Beat the banks at their own game and demand a better deal on your mortgage The big four banks have done very well this Spring, but if you shop around, you can ensure you get a better deal on your mortgage. FORGET the horses, there's only one clear winner this Spring racing season. Our big banks. All four have galloped home with record profits in the past year, together collecting a tidy sum of $27 billion in after-tax profit. Before tax was paid to government, their winnings stood at a combined $38 billion. That's up from $33 billion the year before and yes, it's a record. The big four took a hit during GFC - with profits shrinking in 2008 and 2009 - but it was short lived. By 2010 the big four had recovered to pre-GFC levels of profitability and this last year has been a doozy by any measure. Commonwealth led the pack with a record $7.8 billion in after tax profit. In second place came Westpac with a record $7.1 billion. In third place was ANZ with $6.5 billion and NAB was fourth on $5.9 billion. But according to the banks themselves, everyone's a winner when they make multi-billion profits. According to industry figures, of every dollar in pre-tax profit, 29 cents is paid to the government in tax, 53 cent is paid in dividends to shareholders (which include super funds) and 18 cents is reinvested in the business. But if you're a mortgage holder with only modest super, you're far better off having paid less interest in the first place. On a return on equity basis - a key measure of profitability - the banks are averaging a return of 16.1 per cent. To give you a benchmark, high-risk medical or tech start-ups can command a return on equity of about 30 or 40 per cent. The higher the risk, the higher the penitential return. Safe investments like public utilities usually get something in the single digits. Major international banks like Citibank and Barclays can only claim around 7 per cent. But our Commonwealth is doing 18.5 per cent. The thing about banking is it isn't rocket science. You take someone's money (deposit holders) and lend it to someone else (mortgage holders and business borrowers), taking a cut for yourself along the way. A banking license for one of our big four banks is pretty much a license to print money. All four operate on the "four pillars" basis - the knowledge that if they were to encounter trouble, the government would essentially bail them out by arranging a shotgun marriage with another bank. And if another global financial crisis strikes, the banks also know the government will act quickly to go guarantor on all their deposits and loans. It's a privileged position occupied by no other Australian industry (except, maybe, once upon a time the car industry). Yep, it's easy money being a bank. It's up to us as customers not to let them get away with it. How much profit the banks can make depends on how willing we are to shop around find better deals from smaller lenders. So what can you do to get a better deal? The answer is easy: haggle. Gail Kelly at Westpac admitted this week she will offer an immediate 70 basis point discount off the standard variable rate just for turning up. And much more, in some circumstances. According to my colleague and Cost of Living Editor, John Rolfe, some banks will even stretch to more than 1 percentage point for the right borrower. So if you're angry about bank profits, why not do something about it? Get in there and ask for a better deal. If you're not getting a full percentage point discount to your bank's standard variable rate, you've got nothing to lose by ringing them up and asking for a bigger discount. You've got to be in it to win it.