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Australia’s big four banks’ profit margins will shrink considerably unless they pass on the higher costs of funding to their home loan borrowers.
Data released by JP Morgan yesterday found that the banks’ wholesale borrowing costs are predicted to impact annual profit should they not pass on the higher costs of funding in the form of a 25 basis point rise. Combined losses are estimated to total almost $600 million for the 2008 financial year.
According to JP Morgan, ANZ will lose an estimated 3.6 per cent, CBA 2.3 per cent, NAB 3.8 per cent and Westpac 3.5 per cent from their annual profits.
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