Intense competition for deposits has benefited savers but squeezed bank margins. The cuts come well before most expect the central bank to drop the cash rate.
Already a subscriber?The country’s largest banks are quietly making significant cuts in the interest rates they pay on term deposits, ahead of the Reserve Bank, stepping back from an intense competition for funds that has weighed on their profit margins but benefited savers.
Deposits are an important low-cost source of funding for the banks, which use them to finance their lending activities, although the scramble has created what J.P. Morgan called an “ongoing drag” on profitability.Sally Tindall, director of data insights at Canstar, a financial comparison platform, said banks were moving ahead of the RBA. That is despite some bank economists, like those at NAB, not expecting a rate cut until May.
, and the government had been concerned about delays in passing on interest rate increases to savers when they had been applied to borrowers. A CBA spokeswoman said it had paid more than $20 billion in interest to depositors in the 12 months to June 30, and Mr Comyn last week said Australia was the most competitive market globally for term deposits.
NAB followed on Monday with similar incisions to its 13-17 month account and longer-term products. ANZ, however, made the deepest cut with an 80 bonus point reduction on its 11-month term deposit account to 4 per cent.NAB declined to respond to questions. An ANZ spokeswoman said the bank considered “a range of factors in making these decisions, including the impact on customers, cost of funds, business performance and competitive pressures”.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
RBA interest rates: No rate cuts before Christmas, says RBA governor BullockMichele Bullock has declared “near-term interest rate cuts are not on the agenda”, warning the economy remained too hot and ruling out decreasing the cash rate before Christmas.
Read more »
Interest rates: CBA’s Matt Comyn backs RBA on rates staying higher for longerThe chief executive of the largest home lender says inflation remains too high. The market is at odds with the RBA, which has all but ruled out a cut this year.
Read more »
RBA interest rates: Why the Reserve Bank’s rates warning won’t mean much to investorsAndrew Hauser says it’s a risk to listen to “false prophets” on interest rates. But those in the market have little choice but to take a position as a crucial turning point looms.
Read more »
Interest rates Australia: RBA governor Michele Bullock talks tough, but board can’t stomach raising ratesThe RBA has squibbed again this month. With long-run credibility on the line, it needs to focus on getting inflation inside the target band.
Read more »
Interest rates: RBA to hold rates steady as inflation gets closer to targetThe central bank is expected to oversee a “straightforward” meeting this week, after last week’s inflation result took the heat out of tightening fears.
Read more »
Interest rates: If the RBA was doing its job, it would immediately lift ratesA hot inflation figure on Wednesday would show we are in the grip of a structurally persistent crisis which has been underestimated in three of the last four quarters.
Read more »