This morning Crikey received the below internal memo from Commonwealth Bank CEO Ralph Norris sent to Commonwealth employees. We received this from an anonymous tipster:
From: Chief Executive
Sent: Friday, 5 November 2010 10:55 AM
To: All Bank Staff
Subject: Message from CEO Ralph Norris (5 November 2010)
A message from Ralph Norris
I have been in China this week on a planned visit to meet with leaders of our partner banks. However, I wanted to write to you as I know for many people this has been a very difficult week dealing with customers who have expressed concern at our announced increase in interest rates.
These decisions are always difficult to make, as we need to achieve the right balance between the interests of our borrowers, depositors and shareholders. Since the Global Financial Crisis began our total funding costs have increased by 1.35 per cent above the Reserve Bank of Australia cash rate. It is important to note that throughout the crisis we have supported customers with home loan lending rates that have been either at the lowest or second lowest level in the Australian market.
We have continued to absorb a significant proportion of the increased costs and have held off for several months in adjusting our lending interest rates as our cost of funding has continued to rise. Even with this increase our retail lending rate margins are still lower than they were going into the crisis as we have absorbed the additional costs, and will continue to do so.
The alternative to making these changes would mean that we would have to seriously look at other options to reduce costs, such as curtailing services. I don’t believe our customers would want us to reduce our services, which have significantly contributed to our tremendous progress on customer satisfaction measures in recent years.
All of us have friends and relatives who are affected by these interest rate changes and it is important to let them know that the Bank is endeavouring to balance the interests of its stakeholders. I also realise that you, as employees of the Group, are affected.
You can be assured that this decision was not taken lightly and if there had been any way to avoid lifting our lending rates I would have taken it. Again, thank you for the effort you have given in what has been a very difficult week.