Deferred loans drop by near 70% from pandemic peak
Deferred loans have fallen by almost 70%, according to the Australian Banking Association (ABA), since the peak earlier this year.
At the peak of the COVID-19 pandemic in June, more than 900,000 loans were deferred by Australian banks, including 803,000 by the seven largest banks.
This represented more than $250 billion, a figure that had since reduced to $86 billion.
There were fewer than 145,000 home loans, business loan deferrals had fallen to fewer than 73,000, and small and medium sized enterprise (SME) loan deferrals were just over 65,000.
It was expected to fall further in the coming weeks as more loans reached the end of their six-month deferral period.
The move was described as an “encouraging sign” by ABA chief executive, Anna Bligh, that the economic recovery was gathering pace.
“Australian banks have played a major role in carrying the economic burden of the pandemic for their customers,” Bligh said.
“The good news is that the majority are now bouncing back as they restart their loan repayments.
“Don’t wait till you are in over your head, talk to your bank, they’ll help you find a way through this. Don’t tough it out on your own.”
Table 1: Loan Deferrals
|
|
June 24, 2020 |
November 4, 2020 |
% change |
|
Business loan deferrals |
228,070 |
72,909 |
-68% |
|
Of these: SME deferrals |
198,262 |
65,599 |
-67% |
|
Mortgage loan deferrals |
493,440 |
169,677 |
-66% |
|
Of these: Home loans |
436,139 |
145,250 |
-67% |
|
Total |
803,281 |
280,158 |
-65% |
Source: CBA, Westpac, NAB, ANZ, BOQ, Suncorp & Bendigo
Bligh said banks continued to work directly with customers who are still in financial difficulty.
“It’s great to see a lower than expected number of people needing to extend their deferral period,” Bligh said.
Graph: Value of loan deferrals 29 April - 4 November 2020
AUTHOR
Laura Dew
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
