Financial Schools Reviews

Gail Kelly, chief executive of Australian banking major Westpac, has promised the lenders mortgage borrowers that the bank will not exceed official hikes in interest rates initiated by the Reserve Bank of Australia this year.

On Wednesday, the lender posted impressive growth in its first half profits, which grew 32 per cent to $2.88 billion, a record for the lender.

The record profits growth forced Mrs. Kelly to defend Westpac and the broader financial services sector from a growing chorus of voices which argue that the governments super profit tax of the resources sector also be applied to the major banks, which between them will earn a combined $20 billion this year.

Late last year Westpac was the subject of intense criticism by the Prime Minister Kevin Rudd, and Federal Treasurer Wayne Swan, after the lender increased its variable mortgage rates by 45 basis points, nearly 20 basis points in excess of the 25 basis point hike in official interest rates enacted by the central bank.

At the time Westpac blamed the increase on higher funding costs, an argument that at the time was rejected by Treasurer Wayne Swan.

Westpac has the highest mortgage lending rate amongst the Big Four lenders at 7.41 per cent.

On Wednesday Mrs. Kelly said Westpac had lengthened the maturity of its funding, and added that competition for retail deposits has somewhat eased recently resulting in a reduction in the risk of Westpac increasing rates outside of RBA moves.

“It’s not on our agenda to increase our mortgage prices over and above what the RBA may do.”

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