Gareth Parker, host of 6PR Mornings, recently interviewed Shayne Elliott, CEO of ANZ Bank. The discussion covered various topics including interest rates, lending practices, and economic strategies amid the ongoing pandemic.
Elliott explained why mortgage rates have not moved significantly despite the Reserve Bank's cut to a historic low cash rate of 0.1 percent. "The actual cost of money was already down at 10 basis points," he said. ANZ chose to make loans cheaper for new borrowers, particularly small businesses, by reducing small business loan rates by up to 100 basis points.
Regarding fixed versus variable interest rates, Elliott noted that there is a significant increase in customers opting for fixed rates due to lower long-term money costs facilitated by the Reserve Bank's Term Funding Facility. "So normally, over the last couple of years, you'd say about 15 per cent... that's doubled," Elliott stated.
However, despite these measures to stimulate borrowing and economic activity, Elliott observed that demand from businesses remains low. "There isn't a lot," he remarked, attributing this to current global uncertainties and a cautious outlook among potential borrowers.
On household financial behavior during the pandemic, Elliott confirmed that many Australians are focusing on debt reduction rather than spending or borrowing more. "They're hoarding cash... they've paid down their most expensive debt," he explained.
The conversation also touched on ANZ's new green lending policy which drew criticism from Agriculture Minister David Littleproud. Responding to Littleproud's comments that banks should focus on providing capital rather than dictating societal values, Elliott defended the bank’s stance: "It is our knitting to decide who we lend our money to."
He emphasized that ANZ's decision was based on assessing risks associated with high-emitting industries and ensuring prudent management of shareholder and depositor funds. "We will work with them to transition to a low carbon future," he added.
The interview concluded with Parker appreciating Elliott's openness in discussing these issues directly with listeners.