CBA boss Matt Comyn urges Victoria to reopen to save small businesses

Commonwealth Bank chief Matt Comyn has joined a chorus of business leaders urging Victoria to accelerate the easing of Covid-19 restrictions.

Commonwealth Bank chief executive Matt Comyn: ‘In Melbourne (they) are definitely bearing the brunt of the pandemic.’ Picture: Adam Yip

Commonwealth Bank chief executive Matt Comyn has “measured optimism” about the domestic economy’s prospects, despite the nation needing to cut unemployment in 2021 and weather the reduction of COVID-19 support measures.

Speaking at a Trans Tasman Business Circle online event, Mr Comyn also joined a chorus of business leaders urging Victoria to accelerate the easing of COVID-19 restrictions due to the “huge impact” on struggling small businesses.

He said concerns about a “substantial cliff” for the economy had abated given federal budget stimulus and the extension of loan repayment pauses for those that required them, but Australia wasn’t yet “out of the woods”.

“There will be some difficulties well into 2021 ... at the moment perhaps some of the underlying impact (of the pandemic) to the economy has been sort of masked,” Mr Comyn added on Monday.

He said the telling time for the economy would be in the first two quarters of 2021, but particularly the June quarter, with prospects hinging on health outcomes and how Australians fared as income support measures were reduced.

CBA is tipping unemployment will peak in the high 7 per cent range, lower than a prior estimate of close to 10 per cent. Mr Comyn also reiterated the bank’s view that house prices will fall by about 6 per cent peak-to-trough, rather than a prior estimate of 10 per cent.

He thinks even though confidence has rebounded, consumers will continue to hold on to savings and deposit buffers into next year, unless strides are made on a COVID-19 vaccine.

“We expect people are going to be more cautious with their savings for some time,” Mr Comyn said, as banks had seen a dramatic rise in deposits during the pandemic.

The federal government is hoping, though, that budget stimulus and slated personal tax cuts will spur consumers to increase spending in coming months.

Mr Comyn called for restrictions on businesses in Melbourne to be further eased, given many were questioning their viability.

“There is obviously a lot of fear and concern about their prospects and viability going forward,” he said, highlighting extreme pressure on hospitality and retail in Melbourne’s central business district. “It’s been a huge impact to businesses,” he said.

Victorian Premier Daniel Andrews relaxed some COVID-19 restrictions on Sunday, but despite lower infection numbers the vast majority of Melbourne businesses have to wait until next month to reopen.

Mr Comyn’s comments echo those of Wesfarmers CEO Rob Scott and Business Council of Australia boss Jennifer Westacott, who argued there was no rationale for the continuation of strict restrictions in Melbourne.

“Based on the level of cases at the moment it certainly would provide a lot of encouraging support to be able to open restrictions faster,” Mr Comyn said.

“There’s very, very low levels of virus in Melbourne and in Victoria.

“Clearly this is having a very, very sharp impact on small businesses. In Melbourne (they) are definitely bearing the brunt of the pandemic much more harshly than other parts of the country.”

During September, CBA had 31,000 small and medium business loans on repayment pauses amounting to $4bn. Of those, the biggest proportion, 29 per cent, were from Victoria, followed by 25 per cent in NSW, while Queensland and Western Australia each accounted for 19 per cent.

Mr Comyn said some businesses were also rethinking their export strategies given recent trade ructions with China.

“Some customers who had a singular dependence on a particular market probably are looking to diversify, but China will still be an extremely important trading partner,” he added.

On how banks are managing their legal obligations on anti-money laundering and counter-terrorism financing, Mr Comyn said the area was a big focus despite the significant penalties already agreed to by CBA and rival Westpac.

“I don’t think there is a financial institution that isn’t deterred. There’s an enormous amount of effort that’s going into making sure we comply with these critically important AML and CTF laws,” he added.

“This is an area alongside cyber that’s at the absolute heart of what financial institutions need to be able to manage and there is a lot of complexity that comes with it.”

Mr Comyn said CBA continued to make “very substantial investment” into the prevention and monitoring of financial crimes, after working to remediate its shortcomings.

He stressed that banks didn’t want to be facilitating “heinous crimes”.

The comments came amid revelations regulator Austrac is probing Crown Resorts for potential non-compliance with money laundering regulations.

Westpac last month agreed to pay a $1.3bn penalty to Austrac for breaking financial crimes laws more than 23 million times, while CBA stumped up $700m in 2018.

Vittoria Shortt, who heads CBA’s NZ division ASB, spoke about the re-election of Jacinda Ardern across the Tasman, noting on Monday a benefit of the poll was “well-flagged” policies.

She said NZ government policy focused on income support, infrastructure, housing, environment and clean energy.

On returning employees to Australian offices, Mr Comyn said CBA had about 29 per cent of staff back in the office — outside of Victoria — and expected that to move towards 50 per cent.

“We still see a very important role for the office,” Mr Comyn said.

CBA’s heated enterprise agreement negotiations with staff were ongoing and did not reflect the bank’s final offer, Mr Comyn said of pay deliberations.