J.P. Morgan Australia FTM 10 Jun 26 Margin Drivers Monthly (May-26) and More

Research evidence excerpt

J.P. Morgan Australia FTM 10 Jun 26 Margin Drivers Monthly (May-26) and More

Asia Pacific Equity Research AC Asia Pacific Equity Research

10 June 2026 J P M O R G A N

aprr.publications@jpmorgan.com

Summary

Margin Drivers Monthly (May-26) (Andrew Triggs)

Funding cost drivers mixed; advertised home loan spreads stable

In May, funding costs were mixed and advertised mortgage spreads stable. Term deposit spreads were steady at the front end

but deteriorated at the long end as the major banks increased their best long-term rates despite a decline in swap rates. Online

saver base rates were mixed as not all banks passed through the full rate hike. However, all majors reflected the cash rate

increase for online saver bonus rates. All of the major banks saw an improvement in spreads on reward saver base rates, while

reward rate spreads deteriorated modestly. On wholesale funding costs, 3/5yr swap rates declined materially. Average CDS

spreads narrowed slightly and BBSW-OIS increased. Wholesale term issuance was very strong in May despite blackout

periods around reporting season at the beginning of the month. Mortgage competition remains persistent, with the major banks

passing through the 25bp cash rate hike to variable OO and investor rates, leaving advertised mortgage spreads unchanged.

• Deposit spreads. In May, major banks saw an improvement in short-term TD spreads (-5bps), broadly stable medium-term

spreads (+1bp) and a deterioration in long-term TD spreads (+20bps). This reflected stable front-end pricing, while majors

increased best long-term TD rates despite swap rate declines. Among second-tier banks, TD spreads deteriorated across all

tenors, driven by large increases from JDO, St George and BEN. Online saver base spreads improved (-6bps) on average