Credit demands were down for four consecutive months, according to the latest data released by the Australian Bureau of Statistics (ABS), and banks were more inclined to push up their interest rates.

None of the major banks have yet to follow through on the move last week by the Australia & New Zealand Banking Group (ANZ) to lift its standard variable mortgage rates by six basis points to 7.42 percent but there were no assurances too that they will not opt for a hike soon.

The Commonwealth Bank of Australia (CBA) and Westpac both indicated that regular reviews of their existing rates will be observed, at least fortnightly, a direction that the National Australia Bank (NAB) said will not be too far from its own path.

Yet according to NAB chief executive Cameron Clyne, in case the bank will have to implement rate hikes, which experts said most likely it will, the rate packages would be the best deal in town.

"What we try to do is guarantee we'll be the lowest until the end of the year so they at least customers know they're going to get a good deal from us," Clyne was reported by BusinessDay as saying on Tuesday.

At its present rate of 7.31 percent for variable mortgages, NAB already offers the lowest interest, a trend that Clyne said he intends to sustain through the end of 2013 as realistically as possible.

Banks have been attracting fierce criticisms from the public and federal authorities for defying the 4.25 percent benchmark rate policy of the Reserve Bank of Australia (RBA), moves that bank officials said will be sustained despite strong indications that the central bank will reduce the cash rate on May.

The Herald Sun reported on Tuesday that the markets see 85 percent of possibility that the RBA board will finally reverse its hold policy on the rate movement, in-placed since the last cut was imposed December last year.

But the criticisms directed on the industry, Clyne said, were based on wrong arguments - that "banks should have lower profits," without careful consideration on the "terms of dividends and the availability of credit."

The current debates, the NAB chief said, normally dwells on things that "are always argued in black and white, but of course they're grey."

What forces banks to establish higher firewalls that protect their overall profitability, which consumers merely view as interest rates that run too high, is the inescapable reality that funding costs over the long term have been moving higher, Clyne said.

"We don't lend on a marginal cost basis. We're dealing with a book that goes over many years," the NAB chief told BusinessDay.

The public, he added, needs to understand too that the present industry conditions would possibly lead to job cuts and NAB employees were not insulated from such reality, meaning staffs would be let go in the periods ahead.

Clyne confirmed that credit demand has been plunging and as a direct result, NAB has instituted a gradual reduction of its workforce natural attrition and hiring freeze.

"It's fair to say we're not hiring a lot ... We don't want a big job reduction program because that's not very beneficial for our customers or our staff," Clyne said.

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