Competition between banks ‘sufficient’
(19 August 2010 – Australia) Glenn Stevens, the governor of the Reserve Bank of Australia, has said that the state of competition in Australia’s banking sector is ‘sufficient’.
Mr Stevens, speaking at a forum in Perth earlier this week, said that the competition landscape had changed over the past few years with banks currently battling for deposits opposed to lending.
The governor refuted suggestions that there was not enough competition in the domestic banking sector, saying that despite foreign banks struggle to make permanent inroads in the market they still played a vital role.
The Reserve Bank Board left the official cash rate on hold at 4.5 percent this month with the release of the meeting minutes earlier this week revealing the board’s comfort with the existing stance of monetary policy which could see the board continue with the current rate for some time yet.
Despite this there have been indications from some of Australia’s largest banks that an out-of-cycle rate increase could be on the cards, as margins come under pressure.
This follows the beginning of a super-profit reporting season that has seen the Commonwealth Bank of Australia announce a A$6.1 billion profit.
The bank’s chief executive officer Ralph Norris said that a likely increase in funding costs meant the retail division was facing a decline in its interest margin of about 0.4 percentage points over the next year.
That mightn't sound like much, but it equates to about a fifth of the bank's interest margin, Mr Norris pointed out.
At some stage the bank may well have to pass something on to customers, Mr Norris acknowledged.
The governor refuted suggestions that there was not enough competition in the domestic banking sector, saying that despite foreign banks struggle to make permanent inroads in the market they still played a vital role.
The Reserve Bank Board left the official cash rate on hold at 4.5 percent this month with the release of the meeting minutes earlier this week revealing the board’s comfort with the existing stance of monetary policy which could see the board continue with the current rate for some time yet.
Despite this there have been indications from some of Australia’s largest banks that an out-of-cycle rate increase could be on the cards, as margins come under pressure.
This follows the beginning of a super-profit reporting season that has seen the Commonwealth Bank of Australia announce a A$6.1 billion profit.
The bank’s chief executive officer Ralph Norris said that a likely increase in funding costs meant the retail division was facing a decline in its interest margin of about 0.4 percentage points over the next year.
That mightn't sound like much, but it equates to about a fifth of the bank's interest margin, Mr Norris pointed out.
At some stage the bank may well have to pass something on to customers, Mr Norris acknowledged.
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