Big Banks Greedy Move
COMMONWEALTH Bank raised home-loan rates 20 basis points more than the RBA
The first of the big four banks to raise interest rates by more than the Reserve Bank's official move today. The bank said it had raised its standard variable home-loan rate by 45 basis points - 20bp more than the RBA’s decision earlier today.
The bank said its standard rate was now 7.81 per cent, effective from November 5.
Ross McEwan, group executive of retail banking services: “Our overall wholesale funding costs continue to increase as cheaper funding expires and is replaced with more expensive funding.
“At the same time, competition for retail deposits has significantly increased the cost of retail funding.”
Earlier, the RBA dampened Melbourne Cup festivities today by raising official rates to 4.75 per cent.
It marked the fourth time Australia’s central bank has raised interest rates in 2010, after moves in March, April and May.
RBA governor Glenn Stevens said in a statement: “At today's meeting, the board concluded that the balance of risks had shifted to the point where an early, modest tightening of monetary policy was prudent.
“For some time, the board has held the stance of monetary policy steady, which has resulted in interest rates to borrowers being close to their average of the past decade.
“However, the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity.
“Looking ahead, notwithstanding recent good results on inflation, the risk of inflation rising again over the medium term remains.”
Commonwealth Bank attacked after posting $6.1 billion profit
The Commonwealth Bank recorded a 42% increase in full-year cash profit to $6.1 billion this morning, and said it remains cautious about prospects for the next year as economic conditions remain uncertain.
But the bank, and the financial industry altogether, has been accused of being run by a group of "greedy thieves" by Family First senator Steve Fielding, who says the Government and Opposition should be questioning the size of the banking sector's profit.
Commonwealth Bank said impairment expenses for the year to June 30 fell to $2.08 billion, with statutory net profit after tax up 20% to $5.66 billion. Net interest income grew by 11% to $11.87 billion.
Westpac Bank Posts $6.3 billion profit.
WESTPAC Banking Corporation says it will make a decision on a possible home loan rate rise in the coming days, after posting an 84 per cent rise in full year net profit to $6.3 billion.
Australia's second largest lender says it is positive about the outlook for the Australian economy, and expects mortgage demand to remain steady and business credit demand to improve in 2011.
Its net profit for the 12 months to September 30 was $6.346 billion, up from $3.446 billion in the prior year, due mainly to significantly reduced bad debt charges.
Westpac's cash earnings, which takes out unrealised losses and gains on asset values, gained 26 per cent on the previous year to $5.879 billion.
Chief financial officer Phil Coffey told journalists the bank was yet to decide if it will follow the Reserve Bank of Australia's 25 basis point cash rate increase to 4.75 per cent.
Commonwealth Bank of Australia was the first major lender to move, lifting its home loan rates by 45 basis points to 7.81 per cent.
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