Damien Walsh Managing Director
As a customer owned bank, we return profits to customers in the form of better rates and fees while also retaining some funds to invest in the ongoing development of the bank. Getting this balance right involves us sharing value among customers who are depositors and those who are borrowers.
Our loans are almost entirely funded by our customers’ deposits. This means that when we move interest rates on loans, we also move them on deposits to ensure we can continue to manage our margin and remain profitable.
In response to the most recent Reserve Bank of Australia decision to cut the official cash rate 25 bps we reviewed all our lending and deposit products and reduced our standard variable home loan interest rate by 10 basis points. Doing so meant that the interest rate remained more competitive than comparable products offered by the major banks. It also meant we only had to reduce interest rates on deposit products by 10 basis points.
I know that media coverage of interest rate cuts tends to put more focus on what they mean for borrowers and this is understandable as many families work very hard to pay off their mortgage. However in this record low interest rate environment, we also have a responsibility to our customers who rely on income from their savings and investments.
We will always do our best to offer highly competitive rates to all customers who own an equal share of the bank.
To keep us accountable on this commitment the bank has commissioned Canstar since 2003 to conduct an independent valuation of the benefit of our competitive pricing provided to all customers compared to the average of the four major banks. At 31 December 2015, our customers were collectively $25 million better off by banking with us because of our competitive rates and fees.
How this value is shared amongst customers differs over time. Recently, we have focused heavily on offering very competitive home loan rates, which has meant that a greater share of the benefits customers receive by banking with us has gone to borrowers.
This time round passing on part of the latest Reserve Bank interest rate cut to both borrowers and depositors has meant our borrowers and depositors enjoy highly competitive interest rates and so share the benefit we create as a customer owned bank.