Australia’s economy is resilient despite the rising hardship, says NAB’s Ross McEwan

Financial stress is up and wellbeing is down but NAB chief Ross McEwan says Australia’s economy is resilient.

National Australia Bank chief executive Ross McEwan.

National Australia Bank chief Ross McEwan says the economy is in good shape even as a new survey by the bank’s economists shows four in 10 Australians are experiencing financial difficulties.

NAB economists on Friday published a report showing four in every 10 Australians are under financial stress, and wellbeing scores fell sharply in the lowest income bracket. Overall, however, the quarterly score was only slightly lower.

Speaking on Friday at the launch of the Red Shield Appeal, The Salvation Army’s fundraising push, Mr McEwan said Australia’s overall economy was in good shape, and the mining, energy and agricultural sectors were doing “incredibly” well.

The resilience however was not across the board, as financial hardship was rising among some households.

“While we’ve got this magnificent economy going so well, and is the envy of the rest of the world, we’ve got a group underneath that is really, really struggling,” Mr McEwan said.

Earlier this month, Mr McEwan emailed NAB’s Australian customers directly – the first time the bank had messaged all its customers in years – in an attempt to pre-empt difficulties they might be going through.

NAB and its banking rivals have increased the price of mortgages by 3.5 percentage points to match the increase in the cash rate since May 2022.

The Salvation Army has shifted its business to NAB after 140 years banking with Westpac.

Mr McEwan reinforced that the higher rates were there to help control inflation, which was really hitting people’s incomes.

Answering a question on whether NAB could be a leader and shield some homeowners from costlier mortgages by not passing on interest rate rises, McEwan said that would not please many, including depositors who he said were benefiting.

“I’m not too sure the Reserve Bank would enjoy me not joining it, nor would my shareholders, but I think the Reserve Bank probably wouldn’t,” Mr McEwan said.

“And (the higher rates) are there to slow the economy. Just as when it was down it was to actually speed the economy up, on the way back up it’s actually to slow it down.

“At the moment, people are getting a wee bit caught in the middle of all of this, but it’s really inflation that’s getting hold of people. It doesn’t matter whether it’s a grocery bill, petrol bill, a power bill – every bill’s going up.”

With stress around the cost of living rising sharply in the past year, NAB’s survey showed overwhelmingly negative responses when asking about the effect of cost-of-living concerns on wellbeing.

The survey showed a big spike in respondents saying their mortgage and other debts were detracting from their wellbeing.

The data, ahead of the federal budget next week, come as the Labor government faces a push in its own ranks, as well as from unions and economists, to significantly lift Jobseeker payments so that they keep up with the cost of living.

The occasion marked NAB securing The Salvation Army as a customer for the first time, displacing Westpac as the charity’s main bank – which it had been for more than 140 years – a role NAB put a lot of effort into securing.

Mr McEwan said having 120,000 homeless people in Australia, one of the wealthiest countries in the world, was a “disgrace”.

The Melbourne-based lender will donate $300,000 to the appeal, which aims to raise $37m by the end of June. NSW Premier Chris Minns also announced a $225,000 donation from the state’s discretionary fund.

NAB’s donation would include matching donations up to $150,000 from employees and customers across hundreds of branches, while Mr McEwan also donated an undisclosed amount.

“We pitched that we had a lot of things in common,” Mr McEwan said.

“We said we believe we can bring a lot of attributes around helping with funding, helping with development … And I said, we’ve got 35,000 people who will want to give up their time as well.”

NAB is due to report strong interim results for fiscal 2023 on Thursday. In February it reported quarterly earnings that soared 19 per cent, helped by higher mortgage rates and loans to small businesses.