This time yesterday Australians were merrily preparing for the Race that Stops the Nation, confident in the economists’ predictions the RBA would avoid the un-sportsmanlike act of hiking interest rates on Cup Day.
Just 24-hours later all hell has broken loose.
The RBA might have turned on the rates tap with its 25 basis points rise in official interest rates announced at 2.30 yesterday afternoon, but the Commonwealth Bank forced open the flood gates with an immediate move to put its own rates up 45 basis points.
Commbank boss Ralph Norris is not talking this morning, instead letting the Australian Bankers Association make the running.
Association chief executive Stephen Munchenberg said: “What the Commonwealth Bank is saying is that that marginal effect has built up 2 basis points or 0.2 per cent each month, and that’s now built up over nearly a year since the banks last moved interest rates, so there’s a cumulative effect there.”
Westpac just announced its profits have risen 84 per cent in the last 12 months. Yes, that wasn’t a typo - 84 per cent. In the 12 months to September 30 the Gail Kelly-steered Westpac made a net profit of $6.346 billion.
Apparently Kelly is due to make an announcement later today. Wonder what on earth that could be.
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As a child, my parents read to me the classic childhood tale of the boy who cried wolf, a tale that cautions against repeatedly claiming danger when there is none.
Last year, businesses throughout the world experienced danger associated with the global financial crisis. The risk of a catastrophic collapse of confidence was very real and to the credit of the Australian Government, and other governments around the world, there was quick action to restore investor confidence. The stimulus package might not have been perfect, nor was it always directed in the best way possible, but it did its job.
But if you have been listening to the banks of late, you might get the sense the crisis has not passed, that profitability is under grave threat and that interest rate margins are too low. I dispute this.
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So banking is like bananas. And facing a storm like the tragic one in Queensland a few years back that hit banana growers hard. Or so says the following Westpac video.
Some people think it was silly. Condescending, even. Maybe they think a disaster caused by banks isn’t the same as one caused by nature.
Me, I don’t think it’s silly. Like Forrest Gump said, life is like a box of chocolates. Except now it’s like a banana smoothie.
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Over the past few years Westpac CEO Gail Kelly has been the lucky beneficiary of some of the mushiest anti-journalism in the land.
Going back through the clipping files is, to use a cliché, a veritable orgy of cliché. Kelly has been hailed as the supermum, the platinum-haired beauty, a woman of steely resolve, who is always immaculately turned-out, a passionate advocate of work-life balance, someone who is quietly reinventing the way business is done with a more compassionate, family-minded approach to corporate conduct.
When she was appointed as CEO in August 2007, one female journalist shouted excitedly at the press conference: “There’s hope for us yet!”. There is hope you yet, girls, if your idea of equality is seeing female chief executives demonstrate that they can be every bit as foolish and as flint-hearted as their overwhelmingly male equivalents.
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