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The Forum > General Discussion > Are the banks getting away with blue murder

Are the banks getting away with blue murder

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While the banks will tell you that they work on very tight margin,is this actually the case.

You see banks generally work on about a 2.5% margin,this means they borrow at say 4.5%, then lend at 7%.

Now while this may appear quite a small margin, they are actually making a killing as thier actual margin is more like 35%.

Is this one sector that should be paying more tax on their super profits?
Posted by rehctub, Tuesday, 15 November 2011 9:14:59 PM
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Certainly agree with rehctub

IMHO our banks do NOT generally work on a 2.5% margin, rather their general margin is what public consumers receive which is a lot higher.

IMHO many of our public consumers - particularly those on lower income groups, are provided credit cards with high interest rates, whilst at same time refused personal loans.

Higher rates for first loans, are understandable, though often not excusable.

Yet for many these higher rates seem to stay with them, they lack the financial strength to battle the banks.

Lower income people particularly suffer here, failing the income test so denied lower rate loans.

Being on lower income does NOT make someone a higher or lower risk.

Yet borrowing money over decades, making regular payments on time, appears fail to influence the rates which our banks provide to many if not most everyday consumers.

OK the wealthy borrow more money, may have more to lose, but do they really have proportion of recoverable assets to loans ?

Where are the clearly worded statistical explanations for how these higher rates are deemed necessary ?

Should our financial regulations require lenders make their loan assesment calculations /calculators available so all can calculate their ability to borrow before they must identify themselves ?

Considering our financial histories, our banks larger losses appear to have come from other "influential", "persuasive", types similar to those sitting comfortably in bank management or boards.

Is such nepotism bad for all our financial health ?
Posted by polpak, Wednesday, 16 November 2011 7:54:21 AM
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Rectub, banks nett return on assets is around 1%. So if they dropped
interest rates by 1%, they would earn nothing.

Their return on equity varies between 8% to 20%, depending of
write offs for bad losses. They are certainly not the most
profitable companies in Australia, in terms of returns on equity.

I note that you prefer to speculate on real estate rather then
buying bank shares, so you clearly think that real estate speculation
is far more profitable. A super profits tax on that would not
be such a bad idea really.
Posted by Yabby, Wednesday, 16 November 2011 12:07:24 PM
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Rechtub seems to me you are hooked on super profits,and miss use the term often.
Your Butcher shops,like the banks, are private property.
Investors, your risk takers, invest.
To make money,not sure if you sell on credit.
Banks do.
No one stands out side mine with a gun forcing us inside.
I think the margin is well below say electronics.
And do not see any need for price fixing.
Posted by Belly, Wednesday, 16 November 2011 3:22:56 PM
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Yabby:>>Rectub, banks nett return on assets is around 1%. So if they dropped interest rates by 1%, they would earn nothing.<<

We have been down this road before Yabby, what a load of bean counter crap. What of their assetts, bricks mortar land, their assets have grown by over 700% in the past 10 years. Banks are now owners as well as financiers.
Posted by sonofgloin, Wednesday, 16 November 2011 6:25:46 PM
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If they make 1% return on investment, would this not mean they hold trillions of $ worth of assetts?
Posted by rehctub, Wednesday, 16 November 2011 7:04:40 PM
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