Margin-hogging banks are continuing to retain most of the benefits of the shift in the official rate cycle by withholding and delaying the pass-on of increases to retail depositors.
Following the Reserve Bank’s latest official rate rise of 0.25 per cent on Tuesday, National Australia Bank’s head of personal banking Rachel Slade took just over an hour to announce that home borrowers would be hit with the full increase on 11 November.
Slade was equally swift to issue what has become her customary and vague claptrap after an RBA move that deposit rates were “under review” and that NAB had passed on 40 re-pricings to depositors since May.
What that means, of course, is that many of NAB’s retail depositors, particularly those looking to engage in the term deposit market, have not seen material increases in their rates.
And true to form, Slade didn’t announce any increases on Tuesday.
Like many other banks NAB is suppressing retail deposit rates to help boost bottom line profits.
In the absence of effective jawboning from national leaders - the Treasurer Jim Chalmers in particular - the major banks are acting against the interests of Australian households with savings.
NAB has been way more generous repricing term deposit products for wholesale customers such as super funds and government agencies.
For some term products NAB has been paying more than double the interest to wholesale customers compared to the retail base.
Bank executives at each of the major banks should be brought to account for pricing discrepancies of that magnitude because they are unusual.
The industry’s refusal to allow retail depositors to harvest a fair return from the tightening monetary cycle also makes the ubiquitous rhetoric about helping customers sound shallow.
The NAB retail boss trotted out one of those hollow lines in her bank’s media release on Tuesday.
“For those who are finding the increasing interest rates a challenge, banks have a critical role to provide support,” Slade said.
It is critical for many Australians buckling under the weight of loan rate increases that they earn appropriate and equitable returns on their deposits.
That’s the least banks such as NAB can do in the current environment to provide support that is real.
According to global credit ratings agencies such as Standard & Poor’s, NAB and its three peers enjoy an implicit guarantee on their operations that ultimately is funded by Australian taxpayers.
It’s time for Jim Chalmers to get serious and wield some of that leverage on their behalf.