The major lender was the first of the big four to pull the trigger on its own cut, less than after the RBA announced it would slash the official rates to 1.25 per cent on Tuesday afternoon.
ANZ retail boss Mark Hand acknowledged that many borrowers would have hoped to benefit from the full cut, but said the bank also had other considerations.
The bank’s net interest margin — the difference between interest charged on a loan and that paid to fund it — has been squeezed in recent times.
“In making this decision we have weighed up a number of factors, such as business performance, market conditions and the impact on our customers, including our depositors,” Mr Hand said.
“While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with the most competitive lending and deposit rates possible.”
ANZ’s standard variable rate for owner-occupier principal-and-interest loans will fall to 5.18 per cent, with the interest-only rate coming down to 5.91 per cent.
Treasurer Josh Frydenberg condemned the bank’s decision to only partly pass on the cuts.
“We heard from Commissioner Hayne just months ago that the banks were putting profits before people,” he told reporters shortly after the move was announced.
“Actions like this don’t give the Australian people any comfort that the banks have changed their behaviour.”
MORE TO COME
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