Bendigo Bank to cut loan interest rates after ‘careful evaluation’ following RBA decision

Bendigo Bank has passed on the latest interest rate cut, but it won’t take effect until the end of March.

Bendigo Bank will cut variable rates by 0.25 of a per cent on its home loans, small business loans and overdraft products, but not until March 27. Picture: AAP

Bendigo and Adelaide Bank has passed on the latest interest rate cut, but it won’t take effect until the end of March.

The tier-two lender announced on Friday it would cut variable rates by 0.25 of a per cent on its home loans, small business loans and overdraft products, but not until March 27.

The move comes three days after major banks and other lenders on Tuesday reduced variable rates following the Reserve Bank of Australia board’s decision to drop the official cash rate by 25 basis points to a record low 0.5 per cent.

Westpac and Commonwealth Bank moved within minutes of the RBA’s announcement to implement the full cut to take effect on March 17 and March 24 respectively. ANZ and NAB rates will drop from March 13.

Bendigo Bank managing director Marnie Baker said the delayed response was because the bank had “carefully” evaluated what the impact of a rate cut would mean for its operations.

“In an environment experiencing historically low rates, we have carefully evaluated our responsibility to borrowers and communities with the impact lower rates have on depositors, our business performance and all other stakeholders,” Ms Baker said.

Earlier in the week, Macquarie analysts forecast Bendigo Bank would feel a greater impact from the rate cut compared to other banks, likely to see an aggregate decline in earnings by about 9 per cent.

Bank of Queensland and RACQ defied the federal government’s pleas for lenders to pass on the Reserve Bank’s latest rate cut in its entirety, as a spate of second-tier banks joined the big four in giving borrowers a 25 basis point reduction.

The RBA’s latest rate cut - the fourth 25 basis point drop since June last year - saw the major banks’ share prices punished on Wednesday, as investors fretted about a worsening outlook for earnings, based largely on the pressure lower official rates put on net interest margins, which are what banks earn on loans less funding and other costs.