Michael McGrath kicks off ( Great, I thought he would be at the Banking Inquiry)
Most people understand that a variable rate will vary in line with market conditions.
You have 140,000 or so variable rates.
You are not the worst offender - you have cut your rates for new customers as well.
Your cost of funds? It's now 1.57%
How is this calculated
63% comes from deposits
Mark Bourke CFO
€50 billion 1.3%
other debts 3.5b
sub debt 18.6 b
We lend at 1.33% (?) 20% of that would be
McGrath: What was the Net Interest Margin on SVRs
Bourke: WE don't break it down
McGrath: So it's low for trackers and high for SVRs?
Bourke: waffles
McGrath : How many SVR accounts do you have:
Bourke: 52% of our book 135,000 in total - homes and buy to lets
McGrath: If present trends continue, will there be downward pressure on mortgage rates
Duffy: If they come down, we will be able to pass on the benefit within the next month or two
McGrath: Why is the level of switchers so low?
Bernard Byrne: WE want to be fair to all our customers. It's easy to put up a good rate to attract new customers. That is not our policy.
Deputy Michael McGrath:
Why is the level of switcher mortgages so low or "minimal" as the bank described it? We need a market in which banks try to persuade customers of other banks to switch their mortgage to them. This is how one creates dynamism and competition in the banking system.
Mr. Bernard Byrne: One of the key issues for us is to ensure we build a sustainable model. Encouraging switcher activity at the front end through very cheap forward rates is not where we want to be at. One of the driving forces behind the change we made in December was to make sure we benefited front book and back book customers. The change meant our existing customer base got the benefit of the reduction. That philosophy is one we will take into anything else we do from a pricing point of view in order that we are fair to the entire customer base. It is much easier to put out an attractive rate in the front of the market and not suffer the cost into the back book. Our view is that we should try to be fair to all our customers, whether they have been with us for a long time or just about to come to us, so that the customer will know what he or she will get. In regard to switcher activity, our objective is to make sure that people know what they will get. It is a choice as to whether the customer moves to us or not. We are very open to it