Banks Do Not Pass Rate Cuts to Consumer

Even though the government has encouraged banks to pass on the rate cuts to their consumers, ANZ and Westpac are still slow to do so.

A JPMorgan analyst said a bank stands to earn as much as $2 million every day that it does not pass on the rate cuts to their consumers. Scott Manning said ANZ stands to earn some $25 million as the bank dilly-dallies while Westpack would rake in some $28 million.

When combined, Westpac and ANZ can rake in as much as $53 million.

Traditionall, it takes ANZ seven days because it passes the lower rate cut to its customers. The delay means it would take 17 days before borrowers feel the benefit of the rate cut.

ANZ announced that it would states its position on the interest rate cut this Friday.

The National Australia Bank and Commonwealth Bank have already passed on the rate cut to their customers. The implementation was done six days after the rate cut was announcement. Even if the two were the quickest, they earned as much as $14 million in interest income.

Bendigo Bank is the slowest to pass on the rate cut at 20 days.