SYDNEY, July 2 (Reuters) - Two of Australia’s biggest lenders, Commonwealth Bank of Australia and National Australia Bank, resisted public pressure to pass on a central bank rate cut in full, risking a rebuke from the government.
As expected, the Reserve Bank of Australia (RBA) lowered the policy rate on Tuesday by 25 basis points, the second easing in two months to support an economy forecast to grow at its slowest pace in a decade.
Sydney-based CBA and Melbourne-based NAB said in separate statements that they would cut their standard variable owner-occupier interest rates by just 0.19 percentage points.
CBA said it was withholding the full rate cut while increasing the interest rate it paid for term deposit customers by 0.2 percentage points.
The term deposit rate rise was “a deliberate choice to limit the interest rate reduction on the most popular savings account”.
NAB’s chief customer officer of consumer banking, Mike Baird, said the bank would limit the amount it cut deposit rates to 19 basis points, the same as its mortgage rate cut.
“Decisions like these are difficult and reflect the current unique circumstances, with home loan rates at record lows at the same time as deposit and savings rates also being at record lows,” he said.
A month earlier, the country’s third-largest lender Australia and New Zealand Banking Group Ltd, passed on just 18 basis points of a 25-point central bank cut, prompting the treasurer to say the bank had “let down its customers”.
ANZ was the first bank to respond to Tuesday’s rate cut, saying it was passing on the cut in full.
The so-called Big Four banks dominate Australia’s mortgage market and their responses to central bank rate changes are closely watched by investors and politicians.
Bank margins in the world No. 12 economy have been under pressure due to low credit growth on top of about A$8 billion in regulatory and remediation costs stemming from a stinging year-long inquiry which ended in February. (Reporting by Byron Kaye; Editing by Muralikumar Anantharaman)