Aug 16, 2012

Mayne: why the Big Four banks should be brought to heel

The story of the Commonwealth Bank’s extraordinary profits is one of market share, market power, credit quality and huge volume growth on home loans ever since Paul Keating introduced compulsory superannuation.

Stephen Mayne — Journalist and Founder

Stephen Mayne

Journalist and Founder

With a $351 billion secured mortgage book shared across 1.8 million home loan borrowers, the Commonwealth Bank knows more than most about the sensitivity of interest rate movements.

Each percentage point in home loan interest rate margin is worth a whopping $3.51 billion. Therefore, low bad debts and a net interest margin of 2.09% over the past 12 months is the key to its stellar earnings.

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5 thoughts on “Mayne: why the Big Four banks should be brought to heel

  1. Joe Magill

    I called CBA a couple of months ago looking for a business loan. My manufacturing business is a 28 year customer of the bank. They weren’t interested in even receiving a proposal. They would look at a franchise purchase but a business expansion loan, even supported by real estate security, is just too risky.

    So banks are profitable and stable but they are a real drag on productivity.

    I’d love to see a bank which truly understands small to medium business.

  2. Nicholas Whitlam

    What possible justification is there for using my father’s name in this article?

  3. megs

    Good question Nicholas. Just about everyone loyally bought shares at the float. Sheeesshhh. Dont spoil otherwise interesting writing with bile.

  4. mattsui

    Stephen…. “The biggest winner from Keating’s superannuation system has been shareholders in the Big Four banks……” So, that would be just about everybody who has super’ in a fund and probably anyone who manages thier own too.

  5. Figaro

    Maybe the highly regulated nature of our banking system has contributed to the concentration of entities. There are far bigger financial institutions overseas but are reluctant to enter our market and submit to the tight regulations.

    Our banks are already semi-government institutions. Does Stephen Mayne propose more government control or does he want to increase competition by opening up the banking system? Is he saying that maximising profits is not or should not be the object of all listed companies? Apart from being critical of the banks and dropping a few names and innuendos I’m not sure where Stephen’s article is going

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