Stuart Condie
(Australian Associated Press)

The big four’s estimated payouts under the proposed bank levy suggest it will raise less than predicted by the federal government, analysts say.

Commonwealth Bank, ANZ, Westpac and National Australia Bank estimate a total pre-tax cost of about $1.38 billion per annum, while Macquarie Bank is yet to comment on the size of its likely commitment.

The cost to the big four drops to $965 million after tax.

Deutsche analysts Andrew Triggs and Anthony Hoo said the bank’s estimates suggest the government will collect a little over $1 billion per annum from the 0.06 per cent levy on liabilities.

That’s some way short of the $1.6 billion outlined on budget night.

“(The estimates) suggest that the aggregate amount to be collected by the government is likely to fall short of the $6.2 billion targeted in the budget over the four-year period,” they said.

“Hence we see a risk that the six basis point levy could be lifted.”

Deutsche initially expected a hit of about four to six per cent to full-year cash profits, but its analysts now estimate a dent of between two and four per cent from 2017/18.

UBS banking analyst Jon Mott last week warned of potential rises in the levy, stating that its introduction opened a Pandora’s Box for the banks.

All four big four banks outlined the size of their hit on Monday.

Westpac’s estimate of $260 million post-tax hit was the largest, while NAB estimated $245 million, ANZ $240 million and CBA $220 million.

They have all said they will have to pass on the cost.

“The levy will be primarily passed on to customers via higher mortgage rates and lower deposit rates,” Morningstar analyst David Ellis said.

“Business lending rates could also be increased, but we believe residential property investors will face the biggest share of the impost.”