Bank of Queensland Cuts Interest Rate by 20 Basis Points Following RBA Rate Decision
The Bank of Queensland said on Wednesday that it would cut by 20 basis points is interest rate following the Tuesday decision by the Reserve Bank of Australia (RBA) to reduce the overnight cash rate by 25 basis points.
In effect, the Bank of Queensland would keep 5 basis points, which is similar to what the big four did in previous RBA rate cuts.
"Given the continuous pressure on the cost of funding, a 20-basis-points reduction is the best balance between our customers and shareholders," BOQ Chief Executive Stuart Grimshaw said.
RateCity, a rate tracking agency, said Australian lenders would likely keep some of the rate cuts as what most of them did in the last two rate reductions made by the Australian central bank earlier this year. For the two rate cuts made by the RBA in May and June which totaled 75 basis points, the banks pocketed an average of 22 basis points and passed on to borrowers 53 basis points, said Rate City spokeswoman Michele Hutchison.
Commonwealth Bank and Westpac said on Wednesday that it is reviewing their rates after the RBA surprised Australians by announcing that it lowered to 3.25 per cent the overnight cash rate on Tuesday. The National Australia Bank has not yet updated its mortgage rates but has promised to offer the lowest rates among the big four.
ANZ Bank would likely release its mortgage rate decision on Oct 12 in line the the bank policy to announce rate adjustments every second Friday of the month.
Similar to previous announcements of rate cuts by the RBA, Treasurer Wayne Swan reiterated his previous call for borrowers to bring their business elsewhere if their banks would not pass in full the Tuesday rate cut.
"I don't think there's any justification for the banks refusing to pass it through in full. In fact, I was quite shocked to see Mr Hockey on The Project last night saying he thought it was OK that they quibbled some of this rate cut, which I think is deserved by Australian families with mortgage and by small businesses. The fact is that their net interest rate margins are back at the level they were prior to the Global Financial Crisis. And they are very, very profitable," ABC quoted Mr Swan.
Hours before the RBA issued the unexpected rate cut, NAB denied that Aussie banks are super profitable even if NAB registered $6 billion profits.
The treasurer was joined by Australian Chamber of Commerce and Industry Director for Economics and Industry Policy Greg Evans who said funding pressure on banks had significantly ease which is a strong reason for them to pass the latest rate cut in full to borrowers.
"The intention of the Reserve Bank is to provide benefit to real businesses and consumers. It is not to assist banks and their profitability," Brisbane Times quoted Mr Evans.
