Pedestrians cross an intersection in front of the National Australia Bank Ltd. headquarters in Sydney

Australia’s banks are thriving as their global peers struggle but stand accused of “gouging” customers to keep themselves in the black, according to analysts.

The country’s ‘Big Four’ banks – Commonwealth, Westpac, ANZ and NAB – posted a combined total of A$8.3 billion (US$6.7 billion) in interim profits in recent months.

The reason that the banks have withstood the downturn so well is because they did not make themselves vulnerable by handing out risky loans during the good times, according to the Reserve Bank of Australia.

But consumer advocacy group Choice points to another reason for the banks’ health, saying lack of competition has allowed them to charge much higher fees than overseas counterparts.

“It is the abysmal lack of competition that has allowed the Australian banks to gouge customers and therefore remain strong in the face of weak global markets,” Choice senior policy analyst Elissa Freeman said.

A report from Fujitsu Consulting earlier this year found that bank fees levied on Australian households were 22 percent higher than those in Britain and 11 percent more than in the US.

The Reserve Bank estimated that Australian customers paid A$4.85 billion in bank fees in 2008, up 8 percent on the previous year.

Freeman said competition in the sector was set to deteriorate further as the big banks swallowed up smaller rivals weakened by the financial crisis.

She said Westpac’s recent merger with St. George and the Commonwealth’s takeover of BankWest showed the Big Four would emerge from the downturn more dominant than when they entered it.

“The global financial crisis has seen competition in retail banking sacrificed further in order to deliver stability in the banking system,” she said.

Australian Bankers Association chief executive David Bell said businesses sometimes had to make tough decisions, particularly in difficult times, and urged people to consider the bigger picture.

“To remain stable and secure and continue to support the Australian economy, jobs, business activity and investment, our banks need to ensure they remain well-run and profitable,” he said.

“This will mean making commercial decisions which are difficult and, at times, unpopular.”

Source: AFP