Australia’s big four banks have been ranked the most profitable in the developed world for the third straight year, but all that money hasn’t improved their offerings to small business.
The Swiss-based Bank for International Settlements published figures today showing the pre-tax profits of the big four banks – the Commonwealth Bank, Westpac, ANZ and NAB were equal to 1.18% of their total assets.
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This puts Australian banks well ahead of those in the other developed countries on the list such as Canada, the US and Britain, with only lenders in the emerging economies of Brazil, Russia, India and China making better returns.
The Bank for International Settlement’s figures also show Australian banks have lower costs than most of their peers and enjoy wider interest margins – a measure of profitability from lending.
So what are the banks doing with all that profit?
Not lending to small business, that’s for sure.
The big four claim they are eager to lend to SMEs, but just under half of all credit applications made by small and medium businesses in the past year were not granted.
In fact, the banks have been milking small business, with bank fees for businesses jumping 23.9% over the past three years despite fees for consumers falling.
They also failed to pass on the RBA’s interest rate cuts in full to business.
There’s a distinct lack of competition in Australia’s banking sector which small business is paying the price for.
We need an alternative.