ANZ may not pass on interest rate cuts
The ANZ Banking Group Ltd has admitted there is no certainty it will pass on in full any interest rate cut made by the Reserve Bank of Australia.
As the first of the major banks to front a Parliamentary inquiry into competition in banking, the ANZ was grilled over its stance on interest rates.
"We would like to cut those interest rates but we will have to assess what is happening to our funding costs at that time,"
said ANZ's managing director for mortgages, Michael Rowland.
Labor MP David Bradbury, whose NSW seat of Lindsay covers far western Sydney, led most of the questions to the ANZ on interest rates.
"There are many people in electorates like mine who are really doing it tough at the moment," Mr Bradbury told the bank.
"If the Reserve Bank takes a view, and takes a decision to cut rates, they will be the very people the Reserve Bank has in mind.
"If they do not receive the full benefit of what the Reserve Bank has intended, then in a way that's subverting what the Reserve Bank is trying to do through its monetary policy."
When Mr Bradbury urged the ANZ's Mr Rowland to give a clearer answer on the bank's intentions, Mr Rowland responded, "The strongest indication I can give you is that we want to pass on an interest rate cut, if funding costs allow.
"At the end of the day, we're a commercial organisation."
The House of Representatives Economics Committee is looking at whether competition in the financial sector has been reduced following the global credit crunch.
The ANZ told the hearing that the big banks' share of the home lending market had increased in recent months as non-bank lenders were forced from the market by higher costs.
But Mr Rowland said he expected the non-bank lenders to return when conditions improved.
The ANZ home lending boss also noted that his bank's profitability on each loan it made had been reduced by the high cost of funding.
The committee also heard submissions on consumer finance from the Consumer Action Law Centre.
The consumer lobby group said it was concerned about irresponsible lending by both banks and non-banks including pre-approved credit and so-called interest-free consumer finance.