Westpac trying to balance margins
(15 December 2011 — Australia) Westpac chief executive Gail Kelly has warned that the bank may not be able to pass on further rate cuts to customers in the months ahead.
Kelly said the crisis in Europe had slowed growth and made consumers and businesses more cautious, while higher funding costs are pressuring margins which need to be balanced.
She said there had been good growth in customer deposits in the early part of the bank’s fiscal 2012 year, but continued global uncertainty was producing a drag on its revenue from the markets and treasury unit. This included the negative revaluation of Westpac’s liquid assets.
'Higher funding costs are a reality of this environment and are continuing to place pressure on interest margins,' Kelly said.
Kelly hinted that Westpac may not pass on future Reserve Bank interest rate cuts to borrowers in full.
'We are mindful of the impacts of interest rate decision on customers but these must be balanced with what is economically responsible.'
She said there had been good growth in customer deposits in the early part of the bank’s fiscal 2012 year, but continued global uncertainty was producing a drag on its revenue from the markets and treasury unit. This included the negative revaluation of Westpac’s liquid assets.
'Higher funding costs are a reality of this environment and are continuing to place pressure on interest margins,' Kelly said.
Kelly hinted that Westpac may not pass on future Reserve Bank interest rate cuts to borrowers in full.
'We are mindful of the impacts of interest rate decision on customers but these must be balanced with what is economically responsible.'
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