Businesses will be hit from coronavirus shutdown, says ANZ CEO Shayne Elliott

Business closures are ‘inevitable’ amid the economic wipe-out caused by the coronavirus.

ANZ CEO Shayne Elliott. Picture: AAP

ANZ chief executive Shayne Elliott said business closures would be inevitable amid the economic wipe-out caused by the coronavirus.

Speaking to ABC Radio Hobart on Wednesday, Mr Elliott flagged that the bank was bracing for a financial hit, as its earnings were likely to be pressured from the shutdown sweeping the broader economy.

Lower margins and slower business volumes were posing further downside risks to the bank’s half-year earnings, scheduled to be released on April 30.

“I think it is obvious that the bank’s profitability will be impacted,” Mr Elliott said.

His comments come a day after big four rival Westpac warned that climbing loan losses would dent profits.

Despite the expected hit to the bank’s profit, Mr Elliott has not taken a voluntary pay cut.

Mr Elliott said executive salary haircuts have generally been within companies where there has been a significant deterioration in operations.

He noted, however, investors have felt the full brunt of the financial impact, with share price values falling across all four major banks.

ANZ expected a “significant” number of businesses would default during the economic crisis period, and he said the bank anticipated it would be forced to absorb the costs.

“In times like this, we know that banks end up taking credit losses,” he said.

“Companies sadly will fail … and will be unable to make their debts, and in that situation, the banks are forced to take those losses.”

While the economic woes of COVID-19 are being likened to the Great Depression, Mr Elliott said the economy had faced a financial panic nearly every 10 years, with downturns in some instances leading to a period of innovation.

“What is part of that economic cycle is that through a crisis, some businesses fail … while others emerge,” he said.

ANZ’s support package would enable home and business loan customers to defer repayments for up to six months. However, the package is a full opt in or out service, as partial payments throughout the period would impact an individual’s credit rating, according to ANZ.

Mr Elliott said customers choosing the package would be increasing the amount of interest payable on their loans at the end of the deferral period.

“It is not necessarily the ideal for many people,” he said.

“But in the scheme of things, we think it is a reasonable package for people in probably 95 per cent of circumstances.”

The bank said it would offer bespoke packages to customers who believed the deferral package was not a suitable option, but would be subjected to potential changes in their personal credit ratings.