ABA hits out at Greens profit claims
(11 February 2011 – Australia) The Australian Bankers’ Association (ABA) has rejected criticism of bank profits by the Greens Party as unfounded.
The ABA was referring to a media statement, today issued by Greens MP Adam Bandt, which noted the first-half profit announcement by the Commonwealth Bank reinforced the need for action "to rein in excessive profiteering by the banking sector."
Steven Münchenberg, Chief Executive of the ABA, said that banks are not making excessive profits.
"The standard measure of profitability – return on equity - shows banks are in the middle of the pack compared to other industries. Banks are currently more profitable than some industries and less profitable than others. There is no evidence that they are making excessive profits," Mr Münchenberg.
"A solid, reliable and healthy banking sector is important so it can continue to make loans to businesses which provide jobs and keep our savings safe."
"Profitable banks underpin our growing economy; give customers confidence that their deposits are safe, their bank will not collapse and need taxpayers’ bailouts."
"In the US and the UK, we saw that weak banks equal a weak economy. Unemployment in the US remains high at 9 percent and the UK - almost 8 percent - and here it is much lower at 5 percent."
"The 'headline' profit numbers of banks are always large because they are very large Australian businesses. The bulk of the banks’ profits come from other parts of their business, not retail customers," Mr Münchenberg added.
The evidence shows that Australian bank customers enjoy competitive financial markets and are able to access products and services at fair and competitive prices, The ABA said.
In recent times competition has led banks to reduce and abolish many unpopular fees as they compete to attract and retain customers.
Steven Münchenberg, Chief Executive of the ABA, said that banks are not making excessive profits.
"The standard measure of profitability – return on equity - shows banks are in the middle of the pack compared to other industries. Banks are currently more profitable than some industries and less profitable than others. There is no evidence that they are making excessive profits," Mr Münchenberg.
"A solid, reliable and healthy banking sector is important so it can continue to make loans to businesses which provide jobs and keep our savings safe."
"Profitable banks underpin our growing economy; give customers confidence that their deposits are safe, their bank will not collapse and need taxpayers’ bailouts."
"In the US and the UK, we saw that weak banks equal a weak economy. Unemployment in the US remains high at 9 percent and the UK - almost 8 percent - and here it is much lower at 5 percent."
"The 'headline' profit numbers of banks are always large because they are very large Australian businesses. The bulk of the banks’ profits come from other parts of their business, not retail customers," Mr Münchenberg added.
The evidence shows that Australian bank customers enjoy competitive financial markets and are able to access products and services at fair and competitive prices, The ABA said.
In recent times competition has led banks to reduce and abolish many unpopular fees as they compete to attract and retain customers.
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