A JP Morgan analysis issued yesterday considered how the banks' profits would be affected if a spread of 50 basis points above the 90-day bank bill swap rate were maintained over 12 months.

Even after taking into account the big four's previous mortgage rate movements above changes in the official cash rate, they would still stand to lose a combined $534million from their fiscal 2008 profits, JP Morgan found.

Since January, the average monthly spread above the swap rate has hovered between 44 and 66 basis points. In June, the average spread was 56 basis points.

In JP Morgan's 50 basis point spread scenario, ANZ Banking Group would be the hardest hit, losing $142million, or 3.85 per cent, from its fiscal 2008 earnings.

National Australia Bank's profits would take a 3.7 per cent hit, Commonwealth Bank of Australia 2.79 per cent and Westpac 2.49 per cent.

So far this year, CBA has raised rates 37 basis points above the cash rate, ANZ 40 basis points, NAB 39 and Westpac 40.

St George broke from the pack on Friday by raising its rate another 20 basis points, or 60 basis points for the year, putting it $7 million ahead in fiscal 2008 on JP Morgan's estimates.

While expected to follow St George, the other banks could stay put, according to JP Morgan banking analyst Brian Johnston.

''On the one hand, the rhetoric of the other major banks over recent weeks would suggest that they will follow in the not too distant future.

''Conversely, the other major banks may take the view that St George has priced itself out of the market and may look to accentuate any associated loss of market share ahead of a potentially disruptive period should the proposed merger with Westpac proceed.''

In line with JP Morgan, broker Goldman Sachs JBWere said the average cash-to-bill spread had increased to 57 basis points from 23 in fiscal 2007

Its analysts said that, by increasing the swap rate 60 basis points, St George might be looking to offset higher long-term funding costs as well. AAP