Commonwealth Bank chief Matt Comyn backs virus suppression strategy, urges small business support

Government likely to outline more targeted stimulus to struggling sectors next week, says CBA boss.

CBA CEO Matt Comyn suggested next week’s budget update from the government would be likely to outline more targeted stimulus to struggling sectors.

Commonwealth Bank chief executive Matt Comyn says small business support should “loom large” in further federal government COVID-19 stimulus, and Australia is right to pursue virus suppression over elimination.

Speaking on the sidelines of a bank event, Mr Comyn said he supported the federal government’s medical approach to the pandemic, despite a second wave of infections gripping the nation.

“I’m very supportive of the suppression strategy, I think eradication is practically very difficult,” he added. “We’ve got to do what we can collectively to try and implement all of those practical measures to ensure that we minimise community transmission.”

Mr Comyn suggested next week’s budget update from the government would be likely to outline more targeted stimulus to struggling sectors, and small business health would be a key priority given its hefty contribution to the economy.

“I’m sure that’s (small business) an area of real focus, it’s such a significant proportion of the economy and employment … small business would loom large no doubt in the thinking of the government,” he said.

“They’ve had the benefit obviously of seeing all of the latest economic data and they’ll be working through the most practical way to deliver support to areas of the economy that need it most.”

Mr Comyn said the stimulus measures so far – including the JobKeeper program, early access to superannuation and a boost in apprenticeships and training – had been “extremely effective” and reflected about 20 per cent of gross domestic product during the period.

But his comments came as Victoria recorded a spike of 317 new COVID-19 cases on Thursday and as the nation’s largest banks wade through $266bn worth of loans that have had repayments paused, to gauge whether borrowers can resume paying.

“Clearly it’s (rising infections in Victoria) been a setback, an increase in cases and today’s case numbers have just come out,” he said.

“The lockdown in Melbourne, particularly in the CBD is going to hit some of the businesses there hard. We are in the process of going through all those three-month check-ins.”

Need for support

Mr Comyn said while just 20 per cent of CBA customers on loan repayment deferrals had continued making some form of payment during the pandemic, he was optimistic more would restart before the end of the first phase of the program in September.

“We are looking at how far ahead they are on their repayments in particular, and what’s the impact to their income … but there is going to be the need for support for areas of the economy which need it most.”

Uncertainty about the pandemic’s fallout was constraining decisions by some customers on restarting loan repayments, according to Mr Comyn.

“The difficulty for everyone is there is some uncertainty, we hear that a lot from customers. That’s probably been the dominant theme in the repayment check-ins … they still want the flexibility because they are not quite sure what is around the corner.”

CBA will provide more granular information on loan deferrals, and those seeking extensions, at its full-year profit results next month.

The banks, government and Australian Prudential Regulation Authority last week allowed favourable capital treatment to continue for six-month loan deferrals, for a further period of four months for borrowers unable to restart payments because of the pandemic.

The major banks were clear, though, that extensions of loan repayment deferrals would only be available after a thorough assessment of a borrowers’ ability to restart paying.

The major banks have so far set aside almost $5bn for a spike in COVID-19 related loan losses, but as deferral periods expire the fallout will become clearer.

Still, some investors remain upbeat on the sector, given the economic hit from the pandemic may not be as severe as first feared.

“If you are optimistic about Australian and New Zealand economic recovery, and we are, you have to be comfortable with the banks,” said Paul Xiradis, Ausbil Investment Management’s executive chairman.

“Banks were provisioning for an economy with far higher unemployment levels than we have experienced, a deeper negative growth experience than has occurred, and a more elongated recovery than we are seeing at this juncture.”

Mr Comyn said the better-than-expected economic outlook would hinge on how authorities were able to get the second wave of COVID-19 infections under control.

“There’s unfortunately going to be some uncertainty for a time and we’ve just got to hope and do what we can. Working with the government and others, to try and restore as much confidence as we can.”