Gerard Cockburn* says Aussies appear to be approaching their finances differently during the coronavirus pandemic, and it’s hurting the banks’ bottom line.
ANZ Bank says its customers have wiped billions of dollars off their credit card debt as the coronavirus-induced recession fuels financial caution.
In a House of Representatives economics hearing on Friday, ANZ chief executive Shayne Elliott said customers had become more prudent during the pandemic, wiping about $2 billion from the major banks’ credit card loan book.
Australia’s big four banks will front the committee chaired by Liberal MP Tim Wilson over the next week to explain how the economic downturn had impacted the sector.
Since March, institutions have implemented six-month mortgage and loan deferrals for customers experiencing financial hardship due to the pandemic.
Loan deferrals are set to expire at the end of September.
Mr Elliott said about 84,000 of its home loan customers still had their mortgage repayments on pause.
The deferrals represent nearly 10 per cent of the bank’s home lending portfolio.
“It is, of course, unsurprising that demand for credit has dropped as business waits to see what the future brings,” Mr Elliott said in his opening statement.
ANZ’s credit card book has fallen from $7.5 billion to $5.5 billion from the drop in credit card use.
Mr Elliott noted the plummet in spending had impacted the bank’s revenue, however other lending categories such as home and business loans had increased.
ANZ said about 15 per cent of customers who had frozen their home loans were still uncertain when they would be able to meet repayment commitments beyond the end of the grace period.
The bank said a number of new loans had been from homeowners refinancing to take advantage of cheaper interest rates.
Mr Elliott said the broader economic impact on the banking sector remained uncertain, however he expected the housing markets to fall by 10 to 15 per cent.
This article first appeared at news.com.au
