Shayne Elliott, CEO of ANZ, discussed the bank's financial strategies and challenges during an interview with Brooke Corte on 2GB Money News. He explained the bank's decision to set aside a significant impairment charge in response to potential losses due to COVID-19.
"The total charge was 1.67 as you mentioned, a little over a billion of that was a provision or to increase our reserves for potential losses due to COVID-19," Elliott stated. This decision is based on various economic models predicting severe downturns, including GDP falling by 13% in the second quarter and unemployment rising to the same percentage.
Elliott acknowledged that these projections might seem pessimistic given recent government measures like JobKeeper and plans to gradually reopen the economy. "If anything you'd say on the balance of probabilities, if I had to make a judgement today, that base case that we've modelled probably seemed on the quite pessimistic side," he noted.
The discussion also touched upon ANZ's choice to defer dividend payments amidst ongoing uncertainty. Elliott explained this decision as a precautionary measure: "We are in the eye of a storm, literally... And so we just said 'let's just buy time'."
Addressing concerns about bridging finance related to JobKeeper payments, Elliott admitted initial misunderstandings but confirmed improvements have been made. "Yes, we have... we've advertised and made it really available," he assured.
Corte highlighted difficulties businesses faced with JobKeeper implementation. In response, Elliott defended the government's swift action compared to past crises but acknowledged execution issues: "It is absolutely well-intended... The good news here is though that industry, the banks, the ATO, the government all got together."
Elliott concluded by recognizing delays some customers experienced with superannuation withdrawals due to unexpected demand: "It's not bad intent; it's just... we're trying to figure this out as we go along."
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