Westpac’s chief executive officer Gail Kelly has defended the bank’s decision to increase its variable mortgage rate by 0.45 per cent.
Speaking at a media and investor update yesterday, Ms Kelly said rising funding costs were the sole reason behind the bank’s decision to move above the RBA.
Ms Kelly reiterated her firm view that there is a “new normal” in banking following the onslaught of the global financial crisis.
“Everyone will be required to pay a higher cost for debt, including companies, individuals and the banks themselves.”
Ms Kelly said additional costs would also arise from planned regulatory changes, requiring banks to hold larger liquidity and capital buffers to enable them to absorb future shocks.
Peter Hanlon, who was, until an internal reshuffle yesterday, the bank’s head of retail and business banking, also defended Westpac’s decision to raise rates.
“We don’t have a price-leading strategy; we’re not the Jetstar of banking,” he said.
Mr Hanlon will now take on the newly created role of group executive, people and transformation.
Rob Coombe will step into the role of head of retail and business banking.