Banks not gouging - Treasury
(10 August 2012 – Australia) Treasury markets group executive director Jim Murphy’s testimony on Wednesday kicked off three days of hearings likely to put banks under pressure to explain unpopular decisions on interest rates.
Murphy defended the level of competition between the big banks, dismissing gouging claims saying bank profits were "no greater" than those of other companies.
After a recent report showed that the big four were the most profitable in the developed world, the banks also said they were still feeling the effects of the global financial crisis, and this had prevented them passing on official rate cuts in full.
Murphy said the financial system was going through a ''transition'' that had increased banks' dominance of the home loan market.
Reflecting this, 88 percent of new home loans were written by banks in June, figures showed on Wednesday.
But despite bank dominance, Murphy said competition remained healthy and lending margins were ''around long-term averages''.
''Their profit levels are no greater over a long period of time than other major corporates. That's a matter for the community and the government to decide whether that's too high a profit, or OK,'' he said.
After a recent report showed that the big four were the most profitable in the developed world, the banks also said they were still feeling the effects of the global financial crisis, and this had prevented them passing on official rate cuts in full.
Murphy said the financial system was going through a ''transition'' that had increased banks' dominance of the home loan market.
Reflecting this, 88 percent of new home loans were written by banks in June, figures showed on Wednesday.
But despite bank dominance, Murphy said competition remained healthy and lending margins were ''around long-term averages''.
''Their profit levels are no greater over a long period of time than other major corporates. That's a matter for the community and the government to decide whether that's too high a profit, or OK,'' he said.
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