EMBATTLED small business today received some joy with the Australia and New Zealand Banking Group (ANZ) approving a 25 basis-point cut to its lending rates.
The interest rate reduction, which passes on the full amount of this week’s Reserve Bank (RBA) cut, will save around $6.25 a week on the average $130,000 small business loan.
The ANZ’s variable home loan interest rate will also drop by 25 basis-points to 6.90 per cent, saving $13.50 a week on the average $280,000 home loan.
The ASX-listed bank says passing on the RBA’s cut in full was “the right decision’’.
“While deposit customers are receiving very competitive deposit rates, many of our borrowing customers are under pressure from a range of other costs,” says ANZ CEO Philip Chronican (pictured) in a statement released today.
“We felt that reducing interest rates by 0.25 per cent for home borrowers and for small business was the right decision in these circumstances.”
The ANZ move puts pressure on the other major banks – Commonwealth and NAB – to pass on the full RBA reduction.
Westpac Banking Corporation has responded by cutting its variable lending rate by 20 basis-points to 6.89 per cent.
Bank of Queensland earlier this week announced a 20 basis-point cut to its lending rates.
ANZ says many of its customers have not directly benefited from the booming resources sector and blames its high funding costs on the European Union’s deteriorating economy and increased competition for deposits.
“Although we need to be realistic about funding costs and the challenges the global economic situation is presenting, ANZ also needs to absorb its share of the burden,” says Chronican.
“Hopefully this decision will help relieve some of the pressures that we know homeowners and small businesses are facing at present.”
ANZ shares today fell slightly to $21.45 per unit.
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