Former Westpac CEO David Morgan has predicted that Australasia's big four banks would emerge from the financial crisis with increased pricing power, The Australian has reported. "Morgan said the core of the domestic banking system was "very healthy", with foreign banks retreating, second-tier lenders disappearing and higher funding costs generally able to be passed on to customers, The Australian reported Morgan as saying. The result was a reduction in competitive intensity, and an ability to price more appropriately for risk, offset by a greater tendency for the federal Government to use moral suasion to keep lending rates relatively low, he was reported as saying. "This means we have not seen, in my judgment, the full impact of the new-found pricing power of the major banks," Morgan said. "Given also my judgment that the return of foreign financiers -- and a new tier-two of financiers -- to Australia is likely to take a long time, I believe we have seen a fundamental, very significant structural shift that augurs well for major bank profitability in the future." * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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