When banks make big profits media organisations love to cheer them on as though there are no losers form some of the biggest corporations in Australia making ever more money. But profits don’t come from thin air, they come from customers, they come from you.
Thu 19 Feb 2026 01.00
Photo: AAP Image/Darren England
When banks make big profits media organisations love to cheer them on as though there are no losers from some of the biggest corporations in Australia making ever more money.
But profits don’t come from thin air, they come from customers: they come from you.
Consider when recently the Commonwealth Bank recorded a boom in profits. The ABC wrote it up as “net profit for the first half of the financial year has risen 5 per cent to $5.367 billion on the back of increased lending and deposit volumes.”
But just think for a moment – that increased lending is people borrowing to buy a home, or small businesses taking out loans or running an overdraft. And those increased deposits are people (including retirees) taking out term deposits.
If they are making profits out of those two things it means the people doing well out of the deal ain’t you.
In the decade before the pandemic the difference between the average rate of home loans and term deposits was around 245 basis points (2.45%pts).
If the home loan rate (the rate you pay the bank) was 4.59%, like it was in 2016, then the term deposit rate (the rate the bank pays you) was 2.15%.
Now the difference is 315 basis points – they are paying you less and charging you more:
As David Richardson revealed in 2024, home loans are a very profitable for the big 4 banks. They made, he calculated, around $200,880 in profit on the average 30-year home loan for owner-occupiers.
And yet when that ends up in a record profit, it is reported as good news, as though it has not come from ensuring homeowners paying more for their mortgages and providing less to those with term deposits.
Greg Jericho is chief economist at the Australia Institute
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In some excellent news, the Bureau of Statistics estimates that Australia’s unemployment rate remained at 4.1% in January. Before we go any further let’s just enjoy the current state of Australia’s labour market.
The latest wages data shows the RBA is wrong to blame higher wages for rising inflation. Recently inflation was on the rise, and the Reserve Bank is worried about a tight labour market. But what does a tight labour market mean, and what does it have to do with inflation?
Perhaps the most screwed aspect of how the media covers economics and business is how profits and business expenses are written about as though they are glorious things with no losers, while wages growth is always a danger that actually will hurt customers.
The Commonwealth Bank has delivered a staggering profit update amid a surge in first home buyers trying to crack the property market.
