CBA’s Matt Comyn says geopolitical woes to hit funding, currency, financial markets and keep petrol prices high

Matt Comyn says geopolitical woes will trigger more volatility in funding and other markets, keep petrol prices high, as CBA reveals financial abuse costs to the economy.

CBA released research with Deloitte Access Economics which showed financial abuse costs victims $5.7bn, in addition to $5.2bn to the broader Australian economy. Picture: James Gourley

Commonwealth Bank chief executive Matt Comyn says escalating aggression and military action by Russia in the Ukraine will trigger more volatility in funding, currency and financial markets and keep petrol prices high.

His comments come amid growing concerns about how the declaration of war will damage the global economy, which is still recovering from the latest wave of Covid-19. Many countries are grappling with soaring inflation and persistent supply-chain bottlenecks, and economists and governments are concerned the military conflict started by Russia will weigh on business and consumer confidence.

Mr Comyn said while CBA remained optimistic on prospects for the Australian economy, volatility would abound as geopolitical risks increased.

“Clearly we are watching with interest what‘s happening in Russia and broader Europe, we recognise there’s likely to be volatility around and that situation is rapidly evolving,” he added on the side lines of a CBA event addressing financial abuse and its impact on the economy as well as individuals.

“In the near term, yes, that‘s (potential military conflict in the Ukraine) likely to have an impact certainly on volatility in financial markets and funding markets, in currency markets, oil.

“Australia is not a large trading partner so we don’t have a lot of direct exposure to that region but clearly geopolitical risk can have broader implications so it’s something we’re watching.”

Commonwealth Bank CEO Matt Comyn. Picture: NCA NewsWire/Damian Shaw

Brent crude oil futures rose as much as 4.7 per cent to an eight-year high of $US102.08 a barrel on Thursday, surpassing the $US100 per barrel mark for the first time in eight years. Brent is a global benchmark used to price more than three-quarters of the world‘s traded oil.

Ahead of Russia’s declaration of war, CBA had been predicting Australia’s economy will expand 4.9 per cent this calendar year, while the bank expects unemployment to decline to 3.8 per cent.

CBA is pencilling in consumer price index growth of 3.6 per cent for 2022 and that the Reserve Bank will raise the cash rate to 1 per cent by the year’s end.

Australia’s sanctions against Russia are set to become law from Friday and take effect next month. Prime Minister Scott Morrison has said there must be consequences for “violent, coercive and bullying” behaviour.

Earlier this week, Judo Capital’s boss Joseph Healy said any further aggravation by Russia in the Ukraine may impact business sentiment.

“There’s a real risk that business sentiment and financial market sentiment will be dented by a deterioration of the situation in the Ukraine … it’s kind of gone up several notches in the risk to the global economy,” he added.

CBA’s shares declined 2 per cent to $94.71 on Thursday, as the S&P/ASX200 slid 3 per cent on investor anxiety linked to the war in the Ukraine.

Separately, CBA on Thursday jointly released research with Deloitte Access Economics which showed financial abuse cost victims $5.7bn and the broader Australian economy an additional $5.2bn, given the hit to productivity and mental health costs.

Mr Comyn said while financial abuse was better understood than a few years ago, the scale of the problem meant a lot more needed to be done to tackle the problem.

“It‘s clearly a multi pronged, certainly a multi-billion dollar investment that’s required across both government, clearly across … financial institutions, to the private sector, more broadly, not for profit, we’re working with academia,” he added.

Mr Comyn said the report showed the “scale and the gravity” of the financial abuse issues Australia confronts.

The event was attended by former Australian of the year Rosie Batty and Anne Ruston, the federal minister for families, social services and women‘s safety.

Also speaking at the event were Tarang Chawla, an anti-violence advocate whose sister was murdered by her husband and Amani Haydar, who lost her mother to domestic violence.

Deloitte Access Economics associate director Wing Hsieh highlighted the scale of the financial abuse problem.

“Financial abuse really is a societal problem. It needs to be a combined effort from everyone in society, from the private sector to government, everyone needs to be backing this issue and tackling it,” she said.

“The biggest parts of those amounts ($5.7bn and $5.2bn) are really in being prevented from working, so contributing fully to the Australian economy, and then within the direct costs it’s really about having income withheld.”

The report found more than 623,100 women and men were subjected to financial abuse in 2020, with the biggest proportion of female victims – or 27 per cent – saying they had their income withheld or controlled by an abusive partner. That was followed by female victims saying their partner did not contribute to household expenses or that they were entirely prevented from working.

Some 22 per cent of male victims said their income was withheld or controlled by an abusive partner.

The report said nearly one in 30 women were subjected to financial abuse in 2020, compared to about one in 50 men.

CBA stepped up its commitment to help victims of financial abuse in 2020, at the height of the Covid-19 crisis. It launched its Next Chapter program that year, which it said on Thursday has helped more than 500 people impacted by financial abuse, via a financial independence hub in partnership with Good Shepard.

The bank has drawn on the experience of those impacted and worked with community groups and experts in the area since 2015, committing $30m over that five-year period.