The big four banks have fattened their margins while complaining about being squeezed, new figures reveal.
As Parliament prepares to debate legislation forcing banks to lift rates by no more than the Reserve Bank, figures from the Australian Prudential Regulation Authority indicate the average rate paid by the big banks on money they borrowed rose by less than the official cash rate.
"It means we have been complaining about the wrong thing," said Richard Denniss, the director of the Australia Institute, which analysed the figures.
"Whereas we have been angry about banks not moving in lock step with the Reserve, we should have been concerned their actual costs weren't even keeping pace with Reserve Bank increases," he said.
The figures show that while the Reserve cash rate rose 1.36 percentage points between the June quarters of last year and this year, the average rate paid by the big banks rose 0.88 points.
The lower rate would have been because rates on some of the funds banks borrowed went up more slowly than the Reserve cash rate.
"It's like making hamburgers. If meat accounts for a third of your costs and the price of meat goes up 10 per cent, you shouldn't be expected to put the price of hamburgers up 10 per cent," Dr Denniss said.
The Australian Bankers Association confirmed the calculations were correct but said they did not reflect the banks' actual cost of funds.
"To be honest we can't work this out," said its chief executive, Steven Munchenberg. "Performing the same calculation we get the same result but I know it is not right because if it was we would have been being beaten to a pulp with this by the government and the opposition."
The Treasurer, Wayne Swan, said separate Reserve figures showed that over four years the net interest margin of the big banks had "fluctuated in a relatively narrow range".
"This makes it clear there is absolutely no justification for any bank to move above the Reserve Bank," his spokesman said. "We are working on reforms and we won't let the big banks off the hook."
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