Commonwealth Bank boss Matt Comyn defends rate cuts call

CBA boss says RBA’s rate cuts haven’t lifted confidence, defending his bank’s decision not to pass them on in full.

Commonwealth Bank CEO Matt Comyn Picture: AAP

CBA chief executive Matt Comyn has defended the bank’s decision not to pass on rate cuts in full to borrowers, while saying recent Reserve Bank cuts had “not helped confidence”.

Mr Comyn on Monday night told customers at a forum in Brisbane that the lender valued loyalty and was “very conscious” about being competitive in the market. “Put simply, one of the things we try to do is make the right decisions across different groups of customers, in particular between borrowers and savers, who have different needs,” Mr Comyn told the forum.

“The cash rate has come down 75 basis points. If you have an interest-only mortgage, 75 basis points have been passed on. The lowest reduction for an owner-occupier would have been 57 points. Part of [the reason for not passing on in full] is we look at our deposit customers and say, well what’s the most appropriate action?’.”

Mr Comyn poured cold water on the prospect of another Reserve Bank cut on Tuesday.

“I think it’s extremely unlikely [that we’ll see a rate cut on Tuesday],” he said.

“I don’t have any other insights from anyone else. That said, retail sales were weaker than many had anticipated. Our view is there’ll be one more rate cut, in February next year.

“I think three rate cuts in quick succession has not helped confidence. I hear that from retail and business customers around the country. The cash rate coming down isn’t necessarily improving sentiment. I suspect they won’t cut the cash rate in November and December but unless things start to accelerate there’ll be more pressure on the RBA to stimulate demand in the economy.”

Fielding questions on the issue of loyalty, Mr Comyn said it was a challenge for banking as well as every other industry.

“People want to make sure that if you’re a longstanding loyal customer that you’re not disadvantaged,” he said. “We think about that a lot … of course there’s a lot of competition in the market, we want to make sure we’re offering some of our best pricing, great service, and loyalty in lots of different ways to our existing customers.’’

Mr Comyn last month defended the bank’s practice of offering new customers lower rates while failing to pass them on to existing customers.

The so-called “loyalty tax” is due to be examined by the Australian Competition & Consumer Commission as part of an inquiry ordered by the federal government that will also look at lenders’ failure to fully pass on rate cuts.