Mainstream banks continued to hold off reducing interest rates to borrowers this week in spite of further announcements of substantial profits.
However niche bank, Mercantile Lisbon, cut its home loan rate to new customers by 0,5 percent.
This was brushed off by the big five retail banks as a marketing ploy.
While resisting interest rate cuts and claiming hard times because of bank robberies and servicing a high risk public, bank profits continued to soar.
Two weeks ago First National Bank announced a 28 percent increase in profits while this week Nedcor matched FNB's 28 percent and Saambou announced a 40,5 percent increase in its profits.
Personal Finance sparked the growing debate by publishing research by financial services company Fleming Martin that showed South Africa's real (after inflation) prime lending rate is testing highs not reached since World War II.
It also highlighted the difference between what banks charge you for loans and what they pay for their funding is well above those of overseas banks.
Since highlighting the issue, banks have used several excuses in defending their margins.
The Fleming Martin research has been question by the Banking Council, Standard Bank and Nedcor.
But Fleming Martin is sticking to its guns that their research is correct.
A spokesman says the rates which were compared in the research the interbank call rate and the prime lending rate are good indications of the approximate margins of banks.
The prime lending rate is the rate which banks offer to their best customers. In fact, most consumers will be paying more than this for their borrowings.
Also, using the interbank call rate is justified because this is the rate at which banks borrow money from each other or large institutions. Banks obtain about 70 percent of their funding from this market.
"I think they (the banks) are just being greedy, to be perfectly honest," Fleming Martin says.
The Reserve Bank adjusted one of its borrowing facilities (the marginal lending facility) for the commercial banks upwards this week.
Reserve Bank governor, Chris Stals, says that the change is aimed at discouraging banks from making extensive use of the facility and their average cost of money should therefore not be affected.
A banking analyst says banks may try to hide behind the fact that Stals increased the marginal lending facility to avoid lowering rates, but they would not be justified in doing so.
"The actual cost of wholesale funding to banks is about 13 percent. Banks are lending at 18,25 percent to the man in the street that is quite a fat margin."
He says it is unlikely that the banks will respond to Mercantile's drop in its rate on new home loans.
Banks last lowered their interest rates by one percentage point in March when the prime lending rate fell to 18,25 percent and the home loan rate to 18 percent.
Standard Bank spokesman, Erik Larsen, told Personal Finance: "We are reviewing our rate structures at the moment, but no decision has been taken."
Derek Price, general manager of First National Bank Properties, says: "We are monitoring the market closely, but it is strategically unsound for us to give dates or to discuss our reasons."
Noel Young, senior general manager, operations at NBS Bank, says: "We take cognisance of what other banks are doing but believe the repo rate has shown no continuity to indicate consistently lower rates and still needs time to settle."
Mike Leeming, executive director, Nedcor Bank, says: "We anticipate further drops in interest rates and we will react as soon as we feel this is warranted by market conditions."