The Commonwealth Bank has become the second major lender that has failed to pass on the Reserve Bank’s interest rate cut in full, cutting its standard variable home loan rate by 0.4%.
CBA announced today it would reduce interest rates on its range of variable home loan accounts by 0.4%, effective from next Friday.
“In making this decision, the group has continued to balance the interests of its 1.8 million home loan borrowers with those of its 11 million depositors, and those of its shareholders, who include 800,000 Australians who own its shares directly, and millions more Australians who own shares through pension funds,” CBA said in a statement.
The decision comes two days after the Reserve Bank slashed the official cash rate by 50 basis points, putting instant pressure on the banks to pass the rate cut on in full.
NAB was the first of the big four banks to make a move, yesterday cutting its variable home loan rates by 32 basis points, holding back 18 basis points.
The bank said it would reduce its standard variable rate on mortgages and business loans, effective from May 4.
NAB group executive Lisa Gray justified the move by saying it still offers the lowest standard variable of the major banks.
“The European debt crisis is having an impact on the global and domestic economy,” Gray said.
“By maintaining the lowest standard variable rate of the major banks, we have sought to continue to shield our customers from current global economic instability.”
The interest rate on NAB’s online savings account iSaver will also drop by 0.5% to 5%, and NAB’s consumer credit card interest rates will drop by 0.25%.
Bank of Queensland also cut its standard variable rate yesterday by 0.35%.
Meanwhile, ANZ said it would make a decision at its regular pricing meeting on the second Friday of the month (May 11), while Westpac is expected to make an announcement tomorrow.
The news comes after Westpac posted a $3.195 billion profit.
“This is a sound result in a challenging environment and reflects continued progress in building a stronger and more productive organisation,” Westpac chief executive Gail Kelly said today.
Earlier this week, it was reported ANZ has lifted its first half profit by 10% to $2.92 billion, but says margins in its Australian business are declining.
It has indicated that any rate cut will likely be less than 50 basis points, with the bank saying its margins declined in the six months to March 31.
According to ANZ chief Mike Smith, the bank is adapting to the changing financial environment, which will impact customers and staff.
“Our recent decisions on interest rates for customers in Australia and on employment within the group reflect the need to reshape our business,” he said.