Commonwealth Bank boss warns an increase in bad loans is likely | The Business | ABC News

yes we saw a slight uptick in customers who are behind on their repayments but we're still well below the levels that we saw preco uh so we do expect that that will continue to pick up during the course of the year but again from relatively low levels but I think also the important uh aspect is even though customers almost all of them are making their repayments we do see and here quite clearly from customers about some of the strain that they're under and some of the sacrifices that they're having to make to to to work through uh higher interest rate environment and higher cost of living and hence why it's so important that uh inflation does come down inflation does hurt everybody how long do you think your customers can hold on at current interest rates before there is a much more meaningful rise in areas couple of things there's always a lag between interest rate increases by the RBA so the November uh rate hike will be starting to be felt by the economy but particularly households over the course of this month but the main driver of when people can't make repayments is unemployment and so we're lucky that unemployment is still near 50-year lows uh that's been one of the underpinnings of such resilience in the Australian economy and alongside inflation they're probably the two most important economic pieces of data that no doubt we and The Reserve Bank will be watching very closely unemployment is forecast to rise CB is less than halfway through its fixed loan rollover I'm going to ask you again about areas are you going to see 90-day areas start to start to tick up in this second half yeah we do expect that it will uh tick up over the course of the rest of this financial year to 30 June but also to to 31 December I mean a couple of things one uh we're not seeing uh a change in terms of customers that are coming on fixed rates they're actually uh slightly further ahead than the rest of the portfolio so we we feel like again that's been uh very manageable and we've obviously worked closely with customers as as they've come off fixed rates but critically uh we'll be here to support our customers through that transition and through the year have you had a conversation with Michelle bulock since she became RBA governor and if yes what did you talk about I'm fortunate and so far as I'm able to uh work with the RBA and uh used to meet with with the former Governor I've met with the the new governor uh generally we're there to share insights and information about what we're seeing in the economy I think it's important that anything that we've got that might be of value we do share with the RBA I watch the uh rba's uh decision and I think both the governor did a great job articulating exactly what was on the rba's mind and I've read through the statement of monetary policy and it's very consistent with what we're seeing and we'd otherwise expect have you talk to her about the strain on borrowers at the moment and given her your views on how long they can continue at current interest rates yes and look we we uh I always find the RBA a very receptive to engagement and you know the new governor is no exception to that and so they would be seeing similar things that we would of course we're providing that information and and uh anything that we're picking up uh and they're acutely aware of that when do you expect the RBA will cut rates and could you see them moving before the US fed well our expectation is that they will cut before the end of this calendar year but I think as we've seen uh economic forecasting is a very difficult uh objective and there's always uncertainty I think it's extremely unlikely they'd be cutting before the US fed I think later this year we'll probably see rate Cuts in the UK US Canada uh and there's certainly an expectation late this calendar year but we all know that inflation is very difficult to precisely forecast and so circumstances can change the Commonwealth lost market share by withdrawing from the mortgage Wars last year was that the right call well it's always hard to uh um think about things with the benefit of hindsight I think we' do the same would make the same decisions that we saw there's you know in any business you have to be thoughtful and uh make sure you're um acting in a sustainable way do you see a time in the near future where you will need to become a bit more competitive to protect your market share well we are very competitive I mean we have uh been very thoughtful about exactly in any Market you always have to think about you know where you compete for customers that bank with the Comm World Bank they can rest assured that we're extremely competitive on home loans on homans on all on all products we have to be last time we spoke you express concern for widening inequality in Australia is that becoming more evident to you when you look at who is now applying for Home Loans from your bank with more than a third of owner occupier Home Loans coming from households earning at least $200,000 a couple of things again one inflation as I said is bad uh for everyone it hurts everyone but it also disproportionately hurts uh lower income Australians secondly what we're seeing quite clearly in some of our economic data and spend data is that some of our younger customers are feeling the brunt more sharply I think some of those factors absolutely have weighed heavily on many people's minds and about whether they'll have access to the same opportunities that perhaps we have and our parents have had and I think it's really important that we are building a brighter future for all Australians and we're able to deliver that Matt comman thank you thanks very much

Channel: ABC News (Australia)

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Keywords: Australia, abc, abc news, news, kirsten aiken, matt comyn, cba, commonwealth bank, australia news, economic news, economy, economists, business, business news, finance, finance news, housing, house prices, housing market, property, property market, rates, interest rates, cash rate, rba, reserve bank, mortgages, home loans, bad loans, credit

Id: n24C2-yvG1k

Length: 6min 21sec (381 seconds)

Published: Wed Feb 14 2024