Profitable banks under pressure to pass on cuts

All four big banks have hiked their standard variable home loan rates this year, by between 9 and 12 percentage points.

Economists do not expect the retail banks will pass on any RBA rate cut in May in full. Shane Oliver, chief economist at AMP Capital Investors said: “Bank profit numbers will probably be reasonable which will make it hard for the banks to complain about declining interest margins.”

“The Reserve Bank's financial stability review in March clearly highlighted that the return on equity for the major banks remains pretty high and net interest margins don't look to be particularly suffering, so I think to justify not passing on a decent portion of any rate cut we get will be a bit hard.”

Source: Adelaide Advertiser