Bank profits

Liam Dann’s defence of banks’ profit of 14 per cent is a bit thin. If a company has a return on equity of 15 per cent it is derived from productive assets such as machinery, tools and trucks. In contrast, a bank’s business is money. Its equity is mostly cash, with a bit of office equipment thrown in. The official cash rate is 1.75 per cent and interest on cash deposits is around 3 per cent. In that light, 14 per cent looks excessive indeed.

K. H. Peter Kammler, RD Warkworth.