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Commonwealth won't commit to rate parity

13/11/2009

By Robert Carry

Commonwealth Bank chief executive Ralph Norris has declined to commit the firm to keeping its interest rates on par with Reserve Bank of Australia (RBA) movements.

Speaking at the company's annual general meeting in Perth this week, Norris said, "I can't rule that out and it is dependent on what the cost of funding is, and that's obviously based around the cost of retail funding and also the cost of wholesale and international funding."

Norris said that in his view further interest rate hikes were to be expected and that the cash rate could hit 4.5% in the next 12 months.

He predicted that the coming year was likely to be a challenging one for the institution. "In this environment, we will maintain our conservative approach to capital funding, liquidity and provisioning," he added.

"At the same time, we recognise that we are well placed to continue to strengthen our business franchise, and improve our financial performance and returns to you, our shareholders," he said.

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