Big four's fine-tuning of rates 'cute'
RESEARCH shows the combined yearly profits of the big four banks now total more than $1000 for every person in Australia and questions bank claims that higher funding costs are preventing them from passing on the full value of official interest rate cuts.
Analysis by the Australia Institute has found the funding costs faced by the big four banks was virtually unchanged between September 2010 and December 2011.
A senior research fellow at the institute, David Richardson, used Australian Prudential Regulation Authority data to calculate the effective interest costs of the big four by taking quarterly interest expenses and expressing them as a return on total liabilities.
Mr Richardson's results show bank funding costs were ''pretty well flat'' in the period even though banks claimed they were rising.
''The banks are being a bit cute when they tell us their funding costs have increased and this is an excuse for them not bringing lending rates down as much as the official rate,'' he said. He estimates the profits of the big four will total $24 billion this year, or ''well over $1000 per person''.