Evans talks rates for Westpac

Other banks really need to follow Westpac and lift their own interest rates in a manner consistent with that of the price leader, or that appears to be the theme of the bank's defence of its home loan pricing policy at the bank's annual meeting in Melbourne yesterday.

Ted Evans, the bank's chair, took on the task of explaining the bank's decision to raise home loan margins by 20 basis points more than the recent rise in the RBA cash rate.

"With interest rates now clearly on the rise again, both at home and abroad, there are limits to how long we could absorb these costs without weakening our bank, the Australian financial system and hence the Australian economy," he said.

Increased funding costs, at least for Westpac, "have been extended by our desire to be open for business throughout the crisis and hence continue to serve customers by growing our loan book."

Taking a chip at rivals, he said that "not all our competitors were as active".

Evans also portrayed a reluctance to lift margins on home loans in line with cost of funds as "subsidies" paid for by other classes of borrowers, such as business and developers.