The COVID-19 pandemic has significantly impacted the financial sector, with ANZ Bank reporting a substantial decline in its first-half cash profit. The bank's profits fell by 60% to $1.4 billion due to increased provisions for bad debts, including an additional $1 billion set aside specifically for the effects of the coronavirus.
Shayne Elliott, CEO of ANZ Bank, addressed these challenges during an interview on ABC RN Breakfast with Hamish Macdonald. Despite the downturn, Elliott described the results as "reasonable," citing strong core operations before the pandemic and a prudent approach to setting aside funds.
Elliott explained that ANZ conducted stress tests to determine their financial resilience. He stated, "our base case... suggests that GDP would fall 13 per cent in the second quarter... unemployment would peak at 13 and house prices would fall 11 per cent between now and the end of next year."
Discussing customer impact, Elliott acknowledged that some customers might not overcome this crisis. He noted differences from the Global Financial Crisis (GFC), emphasizing a more robust government response this time around. However, he admitted that smaller businesses might struggle more than larger companies.
When asked about deferring loan repayments further, Elliott clarified that while they could extend deferrals beyond six months if necessary, no taxpayer money had been utilized yet: "we've not drawn down $1 of that Reserve Bank money."
ANZ's decision to delay interim dividend payments until at least August was also discussed. Elliott justified this move by highlighting economic uncertainty: "today is just not the right day to be making a decision about writing a cheque for a billion or $2 billion."
Looking ahead, Elliott painted a picture of long-term economic changes post-COVID-19. He predicted slower recovery in certain sectors like tourism and education due to global dependencies and anticipated structural shifts in economies worldwide.
The conversation concluded with acknowledgment of ongoing challenges but also an emphasis on strategic planning for future stability.