Banking system should work for all: Swan
Federal Treasurer Wayne Swan says the latest financial results from Commonwealth Bank of Australia's (CBA) shows how "hugely profitable" it is, despite the volatile global markets.
The CBA, along with the other big banks - ANZ, National Australia Bank and Westpac - have raised their standard variable mortgage rates in recent days, blaming rising overseas funding costs flowing from the European debt crisis.
The increases came despite the Reserve Bank having left its official cash rate unchanged at last week's monthly board meeting, sparking a verbal stoush between the government and the financial institutions.
St George Bank was the latest bank to lift its standard variable home loan rate, increasing it by 12 basis points - more than the big four, which recorded rises of six to 10 basis points.
CBA, the nation's largest home lender, reported a net profit of $3.6 billion for the six months to December 31 on Wednesday, up 19 per cent from the previous corresponding period.
"They have made that profit despite global volatility in financial markets. It shows they are hugely profitable," Mr Swan told parliament on Wednesday.
He said the banking system should work for "all Australians", not just shareholders, which was why the government had pursued reforms to increase competition.
Still, unlike the ANZ - which led the way in the round of rate moves, and followed up by cutting 1000 jobs - the CBA has no plans for drastic staff reductions, either by redundancy or sending positions offshore.
But CBA chief financial officer David Craig told reporters unemployment was likely to rise in the finance sector and that it was hard to say whether other sectors of the economy would offset that.
His comments came ahead of Thursday's release of official labour force data for January.
Economists' forecasts centre on a 15,000 rise in the number of people employed, although this is not enough to prevent unemployment rate ticking up to 5.3 per cent from 5.2 per cent.
In making its staff decision, ANZ joins a long line of other sectors to announce job reductions, particularly in manufacturing.
But Shop Distributive and Allied Employees' Association boss Joe de Bruyn says he does not believe the cuts will push up jobless figures significantly.
"The truth is there are some job losses getting a lot of publicity but there are companies that are expanding," the union boss told AAP.
Mr de Bruyn said the union's national executive had seen a list of new supermarkets, discount and hardware stores in the pipeline, generating work for hundreds in coming years.
Employment concerns do not appear to be worrying consumers just yet, with the latest reading of the Westpac-Melbourne Institute confidence index rising by 4.2 per cent to 101.1 points in January, and in belated response to the rate cuts in November and December.
Above an index of 100 shows there are more optimists than pessimists.
But Westpac chief economist Bill Evans said the survey period for the index would not have totally taken into account the disappointment that the Reserve Bank left the cash rate unchanged, when a cut was widely expected, or the subsequent increases in bank lending rates.
Mr Evans still expects the Reserve to cut the cash rate by a further 50 basis points this year, with the first 25 basis points likely in March.
Originally posted here:
Banking system should work for all: Swan