ANZ Enjoys Bonanza From Delayed Cuts

Because ANZ has delayed passing the cuts to its customers, the bank has enjoyed as much as $100 million from its borrowers.

ANZ is the last one from the big four banks to pass on the rate cut done by the Reserve Bank. On Friday, it reduced the standard variable rate by some 0.20 percentage points to bring it to 6.4 percent. ANZ’s move has now matched the rate cuts from the other banks.

ANZ has previously announced that any interest rate change would be reviewed until the second Friday of the month. The bank has implemented the move in an effort to break the preconceived notion that there is a link between the official cash rate and mortgage rates.

As a result, this would delay passing on the cuts to customers.

Industry analysts said the ANZ’s delay in passing on the rate cuts has given the bank some $111 million in extra money. Scott Manning said ANZ earns about $2 million every day that it delays the passing of the rate cut. Manning is an analyst from JPMorgan.

This month, ANZ delayed the passing on of the cut by 17 days. ANZ is estimated to have raked in about $25 million as extra income.

ANZ Australia chief executive Philip Chronican said the delay is because of the high funding costs. He added that the bank wants to balance the need to provide customers a more competitive mortgage and recognizing that there are uncertainties with the fiscal situation in Europe and the US.