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NAB CEO defends slim mortgage rate cut

AAP logoAAP 4/08/2016

NAB chief executive Andrew Thorburn will tell a parliamentary committee that his bank had to balance the needs of borrowers, savers, investors and shareholders when it decided not to pass on in full the Reserve Bank's latest rate cut.

Mr Thorburn said on Thursday he will accept an invitation to address the committee after Prime Minister Malcolm Turnbull announced that the banks will be called on once a year to give a full account of their dealings, including interest rate policy.

"The setting of interest rates requires this delicate balance because different stakeholders have different needs," Mr Thorburn said in a statement.

"We set a rate for mortgage customers that reflected the balance between all our stakeholders. If we don't get this right, it is inevitable we will lose business, and become a less competitive bank."

NAB's rate cut in the wake of the Reserve Bank's decision was the smallest of all the big four lenders.

While the Reserve Bank cut the cash rate by 0.25 per cent to a new record low of 1.5 per cent, NAB will cut its standard variable rate for owner occupiers by 0.10 per cent, ANZ by 0.12, Commonwealth Bank 0.13 and Westpac 0.14.

The banks say their margins are under pressure from a competitive home loan market, tightened capital requirements and wholesale funding costs.

"The decisions we are making every day are done in the context of an uncertain international economic environment, in a highly competitive marketplace, where the bank is subject to significant regulation and where there is major transparency of our operations," Mr Thorburn said.

"There are a lot of people who rely on us getting the balance of these decisions right, including our 35,000 staff."

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