Debt Consolidation Australia :: News

Debt Consolidation Australia News

Big banks not too profitable: RBA

Source: ABC News: 25 Feb 2012

The governor of the Reserve Bank says the Australian banking sector is not too profitable.

Appearing before the House of Representatives Standing Committee on Economics, RBA governor Glenn Stevens said that if he had to choose between unprofitable and profitable banks he would chose the latter.

"You only have to look at the dimension of the banking problems in Europe to see we don't want banks that can't earn a good return," Mr Stevens said.

"Are they too profitable? Our assessment is if you look at the rates of return on equity at our banks over a lengthy period of time they're actually broadly in line with the listed company sector in general."

The big four banks have recently come under scrutiny for raising their variable mortgage rates outside the Reserve Bank's official cycle while at the same time posting record profits.

The banks have blamed weak lending growth and rising funding costs for their rate rises as the eurozone's sovereign debt problems slow economic growth around the world.

Mr Stevens said he was not surprised by the move, and confirmed that those funding costs had increased.

"When people say those costs have risen that is true," he said.

"I'm not here to defend the banks - they can defend themselves - but most businesses seek to reflect their costs in the prices of their products if they can, and that industry is no different."

Mr Stevens also told the committee he was comfortable with the current level of interest rates because he did not believe banks would pass on the central bank's December rate cut in full as they eventually did.

"We can't make a precise forecast about these things but I had anticipated that that might not be the case, but it turned out it was ... but overall I think where we're sitting now is about where we should be," he said.

But the Reserve Bank was not planning to intervene in currency markets, he said, as the manufacturing and export sectors come under pressure from the historically high Australian dollar.

Thousands of jobs have been slashed in those industries, but Mr Stevens did not believe intervention would be effective at this stage.

He said Australia's natural resources and its proximity to Asia were behind the currency's strong rise.

"I'm not saying we'd never do it, but we have not done so to-date," Mr Stevens said.

"We do continue to ask ourselves whether what's happening in the currency markets makes sense.

"The most recent bout of strength is happening at a time when the terms of trade have actually peaked and started to come down. That is a bit odd, but we'll see what happens."

ABC News


Finance News

Police issue warning about bank scam
Nov 20 :: Melbourne police are warning people about a scam in which fraudsters pose as bankers and ask for money.They say they cold call customers and... read more
ANZ nets solid profit despite wealth management
Oct 26 :: ANZ banking group has reported a solid full-year result with net profit attributable to shareholders up 6 per cent to nearly $5.7 billion - but with... read more
Millions lack access to basic financial services
Jun 01 :: Nearly 3 million Australians do not have access to basic financial products such as a credit card, car insurance or even a bank account, according to... read more
Reserve Bank leaves interest rates steady
Apr 04 :: The board of the Reserve Bank of Australia has left interest rates unchanged at 4.25 per cent at its monthly meeting today, as widely expected.The... read more
Big banks not too profitable: RBA
Feb 25 :: The governor of the Reserve Bank says the Australian banking sector is not too profitable.Appearing before the House of Representatives Standing... read more
Finance Articles

Balloon Payment Loans: 6 steps to make the loan profitable Balloon Payment Loans: 6 steps to make the loan profitable
Did you know that you can reduce the monthly payments on a loan to half of what they should be by using a balloon payment? Handled correctly, structuring your loan to include a Balloon Payment will increase your bottom line. Mishandled, a Balloon Payment can cause real headaches. Here are 6 steps to keep it smart. - read more
The Truth Behind Payday Loans The Truth Behind Payday Loans
There’s a lot been said about payday loans. Many claim that the interest rates charged are outrageous. Others say that they are the only source of finance available for those with less than perfect credit score. There is a bit of truth in both claims but there is much more to payday loans than meets the eyes. - read more
When should I use a personal loan? When should I use a personal loan?
Unsecured personal loans can really help in a pinch. If your savings are low and your car breaks down, for example, such a loan can patch up your life. Or maybe you're buying a big-ticket item and you need backup money to cover a short-term hole in your bank account. - read more
18 Hot Tips For Intending Borrowers 18 Hot Tips For Intending Borrowers
If you're thinking of borrowing money to buy a car, boat, debt consolidation, home repairs, medical bills or anything else for that matter, here are some red hot tips to make the process much, much easier. - read more
How Credit Card Balance Transfers Can Damage Your Credit Rating How Credit Card Balance Transfers Can Damage Your Credit Rating
Since the banks and finance providers have been castigated for the way they seemingly indiscriminately awarded credit to people who could ill afford it, the chances of being accepted for loans and credit cards have decreased. Concurrently, there is a greater focus on individual's being aware of how credit works and what their financial behaviors means in terms of a credit score and history. - read more