Having more certainty around a reopening date would help a lot of businesses who are struggling with their finances, the boss of the country’s largest bank says.
Speaking after ANZ NZ released its annual result showing a $1.9 billion profit, chief executive Antonia Watson said bank balance sheets had turned out to be a poor indicator of financial stress during this lockdown.
“A lot of the real pain is customers that we don’t lend to or they are looking at dipping into savings or home loans before they look to extend overdrafts or come back to us for business lending.”
But she said there was clearly financial stress out there from businesses in certain sectors of the economy.
“We are hearing about stalwarts of the Auckland hospitality scene closing down.”
Whether the bank would see loan stress on its balance sheet all depended on how far away the light at the end of the tunnel was, she said.
“It would be really nice for those businesses to have some sort of certainty to know, well we have got a date on the 29th of November, does that mean I’m going to be ok from the 1st of December? Or does that mean I am going to have to wait for another couple of months?”
Watson said having a little bit more certainty on a reopening date would help a lot of businesses because then they would know if they were eking it out for another six weeks or if they had to keep themselves going through summer when it was normally their busiest season.
“That’s quite an important difference for some businesses.”
Unlike other countries who have announced a “freedom day” date at which Covid-19 restrictions are eased the Government has said it will move to a traffic light system once every district health board has reached a 90 per cent full vaccination rate although Auckland could move sooner if its three DHBs reach the target.
That has led to some businesses self-imposing a date which they think it will ease. Earlier this week restaurateur Leo Molloy said he would be opening up on December 1.
Watson said banks themselves were still waiting to get advice on whether they could require customers who come into branches to provide proof of vaccination under the new traffic light system.
While supermarkets, pharmacies and medical care facilities have been told they won’t be allowed to as they are an essential service banks have not been mentioned specifically.
“We are actually seeking clarity on that, on where we fit because they have talked about some essential businesses where you mustn’t require vaccination status because everyone should have access.
“They haven’t mentioned banks. We don’t know yet and we have got time to work it through. We certainly don’t want to rush into making decisions.”
Businesses which require customers to prove vaccination will also be able to mandate that their staff get vaccinated.
In Australia some banks have mandated vaccination for workers who return to the office.
Watson said it would rather take an encouragement approach for its staff.
“We would rather go down the line of encouraging people to do the right thing off their own bat rather than a full mandate that could entrench positions.
“We are just playing a watching brief on this – we have got time. We don’t see large numbers of people back in the office any time soon even under the traffic light system – if you look at the wording of that – we feel like we have got time to make sure we do this really well and safely for our staff and safely legally for all those things.”
Once workers could safely return Watson expected it would see a similar scenario to last year.
“It takes a little while for people to get the confidence. They come in but far more people are working in a blended way now with a little bit more time at home and time in the office for collaboration and team building.
“We have definitely seen that trend and there is no question it will continue.”
Watson admitted she herself was keen to get back to the office. “Right now I’m desperate to get back to the office just to stop being in these four walls.”
On the biggest challenges facing the bank over the next six months she said ongoing customer support would be vital.
“We have certainly seen far less required this time around than we did last year and partly because I think people have certainty how this plays out businesses have pivoted, are more robust and all that kind of thing.
“But the real challenge is just keeping going with the big regulatory projects we are on.”
First cab off the banks will be a tightening of the Credit Contracts and Consumer Finance Act on December 1 which will require lenders to provide records of all their inquiries, including their assessment of why they were satisfied the loan was both suitable and affordable.
The change is expected to increase the amount of time it takes to apply for a loan and could mean some miss out entirely.
Banks have benefited from the booming housing market in the past year but Watson said it had seen a slowdown under the recent lockdown.
“We saw a very quiet month when the level 4 hit the settlements but it has bounced back – not to where it was earlier in the year. I would say it is slowing but it is still pretty buoyant out there actually.”
Home loan rates have begun to head up with the Reserve Bank lifting the official cash rate and expectations that it will continue rising over the next few years.
Watson said the bank had been sensitising people to interest rates way higher than what they were, and they were still at all time lows.
But she expected the increases to impact confidence.
“I certainly think that will dent confidence a little bit from people maybe realising they are not going to be low forever.”
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