New research by The Australia Institute reveals that while so many Australian families are struggling after 13 interest rate rises, much of what they pay doesn't go towards paying bank staff, improving services or keeping branches open.
It goes towards making Australian banks among the most profitable in the world.
Key findings:
- Between them, the Commonwealth Bank, NAB, Westpac and ANZ made pre-tax profits of $44.6 billion last financial year.
- $17.6 billion of that figure came from loans to owner-occupiers.
- An owner-occupier with an average 30-year loan of $574,200 with one of the big 4 contributes $200,800 purely to the bank's profit. Over the life of the average loan, that's almost 35% of the amount they borrowed.
- ABS data shows that banks are sharply cutting staff numbers in Australia. The number of people working in banking, insurance and other financial institutions fell by more than 35,000 between November 2023 and August 2024. At the same time, banks have been hiring hundreds of workers in other parts of the world, predominantly India.
"This report highlights that a lack of competition among the big banks has come at the cost of home owners," said Greg Jericho, Chief Economist at The Australia Institute.
"The big 4 are generating massive profits from home loans that far exceed the level of risk the banks undertake.
"The 13 interest rate rises have been great for banks and terrible for home owners who are having to pay for inflation that was driven largely by corporations like banks increasing their profits," said Matt Grudnoff, Senior Economist at The Australia Institute.
