Major strikes down hopes for rate cut outside RBA

by AB08 Jul 2013

Westpac CEO, Gail Kelly, has struck down hopes of an interest rate cut outside the RBA cycle, despite growing speculation that major lenders would consider the move.

At the launch of the 100 Women of Influence awards, Kelly told an Australian Financial Review reporter that banks’ own funding costs are rising.

“Funding costs had been on a lovely decline earlier in the year and you could see that actually coming through; the funding costs were lower than they’d been a year ago and two years ago and three years ago. Right at the moment, they’ve picked up again. In fact, people are not out there raising money through off-shore wholesale funding opportunities.”

“Unfortunately, it’s still a pretty volatile world out there and I guess we shouldn’t be surprised – the GFC is enormous in its impact. Any financial crisis has a long-run impact. We’ve probably got a few more years of real volatility to weather.”

Kelly says credit demand is also ‘very low’.

“I recall the decade before the GFC…overall credit growth was about 12.6%. That’s three times GDP growth. Credit growth in the last couple of years has been 3%. It’s not going to go back up to those sorts of levels, it’s going to remain at around GDP level.”

COMMENTS

  • by Maria Rigoni 8/07/2013 12:43:40 PM

    How right this "appropriately" paid bank executive is... "the GFC is enormous in its impact. Any financial crisis has a long-run impact. We’ve probably got a few more years of real volatility to weather."
    ...meanwhile the Australian taxpayer who bailed the Big 4 out during the GFC and who continue to underwrite the most uncompetitive, concentrated and highly profitable banks in the world are treated as a money grab.
    Let's reflect for a minute on commission cuts, culling of accreditation, channel conflict, segregation of brokers based on volume of business introduced, deteriorated service levels, having a branding strategy 'so people who don't like us can bank with us thinking we are someone else', holding back interest cuts, margin creep, crying poor when profits are increasing, staff performance measured by 'every customer must have 4 products' rules... etc...
    The banking system is a money management mechanism that cannot operate without people using it. Modern society and technology gives us little chance of not using it.
    There is valid momentum of anger and dissatisfaction with how the dominant banks in this country use their dominant power and it is time we collectively insist that their behaviour changes!