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
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
