In Australia, more and more analysts are claiming that the major moves and changes by top banks may eventually lead to loss of profits.
According to Victor German, a Nomura analysts, these leading banks, Westpac and Commonwealth Bank (which is for home loan clients), may immediately see the drop of the profit margins and this fact may very well make global investors worry.
German told The Australian, “We have always seen some competitive pressures between the banks, but what we have seen, the steps from the banks over the past week, it looks too aggressive for friendly competitive tensions. In the mortgage and deposit space you are seeing very aggressive pricing on deposits and pretty aggressive deals on mortgages. Anyone who expects the margin to continue to expand is being optimistic.” German ended.
Based on what The Australian gathered, based on a UBS forecast, the profit margins of these leading banks will at least fall from 2.26% to 2.25% this 2011. And in the next two years, it will drop to 2.13%.
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