If you’d like extra proof the massive drawback with inflation within the Australian economic system isn’t authorities spending – regardless of what right-wing economists insist — or that wage-price spiral we had been warned about for thus lengthy that stubbornly didn’t occur, examine the Reserve Financial institution’s new report on financial institution charges launched yesterday.
The report reveals that financial institution income from charges rose 5% in 2023-24 — the primary rise in seven years. And Australian households paid nearly 10% extra in financial institution charges in 2023-24.
Earlier than you yell “gouging bastard banks”, nonetheless, a lot of the family charge income got here from extra Australians travelling internationally, which led to greater bank card utilization abroad. The banks all loved greater income from charges for worldwide transactions and overseas forex conversions (with their rip-off conversion charges).
However additionally they did very properly from charges for taking out private loans, probably on account of hovering inflation and mortgage rates of interest. Income from private mortgage charges soared 34%, handing $390 million to the banks, a lot of it nearly actually from individuals already struggling financially.
However there was additionally a 5% rise in dwelling mortgage charges — after two years of declines in dwelling mortgage charge income. Why? “Easing competitors within the mortgage market resulted in lots of banks withdrawing monetary incentives corresponding to cashback offers, that are provided to draw new or refinancing clients and subtract from charge earnings.”
Name these tens of thousands and thousands in further income from dwelling mortgage charges an oligopoly tax, as a result of that’s what they’re — nonetheless a lot it won’t match with the peddled narrative that inflation is triggered not by grasping companies however by grasping staff and shoppers. This income contributed to the price of housing, which was one of many strongest drivers of inflation over 2023-24.
Even income from charges on deposits rose, and banks charged individuals for withdrawing their very own cash to hunt higher returns elsewhere. Don’t overlook the Commonwealth tried to impose a $3 in-person transaction charge final 12 months (and ANZ has a $2.50 charge).
The report additionally notes that the banks didn’t compensate 2 million low-income individuals for holding them in high-fee accounts between 2021 and 2022. ASIC instructed the banks to start out repaying clients in July 2023, however a 12 months later, little has occurred. “Whereas banks have began responding to the suggestions, nearly all of charge refunds is anticipated to happen throughout 2024/25.”
It’s no marvel huge financial institution shares have outperformed the market — even the troubled ANZ is doing OK. Commonwealth Financial institution shares rose 21% within the July-December 31 interval of 2024, and 37% over calendar 2024. Its friends ANZ, Westpac and NAB loved rises that averaged 33% in the identical interval. It’s at all times good to be an investor in an oligopoly. Fortunately, through our tremendous accounts, most of us are whether or not we prefer it or not.
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