Speaking up in defence of banks

BANK bashing has become a popular pastime, with major banks lifting interest rates, but maybe it's time we stop attacking such easy targets

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Speaking up in defence of banks

BANK bashing has become a popular pastime in recent weeks, with Australia's major banks lifting interest rates.

The reason, they say, is to recover some lost profits because the global credit crunch has pushed up the interest they pay to investors on money they then lend to us. Confused yet?

Many of those confused by it all simply see it as another case of profit-hungry banks grabbing as much cash from luckless consumers as they can.

But let's put things into perspective. The big banks are simply doing what other lenders inAustralia are doing in response to the global credit crunch that is dominating financial markets.

It's basic business to try to avoid falling profits. We don't attack Qantas over its range of surcharges for things such as fuel and credit card payments.

The rises are not obscene. Between 0.1 and 0.2 percentage points is small compared with the 2.5 percentage points rates have risen in the past six years. Many economists are predicting another official rise by the Reserve Bank in a couple of weeks.

Sure, the banks make billions of dollars of profits but that's because they're gigantic businesses.

The big five - the Commonwealth Bank, NAB, ANZ, Westpac and St George - are among the 20 biggest companies in Australia.

Yet their combined profit last year, $17.9 billion, only just beat that of Australia's largest company, BHP Billiton, which earned a $16.8 billion net profit.

If you want to talk about obscene price rises, look at the prices for iron ore that BHP and Rio Tinto negotiate with their Asian customers.

There has been talk of an iron ore price rise of up to 70 per cent this year, and that follows similar increases earlier this decade.

Before I go farther, I have to say I don't love banks. All my personal banking is done through a South Australian credit union. But I am a bank shareholder, as are most Australians either directly or indirectly through their superannuation funds.

To further prove the banks are not evil,  credit unions have also started lifting interest rates to help recover their costs. Australian Central and Savings & Loans have both signalled moves in recent days.

Maybe it's time we stop attacking such easy targets and look to be more constructive when talking about the banks.