Coronavirus changing our banking behaviours, says NAB boss Ross McEwan

National Australia Bank boss cautiously optimistic about the economy, noting some early signs of a return in confidence.

Mr McEwan said there had been a permanent shift away from cash to cards or mobile payments, and it was unlikely that cash would return to favour. Picture: David Clark Photography

National Australia Bank chief executive Ross McEwan has expressed cautious optimism about the economy, saying there were some early signs of a return in confidence.

“Well I think Australia has done the right things early on, isolated as many people as possible and taken really strong precautions which has kept the infection rates down,” Mr McEwan said in an internal NAB podcast.

“(But) it just takes another outbreak to actually create a problem.

“So I think a little bit of confidence is coming from this infection rate being down.”

Mr McEwan’s relatively upbeat tone preceded another solid performance by the share market, powered by a further rally in major-bank stocks.

Local equities were up 2.4 per cent at their peak, but ran out of puff by the close to register a 1.3 per cent gain.

The banks extended their purple patch, with ANZ Bank lifting 4.5 per cent, Westpac up 4.4 per cent, NAB putting on 4.7 per cent, and Commonwealth Bank up 2.2 per cent.

The two-day rally was sparked by a report on Wednesday from UBS analyst Jon Mott, who pointed out that the major banks had been overlooked in the broader market recovery.

The sector had underperformed by 19 per cent over the past three months.

Mr McEwan said large corporates had fared “very well” in the crisis so far, compared to their smaller counterparts.

“They’ve found additional capital where they’ve required it, they’ve had additional borrowings out of ourselves, and they’ve done pretty well out of it,” he said.

“At this point in time, we’re not seeing a lot of stress.

“Obviously, the very small businesses, they closed up quickly.

“It was within days - businesses just lost their revenue within days and were closed by the end of the week, having to let go lots of staff.”

The NAB boss, however, said he was optimistic because of the “resilience of Australia itself”.

Businesses would restructure, and come back cheaper and more resilient.

“I think this will be the first time in 30 years that Australians realise again that they need to have a bit more cash on the balance sheet,” Mr McEwan said.

NAB’s Ross McEwan. Picture: Stuart McEvoy

“They’ll be a bit more cautious coming out of this as well, I think, which will slow the economy down probably a little bit more than we want, but I think they will become a lot more cautious about how they operate their business models.”

Among other COVID-induced changes would be more people working from home, reducing the demand for office space in the central business district, and a much reduced appetite for cash as consumers embraced digital payments.

Mr McEwan said there had been a permanent shift away from cash to cards or mobile payments, and it was unlikely that cash would return to favour.

“Even those elderly folks who have had a passbook account - about a third of them have now got a debit card so that they actually can transact,” he said.

“I would be very surprised if they went back to their traditional accounts as well, with the flexibility and convenience of just using a card.

“So permanent change in my mind has just been made in 10 weeks. It would have taken us another five years.”