Westpac Bank Criticised for Offering Lower Interest Rate for EV Loans

One of Australia’s big four banks has faced criticism for favouring electric vehicle (EV) owners with its lending policy.
At a recent inquiry hearing, Liberal MP Garth Hamilton, the deputy chair of the Standing Committee on Economics, questioned Westpac bank’s representatives about its lower interest rates for EV and hybrid car loans.
According to the MP, Westpac currently offers EV owners a favourable rate of 5.99 percent per year compared to 6.49 to 12.99 percent for a standard car loan.
“Is this a product of your ESG (environmental, social, and governance) policy? Where does a product like this come from?” Hamilton asked.
In response, Westpac CEO Peter King said the bank’s EV car loans were not an ESG product.
“I wouldn’t say ESG, but we think that climate change is a big deal,” he said.
“It’s going to increasingly cost the population through weather events, and we need to assist the transition.”
The CEO also noted that while the EV uptake from the loan program was okay, it was slower than what the bank had expected.
King said one of the reasons was that it took much longer for charging stations to be rolled out.
“The local grids just don’t have the capacity for the charging stations. So I think it’s been slower than what we thought,” he said.
“Under this program, in a cost of living crisis, you offer a discount to people who can afford a Rolls Royce, but not a discount to people who need a Hilux,” he said.
“Now, the cost of living is number one. This policy is a bit a bit warped. It’s very out of touch.
“This is not in line with most people’s concerns right now.”
King responded that EV loans were not “a big product” and that Westpac was actually focused on the cost of living.
Pointing to Westpac’s $500 billion (US$338 billion) mortgage portfolio, the CEO said it accounted for two-thirds of the bank’s loan book.
In addition, King said Westpac had competed to offer lower interest rates to homebuyers in the most recent interest rate hikes.
“The challenge for us is the branch networks are being used less and less—96 percent of [our] transactions are virtual in one way or another.,” he said.
“So the change is happening, but we do know that there are some people who prefer to bank in person and go into branches, and we just got to get that balance right between helping them.”
The CEO also said his bank had implemented a number of measures to cope with customer demand, including setting up a virtual banking team that provides services to customers via video calls.
Despite the digitalisation trend, King said bank branches still had an important role.
“I think branches are important. They’re part of our brand as a banking organisation that’s been in this country for over 200 years,” he said.
“We’ve got to have a representation through branches [though] the way they are used will change.”
King also noted that cash was still being used in many communities across Australia, which demanded the presence of bank branches.
“We can go to some parts of Sydney, and cash is still the predominant mechanism of exchange,” he said.
“We have other areas of the community that don’t have access to the digital economy, and they still use cash.”
However, the CEO said Westpac had a role in helping people enter the digital economy because everything was digitising.
“It’s not just financial services, it’s the economy. So how do we help them safely is something that we think about,” he said.