A fragmented and reactionary response by banks to the Covid wildfire in greater Sydney is preparing the industry to reverse the reversal of provisioning that was the highlight of the most recent profit season.
By last night the four big banks had outlined boilerplate assistance measures.
CBA’s CEO Matt Comyn said in a media release, “We have a range of measures to help businesses to free up cash flow and provide some certainty, whether it's through loan deferrals, fee refunds or new low cost funding through the SME Recovery Loan Scheme.”
Westpac placed an emphasis on “case management support for our small business customers experiencing financial difficulty” as well as “reduced or deferred repayments on asset and equipment finance and eligible business loans [and] business loan restructuring with no fees incurred”.
ANZ side-stepped the language of deferrals, preferring “short-term payment relief”.
In a media release, Mark Hand, ANZ’s group executive for retail and commercial banking, said: “We want our customers to know there is help available if they need it in this difficult time. Our teams are standing ready to assist and will work with customers to understand their specific needs and help tailor individual solutions.”
NAB, in the same vein, mentioned “deferral of principal payments across multiple product options” and “a temporary reduced payment arrangement [or] giving a temporary payment break”.
An industry-wide response coordained by the Australian Banking Association and with the imprimatur of APRA is surely forthcoming
The ABA has postponed its one day conference scheduled for Wednesday in Sydney thatwaas to feature many industry and regulatory icons, and will still want to present a more sophisticated front than is so far evident from the federal government, which so recklessly terminated the Jobkeeper wage subsidy and Jobseeker supplement three months ago.
APRA’s quarterly ADI institution performance statistics for March 2021 show that across the industry lending provisions reversed relatively modestly by A$2.1 billion over six months to $26.9 billion, a decline that matches that of the four major banks over the same period.
APRA put impaired facilities as a proportion of gross loans for the majors at 0.3 per cent in March, down from 0.4 per cent in December 2020.
APRA discontinued its updates on temporary loan repayment deferrals due to COVID-19 with an issue for February 2021.
This shows that as at 28 February, a total of $14 billion worth of loans were on temporary repayment deferrals, which was around 0.5 per cent of total loans outstanding, down from $37 billion (1.4 per cent of total loans outstanding) in January.
In the complacent days of late summer, APRA could write that “as expected, exits from deferral continued to significantly outweigh entries into deferral, with $22 billion in loans expiring or exiting deferral and less than $500 million entering or being extended”.
ASIC’s weekly data on companies entering external administration and controller appointments averaged 86 in the first two weeks of June, down from an average of 106 each week in May, and these will soon sweat Delta.
The Australian Financial Security Authority’s data on new bankruptcies and personal insolvency shows similar themes.
Where these people were involved in a business, the most common industries were construction, accommodation and food services and transport, postal and warehousing.
With services industries and the real economy recoiling for the Sydney Covid outbreak, it’s no wonder conversations in political and business circles over the weekend shared a resigned air that the announced two week lockdown will more than likely end up lasting at least twice as long.