CBA and NAB gouge millions in rates rip-off
Its slogan is "CAN" - but last night the Commonwealth Bank proved it can't be trusted to do the right thing by its customers.
The nation's largest lender revealed it was keeping nearly half of the official cut to interest rates announced by the Reserve Bank just hours earlier.
On the vast majority of loans CBA will pass on just 0.13 percentage points of the RBA's 0.25 per cent reduction in the cash rate.
Meanwhile, National Australia Bank nabbed 0.1 percentage points for itself and shared only 0.15 percentage points.
Treasurer Josh Frydenberg slammed the stinginess.
"It's disappointing that the CBA and NAB have not done the right thing by their customers and passed on the full rate cut," Mr Frydenberg told The Daily Telegraph.
Analysis by comparison site Mozo for The Daily Telegraph found that CBA has already pocketed an extra $135 million from failing to pass on in full the earlier reductions by the RBA in June and July while NAB has nicked $132 million over the same period.
But both trail behind ANZ, which held back more than $152.5 million in savings during that time. The Mozo analysis found that the big four banks profited a massive $5.1 billion since May 2016, when it began collecting data on rate cuts.
These cons have been called out by none other than RBA governor Philip Lowe himself, who in June said drops in the "cash rate should be fully passed through to variable mortgage rates" because of "reductions in bank funding costs".
Mr Frydenberg last night said "it's up to the banks to now explain to their customers why they won't get the full benefit".
CBA said it was trying balance the needs of borrowers, savers and shareholders.
It tried to pat itself on the back for limiting the cut to a key deposit product to 0.05 per cent, but failed to disclose the rate would then be just 0.1 per cent.
Investors with CBA interest-only loans will enjoy the full 0.25 per cent cut. NAB cut its equivalent rate by 0.3 per cent.
One customer with the bank, Mosman homeowner Adam Vernon said he would shop around for a better rate given the meagre savings revealed last night.
"It sucks - I think they should pass on the full rate reduction," he said.
"It is all about profit, if they don't pass on the full amount they will make a lot more from every individual with a mortgage and I am sure they will cut the rate earnings on savings.
"I think it will encourage people like me to shop around and look for banks who are passing on better rates."
The miserly moves came as expectations grew that the RBA could cut interest rates again as soon as next month and may also go "unconventional" by giving lenders even cheaper money on the condition it goes to new borrowers.
AMP chief economist Shane Oliver, who has a strong track record forecasting the central bank's actions, said the central bank was not done yet, predicting another drop on Melbourne Cup Day.
"The RBA does tend to move in twos," Dr Oliver said.
Others say that next cut, to 0.5 per cent, won't happen until early next year, with more to follow including the possibility of the "unconventional easing" to benefit new borrowers.
Dr Lowe said its board had acted to support employment growth, which was slowing from fast levels, and to increase disposable incomes. "The board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed," Dr Lowe said.
Nomura analyst Andrew Ticehurst said the RBA cash rate could go as low as 0.25 per cent and beyond that, "unconventional easing" was now more likely than not.
This RBA could supply funding to banks at below-market rates, providing it was on-lent, Mr Ticehurst said.
There were traces of positivity in Dr Lowe's statement.
"A gentle turning point … appears to have been reached with economic growth a little higher over the first half of this year than over the second half of 2018," he said. "The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector should all support growth."
Shadow treasurer Jim Chalmers said it was "long past time" for the government to come up with a plan to turn around an economy "floundering on their watch". Mr Frydenberg said it was "completely reckless for the Labor Party to be talking down the Australian economy".
The weekly ANZ-Roy Morgan consumer confidence rating, released yesterday, recorded its biggest jump in 15 months.
"Rising home prices, record wealth, low interest rates and firm employment have been working to put smiles on the dials," CommSec chief economist Craig James said.