Westpac chief executive Gail Kelly says the average cost of funding will continue to rise, putting further pressure on lenders.
Addressing a media conference on Wednesday, following Westpac’s full-year earnings announcement, Kelly said pressure would also come from higher deposit rates as banks compete to keep customer savings.
“We’re paying more for deposits because they’re such a valuable asset for our customers and for us,” she said.
Westpac projected that, if everything stays at current levels, the average cost of funding will continue to rise from about the current 50 basis points to almost 80 basis points in two years.
Chief financial officer Phil Coffey said the rate of increase would slow if the marginal cost of funding fell further in coming months, meaning banks may be forced to raise interest rates above the RBA.
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