Banks signal better than expected recovery

Prashant MehraAAP
NAB will be grilled by the House of Representatives economics committee on Friday.
Camera IconNAB will be grilled by the House of Representatives economics committee on Friday. Credit: AAP

Two of Australia’s Big Four banks have signalled a stronger-than-expected recovery among business customers after last year’s pandemic-fuelled recession.

The chief executives of National Australia Bank and rival ANZ on Friday told a House of Representatives economics committee they are seeing clear and widespread signs of businesses being on the path to recovery.

“We are facing the most positive economic conditions that we have seen in the six years this Committee has been inquiring into the major banks,” ANZ CEO Shayne Elliott said in his opening statement in Canberra.

“While many are doing it tough, including CBD businesses, Australia is emerging from one of its hardest periods quicker and stronger than many expected.”

He said ANZ’s large corporate clients are well capitalised with many looking to reposition their business for the changing economic landscape. The bank has also written loans worth more than half a billion dollars under the federal government’s Small and Medium Enterprise Guarantee Scheme.

His comments are in line with those of NAB CEO Ross McEwan earlier on Friday, who said his bankers were approving more loans to businesses than before the pandemic.

“New and increased lending to small- and medium-sized businesses is up,” he said.

“NAB’s agricultural equipment finance sales, for example, have grown 130 per cent in the last 12 months.”

Recent economic data has shown Australia’s gross domestic product expanded by more than three per cent in two straight quarters and that business conditions and business confidence remain well above average.

The also match the experience of larger rivals Commonwealth Bank and Westpac, which on Thursday said most customers who had deferred loans during last year’s recession had restarted repayments.

Mr Elliott confirmed the housing market is showing robust activity with ANZ’s loans to first home buyers in the past three months jumping 75 per cent on the previous year.

First-time property buyers accounted for 35 per cent of owner-occupier loans, he said.

All buyers were being helped by low interest rates, high levels of savings and government policies, Mr Elliott said.

ANZ said most of its 96,000 payment deferrals on home loans last year had resumed paying off their loan.

“Only a couple of thousand of those are still in some sort of stress,” he said.

Earlier, Mr McEwan said more than 98 per cent of those customers who had paused their mortgage or business loans last year were no longer on deferral.

Of these, about 95 per cent had resumed repayments while the remainder were being provided other assistance.

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