Australian Banks Will Feel Virus Heat Next Year: ANZ Chief

Australian Banks Will Feel Virus Heat Next Year: ANZ Chief
The CEO of ANZ Shayne Elliott speaks at the ANZ annual general meeting at the Brisbane Convention & Exhibition Centre on December 17, 2019 in Brisbane, Australia. (Bradley Kanaris/Getty Images)

ANZ’s chief expects banks to feel the worst of the COVID-19 pandemic in the middle of next year.

Shayne Elliott believes the economy will be at its low point between now and the end of 2020, which will flow on to the banking sector.

He expects people to then find their businesses unable to operate.

“We think that’s probably more like the middle of next year, when the crisis will start to hit the banks,”  Elliott told a Senate inquiry on Sept 4.

ANZ expects gross domestic product to recover in 2022.

Elliott said Australians were continuing to pay credit card debts, while about 84,000 customers have deferred home loans.

CBA’s chief Matt Comyn will also appear before the inquiry, to be quizzed on the banks’ response to households and businesses hit hard by the coronavirus-driven recession.

Committee chair Tim Wilson said banks needed to be held to account over the extent of their support for consumers during the pandemic.

The inquiry is expected to shed light on the consequences of mortgage and small and medium business loan deferrals, and the potential for reform of “responsible lending” laws.

It will also be an opportunity for the banks to update the public on their response to the royal commission into financial sector misconduct.

Treasurer Josh Frydenberg told parliament this week the flow of credit would be critical to Australia recovering from the recession.

The economy shrank seven percent in the June quarter because of the COVID-19 pandemic, officially confirming the nation is in the first recession in three decades.

More than $200 billion of loans have been deferred through the crisis.

But there is evidence some of those allowed deferrals have started repayments as the economy recovers.

Paul Osborne, Rebecca Gredley in Canberra