Major bank boss telegraphs rate move

by Adam Smith09 May 2012

ANZ looks unlikely to pass on the RBA's full 50bp cut when it makes its rate announcement on Friday.

ANZ boss Mike Smith has telegraphed the bank's intentions in a speech to the QUT Business Leaders' Forum in Brisbane, the Australian Financial Review has reported. Smith said funding costs have risen for banks in recent months, despite the RBA claim to the contrary.

"The [RBA] said that the costs of funding in the wholesale markets in the last few months have gone down, but in fact they have gone up again as a result of the last two days," Smith said.

Smith said even this price change was "irrelevant" when taking into account what funding was being replaced by new wholesale funding.

"A year ago, the amount we were paying would have been about 60bps less that what we are having to pay out now," Smith said.

Smith predicted, however, that the debate surrounding out-of-cycle moves will eventually ease.

"Give it a year and it will certainly not be as much of a hot point as it is right now," he said.

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  • by Garry 9/05/2012 10:44:56 AM

    Its about time this BS about funding costs was put to bed. No one believes it any more. The banks are making more profit on each loan than pre GFC and they control significantly more of the market. The banks know exactly what the ROI is on each loan - hence the rate discounts given to the top tier brokers. Its about time they told the truth and stated that they just wnat to maximise their returns and stopped treating everyone like idiots!!!!!!!!!!

  • by Craig Dres 9/05/2012 10:52:14 AM

    Mike Smith and co stop lying. A very weak government and Treasurer also helps their cause.
    They never did this whilst Peter Costello was Treasurer!!!

  • by Country Broker 9/05/2012 11:21:30 AM

    This needs to stop , we can all see through the smoke and mirrors all the big 4 CEO should belong to the international society for illusionists !! There is more soin in their explanationsabout rate settings than the Federal Parliment during budget week !!