Claims by the banking industry that profits are suffering have been rejected by a new report out today. The State of Play report says that profit margins on home loans rose from 1.35 percentage points in January to more than 1.8 percentage points last month.
This has led to claims that the banks are raising rates unnecessarily to profit from the credit crisis. The banks are making more annual profit on each mortgage.
InfoChoice research head Steven Anderson said: ``The major banks have not only survived but strengthened thanks to the credit crisis.'' The banks have lifted variable home loan interest rates outside official Reserve Bank rate rises several times this year, blaming higher funding costs on international credit markets. "We're not saying their costs haven't gone up. We know they have. What we're saying is their prices are going up more,'' Mr Anderson said.
The five biggest banks in Australia now account for 80 per cent of new lending. This seems because people trust the big banks with their money and so the shift towards the big five is growing.
The Federal Treasury has recently argued there was evidence Australian banks were much more profitable than in other parts of the world, and even Prime Minister Kevin Rudd has recently spoken out, hinting at profiteering by the big banks.
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