Recent Developments in Banks' Funding Costs and Lending Rates
The global financial crisis has affected the cost and composition of Australian banksâ€™ funding, with flow-on effects to their lending rates and net interest margins. Since mid 2007, Australian banksâ€™ overall funding costs have risen significantly relative to the cash rate, mainly reflecting the higher cost of deposits and long-term wholesale debt, and changes in their funding mix. Australian banksâ€™ lending rates have also risen significantly relative to the cash rate. For the major banks, the increases in lending rates have more than fully offset their higher funding costs, with their net interest margins in late 2009 about 20â€“25 basis points above pre-crisis levels. Since then, margins may have narrowed slightly.
Volume (Year): (2010)
Issue (Month): (March)
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- Susan Black & Anthony Brassil & Mark Hack, 2010. "Recent Trends in Australian Banks' Bond Issuance," RBA Bulletin, Reserve Bank of Australia, pages 27-33, March.
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