NAB has owned up to a slender level of support so far for businesses seeking funding under the SME guarantee scheme.
The bank yesterday said it funded more than 1500 SMEs under the scheme, to the tune of A$150 million or so.
Around 34,000 business customers have taken up offers of repayment deferrals on balances of around $17.4 billion.
On the consumer side, more than 70,000 customers have been granted repayment deferrals on mortgages worth around $26.5 billion.
The bank yesterday surprised the market with the release more than a week early of its March 2020 half year results, inviting sharp scrutiny on the impact of COVID-19 on all facets of its business.
The timing was centred on a $3.5 billion underwritten capital raising the board wishes to finalise before ANZ and Westpac report their half-year profits on Thursday and Monday respectively.
Sell-side banking analysts were keen to pick through the rationale for the provisioning levels and stress-testing considered by the bank.
NAB is bracing for expected credit losses of $4.8 billion, while its current lending exposure to industries severely affected by the downturn is eight times this level.
Then the commercial real estate sector accounts for $24 billion.
Shaun Dooley, NAB’s chief risk officer, said “the base case, which is actually a downside case in itself, is a sharp decline with a reasonably quick recovery into next year.
“I think it’s really too early to tell as to how this downturn will impact the SME sector.
“he best read on the quality of the SME portfolio is really the performance of the book for that six month period that we’ve had from June to December 2019. Over that six months to December, we’ve seen [the ratio of] risk-weight to exposure at default improved slightly over the period.
“We’ve seen a very small increase in defaults. Our default accounts are stable over the period and pretty low level.
“Our watch line fell over that period as well. So I think the SME portfolio going into this position - this environment, was broadly stable and performing reasonably well.”