Westpac bank's CEO Gail Kelly promises to pass on savings as rate cut

WESTPAC boss promises to lower rates independent of the Reserve Bank towards the end of 2012.

Gail Kelly, CEO of Westpac Banking Corporation

WESTPAC bank's CEO Gail Kelly has promised to lower rates independent of the Reserve Bank when funding cost fall towards the end of 2012.

Ms Kelly told ABC television last night she failed to convey Westpac's "absolutely explainable" decision to lift its interest rates above the increase announced by the RBA in December 2009.

"I didn't do nearly a good enough job of getting out there personally to explain the factors," she said, referring to increased borrowing costs in the financial crisis.

Those costs are expected to "plateau" towards the end of 2012, Ms Kelly says, and will likely result in Westpac's interest rates lowered beyond the RBA settings.

"There's no question that we will be passing benefit (including interest rates) on to customers."

A softer year

Ms Kelly expects the Reserve Bank of Australia (RBA) to leave the official cash rate on hold for the first half of 2011.

Westpac's chief economist Bill Evans is predicting the central bank will lift the current rate by 0.25 percentage points just once in 2011, during the September quarter, Ms Kelly says.

"I think we can see them (interest rates) on hold for a while," she said, noting the current rate of 4.75 per cent.