NAB first to cut rates
ONLY one of the big four Australian banks has made any changes to their variable interest rates after the Reserve Bank cut the cash rate by 50 basis points on Tuesday.
The National Australia Bank was the first of the big four to announce a cut to its variable rate by .32% to 6.99% on Wednesday, after the Bank of Queensland cut its rate by .35%.
The other three big banks, Westpac, Commonwealth Bank and ANZ, have not announced any changes to variable interest rates.
However, ANZ did make an announcement on Wednesday to tell shareholders it had produced a half-yearly profit of more than $2.9 billion.
The announcement by ANZ has put more pressure on the bank to reduce its current variable rate, when it meets next Friday May 11 to discuss rates.
If passed on in full, the RBA rate cut could save mortgagees as much as $3000 a year on a home loan of $300,000.
Treasurer Wayne Swan was eager to tag the rate cut as a result of the government's touted fiscal policy to bring the budget back to surplus.
But his message did not seem to get through to the big four yet.
"What I say to the banks and what I say to their customers is very simply this: that the banks are very profitable, they have the capacity to pass this through," Mr Swan said.
"They should pass it through. If they don't pass it through, then their customers should look around for a better deal.
"We're going to see some of the results from the banks coming out this week and next. They are very profitable.
"They have funding costs which they claim have been elevated, but the fact is that the Reserve Bank has noted that funding costs have eased and their profits are very robust."
BoQ chief executive Stuart Grimshaw said continued economic uncertainty had influenced the bank's decision to hold back 15 basis points this month.
"When making decisions on rates we consider the needs of our customers and those of our shareholders," he said.
"It is a difficult balancing act, but we believe passing on a 35 basis point cut is the responsible course of action this month."
The Australia Institute senior research fellow David Richardson said analysis of ANZ's half-yearly financial report showed it had been "crying wolf" about increased cost pressures.
"The ANZ's financial accounts show that total deposits are up 4% and total liabilities are also up 1%. But interest expenses are down 2%," he said.
"Where are the costs pressures the ANZ is facing if they can't be found in their financial accounts?
The banks have set a pattern, always complaining about cost pressures only to publish results that show the cost of funds has been low and falling."
ANZ did not respond to Mr Richardson's statement on Wednesday.