Full marks to Thorburn for putting customers first by holding rates steady as rivals hike

NAB CEO Andrew Thorburn is betting that down the line his numbers may look better because he leaned towards customers.

04/07/18 NAB CEO Andrew Thorburn during a panel discussion at the Australian-British Chamber of Commerce in Melbourne. Aaron Francis/The Australian

Andrew “battery man” Thorburn has put on an all singing and dancing show to draw a line in the sand around home loan rates which has the potential to actually change customer attitudes to the banks.

The NAB chief rightly noted one action alone will not do the trick but can also rightly be said to be amassing a tidy package of pro-customer reforms.

At the same time, Thorburn has landed in court to answer a writ from ASIC against alleged false and misleading statements by MLC and of course the royal commission rolls on.

The new Prime Minister Scott Morrison when asked last year about the impact of a levy on bank earnings responded “cry me a river for the big banks.”

In short NAB and the other banks are not exactly flavour of the month on main street or in Canberra.

NAB is keeping its Standard Variable Rate for home loans on hold. Because we know that by holding our rates for longer, we’re helping our customers more. pic.twitter.com/jIzh3U4Cek

— Andrew Thorburn (@AndrewThorburn) September 9, 2018

The kneejerk reaction to Thorburn’s move was it was a typical PR based move from NAB.

At 5.24 per cent NAB has the lowest home loan in the market, a full 12 basis points below ANZ and 14 points below Westpac which is charging 5.38 per cent.

Funding costs are real and Westpac claimed their increase had cost it $400 million so, rather than bend a little to help customers, its chief Brian Hartzer opted to protect his profit.

NAB booked a return on equity of 11.4 per cent in the last half with a profit of $2.6 billion and Thorburn has decided he can wear an additional $150m or so in costs.

Cross town rival ANZ did the exact opposite and actually lifted rates by more than the funding costs to boost its bottom line.

Bragging time for the banks is when they report their financial numbers and clearly, come September, Thorburn will not look as smart as the other banks.

But the real test is over a long longer term and full marks to Thorburn for actually bending towards his customers touch.

The other banks might say NAB was taking such a hiding before the regulators it had no choice but that is wrong.

The big bank lemming theory dictated he just follow Brian Hartzer, Shayne Elliott et al to make his bottom line look better.

Thorburn did something different, took a risk and is betting not this results but maybe his numbers in two years time look better because he has shown himself as being more attuned to his customers than his rivals.

That of course depends on the bank’s behaviour in other areas.

Lets hope the batteryman sticks to his high risk strategy.