Lending rates unchanged
Bendigo and Adelaide Bank’s residential variable home loan rate remains unchanged at 5.90% p.a. following this week’s Reserve Bank decision to reduce official cash rates.
Managing Director Rob Hunt said that due to the global financial crisis, the bank’s funding costs were not reducing at the same rate as official cash rates.
“Throughout this crisis, we have absorbed a substantial portion of the increased funding costs,” Mr Hunt said.
“To this point, we have passed on the majority of official rate cuts to our home loan borrowers, but we have responsibilities to all stakeholders, including our shareholders.
“While we are always keen to provide relief to customers – and borrowers to date have received reductions of almost four per cent – our current funding costs preclude us from doing more for them at the moment.”
Mr Hunt said the price of all funding sources had increased significantly as a result of the crisis, resulting in a big impact on funding costs for all banks globally.
“That impact on Bendigo and Adelaide was detailed in our announcement to the stock exchange on Monday, when we foreshadowed an expected decrease in our 2009 profit of 20 to 25 per cent.”
The bank’s funding options did not include access to government-guaranteed term wholesale funding.
“Using the guarantee is not economic for Bendigo and Adelaide, given it would cost us more than double the price charged to major banks,” Mr Hunt said.