Australian banks Australian interest rates

Moody’s: Bank rate hikes a credit positive (lol)

Tuesday 11 September 2018

Boy this is dumb:

On September 6, the Australia and New Zealand Banking Group (ANZ, Aa3/Aa3 stable, a2) and the Commonwealth Bank of Australia (CBA, Aa3/Aa3 stable, a2) raised their home loan rates by 16 and 15 basis points respectively, following a similar move by Westpac Banking Corporation (WBC, Aa3/Aa2 stable, a2), which raised its rates by 14 basis points on 29 August.

The increases in home loan rates are credit positive for Australia’s major banks, which include ANZ, CBA, the National Australia Bank (NAB, Aa3/Aa3 stable, a2) and WBC, because they underline the strong pricing power of the banks, which is a key factor supporting their profitability. These interest rate rises will help mitigate the negative effects of rising wholesale funding costs, slower credit growth, and higher regulatory and compliance costs.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.