Ann: Auswide Bank (ABA) Investor Presentation, page-10

NIM down 50 basis points. Ouch! Even the big banks have called a holt to the massive discounting to attract new customers due to margin compression. At a time when banks should have been e noting fat profits the attack to steal customers has really impacted the smaller banks as they are more dependant on the international funding for loans.

These smaller banks are in real trouble moving forward. They cannot afford to cut margins to the same extent, as interest rates drop, making them even less competitive. Would not be surprised to see a banking consolidation phase taking place. The government may reluctantly need to allow some of the smaller banks to be bought up or risk winding up.

Will be interesting to see how ABA negotiates this period.