Westpac CEO Hartzer: AAA rating critical to economy

Westpac has urged the government to prioritise the nation’s AAA credit rating.

Westpac chief executive Brian Hartzer in Sydney yesterday.

Brian Hartzer has called on the government to prioritise the ­nation’s AAA credit rating, warning funding from offshore was critical to the economy and any downgrade would lead to higher borrowing costs.

“The Australian credit rating is important; it is an overall assessment of the economy and it does play into funding costs,” the Westpac chief executive said after reporting a weaker than expected 3 per cent rise in first-half profit for the bank to $3.9 billion.

“It’s important as a small diversified open economy (that) Australia has a high credit rating that allows us to continue to access funding, which allows us to continue to grow and lend in our own economy.”

Amid intense political scrutiny on the banks, Mr Hartzer declined to comment on what Westpac “may or may not do” with mortgage rates if the Reserve Bank today cuts the official cash rate.

Such a move by the RBA would pile pressure on the banks at a time of declining shareholder returns but also a backlash following repeated wrongdoing across their fin­ancial planning, life insurance and trading arms. Last year, the banks lifted mortgage rates when regulatory changes blunted their profits, but analysts believe the public scrutiny may limit their ability to use the same playbook.

While not singling out specific budget measures, Mr Hartzer said he would support “anything that helps grow the economy” and encouraged businesses to invest and create employment.

“The main thing is confidence and the underlying macro features of the economy are still pretty strong: unemployment has been falling, interest rates are low, energy prices have come down, commodity prices have gone up,” he said.

“So there’s an underlying momentum there ... but the other aspect of confidence is certainty and continuity ... what our customers are saying is they see opportunities to invest but they want some level of certainty about the policy framework.”