Neil Mitchell, a broadcaster at 3AW, recently interviewed Shayne Elliott, the Chief Executive of ANZ Bank. The discussion covered several pressing issues affecting the economy and financial markets during the pandemic.
Mitchell highlighted concerns about the housing market, noting that "about six per cent of people had borrowed six times their income to buy a house." Elliott responded by discussing potential measures banks could take to tighten lending practices. He explained that banks might implement "macro prudential rules" to make it harder for individuals to obtain loans. This would involve assessing borrowers with higher assumed interest rates to reduce demand.
Elliott acknowledged that current market conditions warrant attention: "Whenever markets move quickly up or down, it's always a time for concern." He noted that more than 20% of new borrowers are taking on debt exceeding six times their income. However, he also pointed out that household debt service ratios are at historical lows, suggesting some capacity to handle rising interest rates.
The conversation also touched on first-time homebuyers. Elliott mentioned that they still represent about 10-11% of current loans, although this is down from last year's peak due to government incentives.
Regarding economic resilience post-pandemic, Elliott expressed optimism: "The data suggests that the economy is very resilient." He cited high savings levels and effective government support as key factors aiding recovery.
Mitchell raised concerns about business sustainability once government assistance ends. Elliott predicted some businesses might struggle but emphasized strong savings among small businesses as a buffer against future challenges.
The interview also addressed global issues like China's Evergrande crisis. While Elliott believed there would be no direct impact on Australia, he acknowledged potential long-term effects on Chinese policy and regulation.
On digital trends, Elliott observed continued growth in online shopping via mobile devices. When asked about branch operations during quarantine restrictions, he reported minimal disruptions.
Vaccination among ANZ staff was another topic discussed. Elliott shared positive progress towards high vaccination rates within the bank's workforce and indicated ongoing consideration regarding mandating vaccines.
Reflecting on prolonged lockdowns, Elliott expressed gratitude for pre-pandemic life and praised people's adaptability: "I've learnt about the incredible flexibility and resilience of people."