National Australia Bank shares eased 0.8% as shareholders reacted cautiously to the news that the bank will not follow rivals in hiking its home loan interest rates in the wake of moves by Westpac, the Commonwealth, and ANZ.
The shares ended down at $27.64 as the bank justified the decision by saying it is designed to win back customers’ trust.
NAB said it would be keeping its standard variable home loan rate on hold at 5.24 percent.
“We are listening and acting differently. We need to rebuild the trust of our customers, and by holding our NAB standard variable rate longer, we help our customers for longer,” the chief executive of NAB, Andrew Thorburn, said.
“By focusing more on our customers, we build trust and advocacy, and this creates a more sustainable business.”
The NAB did not give a commitment on how long it would keep the interest rate unchanged.
Mr. Thorburn said the bank would keep an eye on funding costs, which have risen over the course of 2018, causing almost all other Australian banks to announce higher interest rates on mortgages.
Analysts have estimated NAB would gain about $200 million if it followed Westpac, which was the first of the big four to hike rates in this round of “out-of-cycle” interest rate increases.
NAB said yesterday that if it had decided the raise interest rates by 0.15 percentage points, the monthly repayments on a $300,000 loan would have lifted by $28, or by $47 a month for a $500,000 loan.
Back in 2011 NAB CEO Cameron Clyne vowed to “break up” with the other big four banks, by scrapping a series of unpopular fees and vowing to offer the cheapest mortgage rates of the big four.
But that burst of competition seemed to fade in the intervening years until this year as the banks, including NAB came under intense pressure at the financial services royal commission.
