Cashed Up

The flood of cash flowing to the major banks over the past several months reversed slightly in October, new figures show.

The top five accounted for eight in every ten dollars (compared to nine in ten in September) of the $11.7 billion net increase over the month, as the government bank guarantee calmed the nerves of those who sold out of foreign-owned groups in September.

While still a commanding slice of inflows into the sector, October figures for the majors are down on September, when an approximate 90% of the $12.6 billion net increase in household deposits flowed to the major five Australian banks, according to Australia Prudential Regulatory Authority (APRA) monthly banking statistics.

Total household deposits held by Australia Deposit-taking Institutions (ADI’s) increased 3 per cent in October to $397 billion, with the major five banks holding 78 per cent of these deposits.

Commonwealth Bank with 29 per cent or $117 billion of all household deposits, holds more than double any other major bank.

A combined Westpac / St George entity would rival Commonwealth with $92 billion.

Some at-call funds remain surprisingly high in the current falling interest rate market, with the AMP eASYCash product attracting 7.35 per cent, the Arab Bank Australia Online Savings Account 7.25 per cent, and the Bank of Queensland WebSavings introductory rate 7.20 per cent, for a $10,000 deposit.

The Westpac eSaver (four month introductory rate) leads the major bank’s pricing at 6.75 per cent, with the St George directsaver at 6.50 per cent.

BankWest is no longer an aggressive price leader with the TeleNet Saver promotional rate down to 6.35 per cent, with ING Direct concluding the promotional rate campaign at the end of October, with all deposits reverting to 5.5 per cent.

The sluggish ING Direct rate has impacted deposits, with the book falling 4.4 per cent or $749 million in October to $16.4 billion, its lowest level in a year.

Interest rate futures continue to heavily price in further official rate cuts, with the implied yield December 90 day bank bill contract attracting an implied yield of 4.37 per cent, with the March and June 2009 contracts 3.18 per cent and 3.14 per cent respectfully.

Interest rates sourced from www.infochoice.com.au, and futures rates from www.asx.com.au, effective Monday 1st December.