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
Recommended for you
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?