Getting ready to again announce record billion-dollar profits ... the big banks. Photo: Louie Douvis
The contrast could not be more stark; as the Reserve Bank prepares to cut interest rates next week to kickstart a rapidly cooling economy, the big banks will be getting ready to again announce record billion-dollar profits.
Talk is already turning to how much of the RBA rate cut the big banks will pass on to mortgage holders.
Make no mistake: profits are a good thing. And Australia does need a strong and healthy banking system. But there's a mounting argument that banks too should play their part in helping restart the economy. And they should start by passing on next Tuesday's rate cut in full.
In a world of post-financial crisis belt tightening, the banks appear to be the only ones jollying along as if nothing has changed.
What has changed, however, is their market power, which is now stronger than ever.
While it is clear the RBA is having a hard time juggling the competing inflationary forces of a mining boom west of the Nullarbor with the recessionary funk on the east coast, the banks are behaving as if they are determined to maintain their profit trajectory.
Other sectors such as retail and service industries have argued for months that they need the stimulus of a rate cut to get consumers spending.
Even miners, in the middle of a once-in-a-lifetime boom, are pulling their heads in. China is cooling. Commodity prices are falling. A fall in coal prices has seen expectations of investment in mining ease.
Belts are being tightened everywhere. Households are paying off debt. Companies are trying to cut costs wherever they can.
From the behaviour of the banks, however, it appears they believe banking profits are sacred. Any criticism is met with the response about ''the need for a healthy banking system'' and their need to pass on their higher cost of funding.
Banks are their own worst enemies when it comes to public relations: passing on rate rises to borrowers in full within days of them taking effect, and often not raising interest rates on deposit accounts by the full amount; delaying cuts to interest rates by weeks or months and then not passing it all on to boost their margins.
The heart of the banks' problem at the moment is that they are writing precious little new business because no one is borrowing.
Banks lend money to make money. And as no one is borrowing, the banks are squeezing their existing customer base to increase profits and appease their masters, the shareholders.
The banks are behaving as if they are not willing to accept any crimping on profits. Such short-term thinking reeks of executives using their market power to cover over the cracks with boards and investors.
But their market position is so dominant they have an impact on the broader economy. Arguably, banks with billion-dollar profits can still afford to do their bit to help lift the broader economy.
Analysts have pointed out that the coming reporting season for banks will be uninspiring for a sector that has been raking it in for years - a low point before things pick up again. While cash earnings are unlikely to impress investors, the headline figure will be billions in record profits.
Banks are trying to protect their margins and, crucially, they have the market power to push through increases in interest rates.
But as a result of this week's weak inflation result, markets are pricing in as many as four interest rate cuts before the end of the year. Those economists who until this week thought there might be only one rate cut, now fear the slowing economy will need at least two rate cuts to get growth moving.
Some analysts argue this will allow banks greater leverage to keep some of the cuts for themselves.
Banks have been arguing of late that their cost of funding has been rising. This is true. But not all the money being raised offshore at high rates is being used for financing mortgages. Some is for business financing. Banks are increasingly using Australian deposits to fund their operations.
While their average costs have been rising, mortgage holders feel they are left holding the can. The belt tightens further.
It is in the banks' interests to lend money and to create a supportive environment to borrow and invest.
They could do worse than loosen the strings and help the broader economy find its feet.
Michael Evans is a senior writer on BusinessDay.
Follow the National Times on Twitter: @NationalTimesAU