Background: Love 'em or hate 'em, Australia’s Big Four banks, CommBank, NAB, Westpac and ANZ, have become the most profitable banks in the world. In particular, the Big 4 make their moula from high-volume, low-risk lending, particularly to owner-occupiers.

What happened: But now, the the Big 4 have found another way to generate a juicy profit. In fact, the Big 4 are sitting on more than $320 billion in transaction and business accounts paying customers zero interest. These so-called “lazy deposits” now make up almost 20% of all bank deposits. According to Jarden, CommBank alone earns close to $5 billion a year from these zero-interest accounts up nearly 450% since 2022.

What else: That helps explain how banks continue to post record profits. When a huge pool of customer cash costs nothing, margins stay fat... even if lending growth slows.

What's the key learning?

💡When people think about bank profits, they usually focus on mortgages… but the real money is often made on deposits. Zero-interest transaction accounts are incredibly valuable because they cost banks almost nothing to hold.

💡On top of this, over the last few years, banks have repriced their home loans (ie. raising rates) much faster than lowering deposits. That gap has quietly widened net interest margins, meaning customer cash has been subsidising bank earnings.

💡This helps explain record profits like CommBank’s $10+ billion result last year. Even if loan growth slows, “lazy deposits” keep profits humming... so it's a reminder to savers that where cash sits matters just as much as how it’s borrowed.