The Commonwealth Bank of Australia (ASX: CBA) share price was out of form on Thursday.
The banking giant's shares gave back their strong morning gains and ended the day 4.5% lower at $60.95.
Investors were selling Commonwealth Bank, Australia and New Zealand Banking Group (ASX: ANZ), and the rest of the big four banks after the Reserve Bank made an emergency cut to the cash rate.
How has Commonwealth Bank responded?
In response to the Reserve Bank's cut and the coronavirus outbreak, Commonwealth Bank has announced an expansion to its support for small businesses and households.
Commonwealth Bank's Chief Executive Officer, Matt Comyn, explained: "We recognise that this is a very concerning time for our customers and the community. We are focused on delivering the best possible service to all of our customers and supporting the Australian economy."
"Following today's reduction in the official cash rate by 25bps we are taking deliberate steps to further support parts of the economy most in need. In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians," he added.
What is Commonwealth Bank doing?
This afternoon the bank revealed the following:
- 100 bps interest rate reduction for all existing cash-linked small business loans.
- 70 bps interest rate reduction in one, two and three year fixed home loan rates for owner occupiers paying principal and interest to 2.29% p.a.
- Changes to home loan repayments which will release up to $3.6 billion in cash for Australian households.
- 60 bps increase in 12-month term deposits to 1.70% p.a.
The latter is a positive surprise for income investors in this low interest rate environment.
Mr Comyn explained: "This allows all Australians – and especially older Australians who rely on their savings income – to earn a guaranteed return which is 1.45% above the cash rate."
It is available for all eligible new and existing personal customers on balances from $5,000 to $2 million.
