SYDNEY, June 4 (Reuters) - Australia and New Zealand Banking Group on Tuesday resisted government pressure to pass on a central bank rate cut in full, drawing a rebuke from the treasurer.
As expected, the Reserve Bank of Australia (RBA) lowered the policy rate by 25 basis points, the first easing in three years to support an economy forecast to grow at its slowest pace in a decade.
ANZ, the country’s third-largest lender, followed soon after by cutting its standard mortgage rate by 18 basis points, prompting Treasurer Josh Frydenberg to accuse ANZ of putting “profits before people. The treasurer, who plays a key role in economic policymaking of the government, said ANZ was ignoring a year-long public inquiry into the finance sector which in February found a culture of rampant fee-gouging and profiteering.
“The ANZ has let down its customers,” Frydenberg told reporters in Melbourne.
“After what they’ve been through with the Royal Commission you would expect that the banks were more sensitive to the Australian consumers, to their own customers’ concerns.”
ANZ said in a statement it made its decision after weighing customer benefits against its business profitability.
“While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with the most competitive lending and deposit rates possible.”
Commonwealth Bank, the country’s largest lender, and National Australia Bank, the smallest of the four, said they would lower mortgage rates for its customers by 25 basis points from June 25 and June 17, respectively.
Representatives from Westpac Banking Corp were not immediately available for comment.
Australian bank margins have been under pressure due to low credit growth on top of about A$8 billion in regulatory and remediation costs stemming from the Royal Commission inquiry.
“I have made it very clear to the banks that the public have a legitimate expectation that they will see the full benefits of rate cuts such as announced by the RBA today,” Frydenberg said.
“I’m very disappointed in the decision by the ANZ.”
ANZ shares closed up 0.8% and CBA shares closed up 0.65%, compared to a broader market rise of 0.2%. (Reporting by Paulina Durana and Byron Kaye; Editing by Shri Navaratnam)