Westpac Banking Corporation
(ASX:WBC) CEO Gail Kelly has defended the bank’s decision to increase rates by 45 basis points, nearly double the RBA’s 25 basis point rise to the Official Cash Rate.
Ms Kelly told investors and the media at an update yesterday that politicians understand this new environment of rising average bank funding costs.
According to The Australian Westpac’s head of retail and business banking Peter Hanlon put the move into a wider context saying the bank does not have a price-leading strategy, and that Westpac is not the Jetstar of banking.
Mr Hanlon says that 70% of Westpac’s customers bought on service and only 30% on price.
The bank has therefore been able to increase its home-lending book by double the rate of the wider banking system the paper says, despite charging an average of 17 basis points more than its competitors this year.
Ms Kelly says she expects funding pressures to continue for some time to come as a result of rising costs of deposits and term-debt rollovers at significantly higher prices than before the GFC.
Westpac reported net profit after tax of $3.4 billion for fiscal 2009.
