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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