CBA posts largest first-half profits ever as cost of living bites Aussies
Aussies being crushed by the skyrocketing cost of living – especially borrowing— are lining the pockets of the nation’s banks, with one of the big four making $1 million an hour in profit.
NSW
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The Commonwealth Bank of Australia has revealed it is screwing more than $1 million of profit an hour out of customers being crushed by the skyrocketing cost of living – especially borrowing.
Meanwhile the man principally responsible for the fastest increase in interest rates on record, Reserve Bank of Australia Governor Philip Lowe, says he has an “open mind” about how much more pain he is going to inflict on home-loan customers.
“How far we have to go up, I don’t know,” Mr Lowe told politicians in Canberra yesterday. “I don’t think we are at the peak yet.”
The RBA has raised rates nine times in nine months for a total increase of 3.25 percentage points, adding $700 to monthly repayments of a $500,000 loan.
After CBA announced its largest-ever first-half profit of $5.15 billion – or $1.2m per hour, every hour – CEO Matt Comyn, who was paid $7m last financial year including bonuses of $4.5m, said the bank was anticipating a further 50 basis points of increases.
Some other experts expect at least twice that.
CBA has been reaping a windfall from rising rates by failing to pass on the increases in full on well over $100 billion of customers’ savings.
For example, its most popular deposit product, NetBank Saver, pays an ongoing rate of just 1.6 per cent.
The bank has said its “net interest margin” improves every time the RBA lifts the cash rate.
The latest results from CBA show its net interest income soared by 33 per cent in the six months to the end of December to $3.8bn.
Dominic Perrottet suggested the Commonwealth was letting down the community.
In an escalation of his attacks on the sector, which began last week, the Premier last night told The Daily Telegraph: “In difficult times, banks should be doing much more to help families who are struggling, and that’s my expectation of the CBA.”
Earlier, the Australian Competition and Consumer Commission said it had begun an investigation into how banks set interest rates for savers.
ACCC chair Gina Cass-Gottlieb said the increases on deposit products appear to have typically been smaller and less consistent than hikes on loans.
Ms Cass-Gottlieb said in many cases, banks have only applied increases in the cash rate to some of their deposit products, often with conditions attached.
The ACCC investigation was requested by federal Treasurer Jim Chalmers.
He said “banks have been a lot slower to pass on the increases in interest rates to savers than to (borrowers).
“I’ve asked the ACCC to take a good look at this issue and shine a light on the dynamics of the retail deposit market,” Mr Chalmers said.
Last week The Daily Telegraph also exposed CBA for putting up home-loan rates an average of 10 days after RBA rises versus 20 days when the Reserve was cutting in 2019 and 2020.
The bank yesterday again refused to adopt rival NAB’s commitment to raise rates no quicker than it cuts.
Mr Lowe told a Senate Committee hearing that profitable banks were a positive for the country.
And he acknowledged that rising interest rates boost bank bottom lines in the short-term.
“You want strong, resilient banks,” Mr Lowe said.
“I know it’s hard for people to accept when they’re suffering from problems with their personal finances,” he added.
During the hearing, Greens senator Nick McKim said to Mr Lowe: “You seem prepared to smash all into a recession by trying to squash demand in response to inflation ... can you explain to the renters and mortgage holders of Australia why you deserve to keep your job?”
Mr Lowe said his intention was to serve out his full seven-year term which is due to expire in September.
He also insisted that decisions on rate rises were made by all RBA board members.
“I find sometimes that it’s all (put) down to me and that’s a bit unfair because ... there are nine of us who make these decisions, and we take them collectively,” he said.
“Inflation at the moment – 7.8 per cent – is way too high. It needs to come down. That’s our primary consideration.”
Just as Mr Lowe defended CBA, Mr Comyn went into bat for the RBA.
Mr Comyn told the ABC that some of the attacks on Mr Lowe were “extreme and unwarranted”.
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