Both ANZ and NAB reported healthy interim cash profits but the core business of lending and borrowing isn’t as profitable as it used to be, particularly in a rising rates environment when banks would usually rake in super profits.
NAB is now expecting the Reserve Bank to raise interest rates three more times by May to a new 11-year high of 4.1 per cent. Chief economist Alan Oster said this made a recession a possibility .
The latest 0.5 percentage point RBA rate rise is set to be passed through in full, bolstering bank profits but adding to headwinds as loan levels and approval rates fall.
National Australia Bank on Friday joined the Commonwealth Bank in lifting their fixed rates in a a clear sign official interest rates are set to surge. Economists are widely expecting a big July rise.