A day after the Reserve Bank of Australia (RBA) unexpectedly cut the overnight cash rate by half a percentage point to 3.75 per cent. Treasurer Wayne Swan prodded on Wednesday Australian banks to pass to customers the rate cut in full.

The forecast of analysts was a 35 basis points cut.

"A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates," RBA Governor Glenn Stevens said on Tuesday.

Mr Swan said the new rate cut was what Australian businesses and households had been waiting for. "The banks should do the right thing and pass this on," he said.

However, even prior to the RBA decision, commercial banks had pointed to higher funding cost as their justification for not passing in full the rate cut or even hiking mortgage interest rates.

The treasurer said that if banks would insist on their argument that funding cost is higher and they could not pass in full the rate cut or even partially, borrowers could take action and seek better rates.

"If they don't, their customers will be very angry and they do not have the capacity to, due to the changes we have put in place in banking competition policy in recent times to more easily walk down the road and get a better deal," The Sydney Morning Herald quoted Mr Swan.

So far, only the Bank of Queensland had announced to cut its lending rate by 35 basis points. The big 4 have yet to issue any statement. ANZ is scheduled to announce its policy on interest rates on May 11, which the three other banks are expected to follow since ANZ has become the de facto leader when it comes to moving opposite RBA policy directions.

Although ANZ had resisted RBA policy in the last three months, there is added pressure on the lender to pass in full the rate cut since ANZ reported first-half underlying profit of under $3 billion, It is up 10 per cent from 12 months earlier which was $2.92 billion but slightly lower than analysts' expectations.

ANZ's improved net profit was due to the bank's operations in Asia, the Pacific, Europe and America but its margins in key Australian operations are going down, which it would likely cite as basis in not passing in full any rate cut.

"People want to feel it in their pocket. Let's be very clear, this is a cut of 50 basis points and will be a significant benefit not just to homeowners but also small business," Mr Swan said.

The growing consumer anger with the rate decision by Australian banks is seen in the latest Roy Morgan Research Consumer Banking Survey which said that the big 4 suffered a 0.9 per cent decline in satisfaction rating.

National Australia Bank suffered a 1.7 per cent drop to 77.5 per cent. ANZ registered a 77.4 per cent satisfaction rating, down by 1.2 per cent the last two months, Westpac logged 0.8 per cent reduction and Commonwealth Bank had a 0.6 per cent satisfaction cut due to their decisions to raise interest rates while the RBA kept the rate for three consecutive months at 4.25 per cent until the central bank reduced the overnight cash rate by 50 basis points on Tuesday.

In contrast, smaller banks logged better satisfaction ratings. ING Direct logged 89.8 per cent, Bendigo Bank 89.4 per cent, ME Bank 86.4 per cent, building societies 91.1 per cent and credit unions 88.7 per cent.

"Despite the rather lackluster performance of the big four over recent times, their personal customers still have much higher satisfaction levels than their business customers who lag well behind with an average satisfaction level of only 64.9 per cent with Westpac being the best on 67.4 per cent. With over two million businesses bank customers across Australia this poor performance must be having a negative impact on the personal customer satisfaction levels of the major banks," Roy Morgan Research Industry Communications Director Norman Morris said in a statement.

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