Banks worry about profits first, second and then customers a distant third

The royal commission hasn’t curbed the lemming-like instincts of the banks, with ANZ and CBA jumping the rate-hike wagon.

Piggy banks with the logos of the Big Four banks.

Australian banks have copped a hiding before the royal commission but that hasn’t stopped the big oligopoly following its normal lemming like push to protect its bottom line.

After Westpac increased its home loan rates last week ANZ and CBA followed within minutes of each other today and NAB will surely follow shortly.

The average 15 basis point increase will add $1,400 to the annual cost of a $1 million mortgage.

The banks blame higher funding costs but interestingly enough they have less impact on ANZ than Westpac yet ANZ increased its rates by as much as Westpac.

ANZ has marketed itself as the “good” bank but, in fact, it is proving to be just as bad if not worse than the others.

By way of example, Westpac says a five basis point increase in its wholesale costs will cut its net interest margin by 100 basis points or one per cent. The impact of the same lift on ANZ is 50 basis points.

The rate hikes are designed to protect bank profits and their affect will be to further depress the Sydney and Melbourne housing market.

This hurts the banks but, as the royal commission has shown, banks worry about profits first, second and customers third.

CBA has the biggest home lending market share at 25.5 per cent, followed by Westpac at 24.5 per cent, ANZ at 15.5 per cent and NAB the same.

ANZ had been improving its market share which led some to think it may hang off increasing rates.

But today’s move shows the big bank oligopoly is alive and well and, contrary to popular wisdom, the royal commission hasn’t changed culture to the extent that customers may gain some boost.

The banks argue a good bank is a profitable one which is true but there are degrees and the banks have crossed the line too far to the shareholder.

Any hope that balance may be restored was killed last week when Westpac hiked rates and ANZ amd CBA have simply underlined it by making a blatant grab for profit.

So much for all Shayne Elliott’s nice talk.