Banks rake in profit but no rate cuts Big banks were still doing it "tough," Westpac chief executive Gail Kelly said after Westpac reported a record half-year profit of more than $3 billion and a bumper dividend for shareholders. But the handsome rewards for bank shareholders have not been enjoyed by bank customers, with Mrs Kelly making no apologies for her bank's track record of not passing on Reserve Bank interest rate cuts in full to home loan borrowers. The record profits for Westpac have resulted in calls for a bank super profits tax amid claims of "gouging" and strong union criticism of thousands of banking redundancies since early 2012. Banks doing it "pretty tough": Gail Kelly. Hot on the heels of a similarly strong result from rival ANZ this week, Westpac on Friday posted a 10 per cent leap in cash earnings to a record $3.525 billion for the half-year. The bonanza ups the pressure on Mrs Kelly to pass on any rate cut in full if the Reserve Bank cuts the official cash rate, as many economists expect, when it meets on Tuesday. Westpac is the worst laggard in passing on rate cuts in full to home loan borrowers among the big four banks. It passed on a cut of 0.38 percentage points after a 0.5 percentage point cut in official rates in October and December, and has the highest standard variable rate on its home loans among the big four. Mrs Kelly said banks were operating in a tough environment given there were "a number of breaks" in the economy, with consumers cautious, business confidence lacklustre, and lending growth subdued. "Ask anyone of my management team here and they'll tell you it feels pretty tough in the business every single day in the slow-growth arena," Mrs Kelly said. But the Finance Sector Union criticised Westpac for pocketing record profits while cutting jobs. The union said the bank has made 686 staff redundant since last year, including 118 since the start of this year. "This is a healthy bank that needs to take its staff with it," national assistant secretary Geoff Derrick said. ANZ also recorded a bumper 10 per cent jump in first-half profit to $3.2 billion. Investment bank Macquarie Group notched up a 17 per cent jump in full-year profits on Friday, which hit $851 million, well ahead of market expectations. Greens deputy leader Adam Bandt used the bumper profits to renew his calls for the federal government to introduce a levy on the big banks. He criticised Westpac for refusing to pass full rate cuts on to customers. "They are gouging their customers and the taxpayer," he said. Westpac's strong cash reserves also enabled it to pay a fully-franked special dividend of 10¢ a share, on top of its ordinary dividend of 86¢. Shares in Westpac soared to a record high of $34.79 during Friday morning's trade, before closing lower. The bank is now valued at more than $100 billion, ranking it among the top 10 banks in the world. Financial markets are tipping a better than 50-50 chance that the RBA will cut rates by 25 basis points next week, with momentum shifting considerably in recent days after a raft of weaker-than-expected financial data. Westpac's own internal forecast is for the RBA to cut rates at least once by June. Mrs Kelly said while wholesale funding costs - which were driven up by the credit crunch during the financial crisis - have eased, the competition in the chase for customer deposits had caused overall funding costs to keep rising. High funding costs, the big four maintain, are the reason for not passing on to mortgagors the RBA's rate cuts in full. Mrs Kelly rejected suggestions Westpac was sacrificing the interests of its mortgage customers in favour of other areas of the bank, including through higher term deposit rates. I think we're fortunate in this economy that we do have a strong banking sector.