ANZ chief executive Shayne Elliott: Overly ‘safe’ banking sector is hurting middle Australia

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The ANZ boss says the derisking of Australia’s very safe banking system is coming at a cost to growth and economic dynamism. A rebalancing is required.

When the biannual bank earnings season starts this week, the focus will be firmly on the question of whether the nation’s overvalued lenders can deliver on net interest margins, bad debts and cost containment.

“Banks have been restricted in our ability to do what we’re supposed to do, which is to provide credit to allocate capital to generate growth jobs and higher living standards. Yes, we’re going to be really safe. And you’re seeing that – the banks got huge amounts of capital, huge amounts of liquidity, ultra-low credit losses.

Kiwi mortgage brokers have estimated it will cut the time it takes to assess a borrower from eight hours to two. Take an example from the small business sector. Under current responsible lending laws, a bank needs to see two years of income from an SME. But as Elliott says, “two years is a long time to survive on your own without credit. But there’ll be many, many cases where we’d be quite comfortable with far less than it, depending on the industry, depending on the people. But some of that discretion isn’t as available as we would like.

 

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