ANZ leaps to rate hike defence

by Adam Smith23 Apr 2012

ANZ has revealed a detailed defence of its claims of tighter funding costs to back up its recent rate hikes.

The bank has said it will report reduced margins at its half-yearly profit announcement next week. ANZ Australia CEO Philip Chronican has tipped the results in a letter to The Age, in which he has provided figures to defend his argument of shrinking margins.

"The bottom line is that, taking into account's ANZ's funding mix of deposits and short and long-term wholesale funding, our funding costs are up 18 basis points over the past six months while ANZ's variable interest rates have risen by 12 basis points," Chronican said.

Chronican said the bank's cost of term wholesale funding had increased every month but December over the past six months. He said this had seen the bank's net interest margins shrink.

Chronican also defended the bank's two recent out-of-cycle rate moves, saying it remained in a competitive position.

"Other Australian banks increased their interest rates by between nine basis points and 15 basis points. ANZ's cumulative increase of 12 basis points has meant that although it has increased rates more slowly, its mortgage and small business lending rates remain in line with our competitors," he said.

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COMMENTS

  • by Allan Faint 23/04/2012 10:22:05 AM

    when not just a profits but record profits continue to be made by the banks year after year. I dont care how the massage their numbers. No business I know can make record profits every year, most are happy to make ends meet. we live in a capatalist society, we must make a profit to survive, but when is enough profit enough?

  • by Country Broker 23/04/2012 10:34:04 AM

    More smoke and mirrors what is needed is a full break down of where they are funding their mortgage from not smokeand mirrors an margins.

  • by Positive Broker 23/04/2012 1:03:13 PM

    This is ignoring the facts on the massive margins being made in other areas. Overall ANZ is very profitable and should not be gouging it's mortgage clients unless they are prepared to reduce margins in other areas. You can't have it both ways.