General News
2 June, 2023
Bank cuts interest rates
This is not a FAKE headline – Cairns Bank axes lending costs
CAIRNS Bank – the people’s bank – has cut interest rates in a bid to help their customers who are ‘hurting’ because of cost-of-living pressures.
When the Reserve Bank of Australia (RBA) increased rates by .25 per cent to 3.85 per cent on May 2, Cairns Bank reduced their residential home rate on loans from 7.5 per cent to 6.99 per cent or by .51 per cent.
Earlier, in March, when the RBA upped the rate again by .25 per cent, Cairns Bank kept their figure at 7.5 per cent.
Cairns Bank chief executive officer Peter Phillips said their customers were hurting because of the increased costs of living.
“When the RBA increased it again by .25 per cent we asked ourselves what can we do to look after our customers,” he said
“We’re not about rates, we are about looking after our customers.
“This is going to hurt us too, on our profits, but we are focused on our customers,” he said.
“It will come off our bottom line. We won’t be making as much profit but this is about investing in our customers.”
Mr Phillips said the bank’s variable rate was 7.5 per cent when most others were around the 8 per cent mark and the fixed rate was between 5.5 and 5.75 per cent, about the same as other banks.
But he said as far as he was aware Cairns Bank was the only financial institute to reduce its loan rates.
Mr Phillips said he believed the RBA would continue to increase rates but the bank could absorb another .5 per cent in rises.
“By our customers not having to increase their repayments they can buy groceries and handle rising energy costs.”
He said the bank was considering other ways to help their customers as well.
Cairns Bank is owned by the people of the region and was established in 1899.
A ‘good year’ for bank
Net profit increases despite the challenges of interest rate rises
LAST year Cairns Bank’s business grew despite the economic challenges and interest rate rises.
According to the annual report, 2022 was “another good year for Cairns Bank”.
“Total loans grew by 12 per cent to $77.8 million over the last 12 months and net profit after tax was $257,907 for the year ended June 30, 2022, compared to $209,002 for the year ended June 30, 2021,” said chairman Michael Wenzel and chief executive officer Peter Phillips.
“We have evolved as a business and got used to the ‘new normal’ following two years which have been heavily impacted by COVID-19 and its ongoing effects,” they said in the annual report.
“Since our last report, we have moved into a vastly different economic environment from that 12 months ago.
“Inflation rates are rising each month to numbers not seen for over 40 years and interest rates are increasing for the first time in over 10 years.
“We had a change in federal government which will undoubtedly bring more changes and every business seems to be short-staffed or can’t get supplies.
“As the Australian Reserve Bank and its counterparts around the world are raising cash rates in an attempt to curb inflation, we all need to get used to this and the impact it will have.
“At Cairns Bank, we continue to offer the best rates we can to both our lending and deposit customers.”
Mr Wenzel and Mr Phillips said one of the key achievements for Cairns Bank during the year was new software to enable the bank to be compliant with the government’s open banking laws.
“Open banking was introduced as part of the government’s strategy to enhance competition within a number of industries,” they said.
“Over time this is expected to bring new technology to customers making it simpler for those who want to deal in an on-line environment rather than through human contact.
“We also introduced an electronic solution that now assists borrowers in getting their loan documents to us in a secure online environment.
“The feedback we have received is that this has made life a great deal simpler for our borrowing customers (and we still have the paper-based solution for those who find this easier).
“Interest rate movements and the consequential impact on our customers and on our business will be a key focus for the next 12 months.
“The challenge is that with multiple and regular interest rate changes, Cairns Bank needs to ensure we have the right balance and banking solutions for our lending customers, our deposit customers as well as Cairns Bank.
“Whilst we know many people prefer to have no contact with their bank, we also know that many of our customers do.
“We therefore will continue to focus on our face-to-face approach and providing excellent customer service to set us apart from other banks.
“We will also continue to work on our strategic goal of providing simple, straightforward solutions to meet our customers’ needs.”
