ANZ banker Mark Hand says businesses need to be realistic about longer-term prospects

Senior banker says it’s now clear parts of the economy have changed permanently, and businesses have to get realistic about their post-COVID prospects.

ANZ says some part of the economy have permanently changed, and businesses need to realistic. Picture: AFP

ANZ Australian retail and commercial group executive Mark Hand has told the House Standing Committee on Economics that although business insolvencies have not yet increased, he stood by earlier comments that some small businesses would benefit from winding up and walking away.

Mr Hand said that the COVID pandemic has caused a number of permanent shifts in consumer behaviour such as decreased cash usage and increased online shopping, which may impact some businesses negatively.

“These changes in customer behaviour that impact us are impacting a lot of other industries,” Mr Hand said.

“They believe they can trade out this. My message is that they should have a realistic view of what changed, and what that means for them.”

“Our concern is that it is very easy for a customer to continue to dig a deeper and deeper hole because they believe things will return to normal.

Ceronica Kregor, Mark Hand, Tracey Lines at an ANZ event in Townsvilles.

Mr Hand said the anticipated rate of insolvencies cannot yet be estimated.

“In terms of spikes in insolvencies, it is too early to tell. We have not yet seen a spike in flows … that is out of the normal.”

ANZ CEO Shayne Elliott told the committee the bank has never believed in the “V shape” economic recovery due to the level of Australia’s economic exposure to the rest of the world.

“We’ve never bought the v shape recovery argument … and that is because Australia is an open, liberal democracy reasonably dependent on the free flow of goods and people,” Mr Elliott said.

Until immigration and global trade flows resume, Australia’s recovery will be more of a “grind,” Mr Elliott said, with GDP expected to recover in a “real” sense by 2022.

Mr Elliott also said that from an economic point of view, activity will be lowest “between now and the end of the year” but the impacts will be felt by the banks “more like the middle of next year.”