Australia's major banks have extended loan repayment deferrals by four months, offering relief to approximately 800,000 borrowers facing financial difficulties due to the pandemic. ANZ Bank's Chief Executive Shayne Elliott acknowledges that while many customers are recovering, the recent Melbourne outbreak poses challenges. He admits some businesses may fail and individuals might lose their homes.
"This is a bit of a setback," Elliott stated regarding the Melbourne lockdowns and border closures between Victoria and New South Wales. He emphasized the commitment of governments and banks to support affected individuals.
Elliott anticipates a short-term increase in deferral requests due to the lockdown but does not foresee an overwhelming demand. "We'll probably see another short-term spike in those deferrals," he said.
Banks have agreed on an additional four-month loan repayment holiday following the initial six-month period ending in September. Elliott clarified this decision was not an admission of a looming economic cliff but rather an adjustment to evolving circumstances.
"The concern was...these deferrals all finish at about the same time," Elliott explained, highlighting efforts for an orderly transition with customers across the banking industry.
Elliott noted that only a small number of ANZ customers are currently unable to resume repayments. "Not too many at all, actually," he remarked, adding that most need more time to stabilize financially.
The extension aims to prevent forced property sales or foreclosures, which could destabilize the property market. "It's not in our customers' interests," Elliott asserted regarding potential property collapses.
The Australian Prudential Regulation Authority (APRA) has approved this extension until March 31 next year, allowing deferred loans not to be counted as arrears or impairments during this period. However, Elliott warned that hard decisions might follow if loans remain unpaid after March.
"We have an obligation...to work with you on a solution," he said about potential foreclosures if necessary.
Elliott expressed confidence in government handling of wage subsidies like JobKeeper and JobSeeker and did not anticipate mortgage subsidies from federal authorities as necessary interventions at this stage.
In conclusion, while banks have mitigated immediate risks with loan deferral extensions, ongoing governmental support remains crucial as Australia navigates economic recovery amid COVID-19 challenges.