MELBOURNE (CU)_The business banking head of three of Australia’s big four banks all came to the Trans-Tasman nation within the last two years, with the objective of bringing an outsider’s perspective over the operations of the major lenders. They participated in the Australian Financial Review Banking Summit held on Tuesday (31 May), under the theme ‘Funding the Recovery’.
Addressing the attendees at Hilton Sydney, the three bankers spoke of a huge opportunity for Australia’s big four banks to ramp up lending to businesses without creating undue risks. National Australia Bank’s Group Executive of Business and Private Banking, Andrew Irvine, who arrived from Canada less than two years ago, said Australia was advanced in its payments and digitisation compared to other economies.
“When you look at the provision of credit, it’s actually pretty backwards and very focused on property because … there’s this national obsession with housing that I’ve found quite weird coming to this country,” he said during the Banking Summit. “That’s a huge opportunity for the Australian banking system to look at lending on risk characteristics underpinned by transactional account data. We all need to do better in this banking system.”
His views were shared by CommBank’s Group Executive of Business Banking, Mike Vacy-Lyle, who arrived from South Africa in early-2020. According to Vacy-Lyle, Australian businesses were “under-indebted”, since lenders rely too heavily on lending backed by collateral, instead of assessment of cash flows. “We can probably mobilise more money to people that need it and not impact on the credit outcome,” he said.
Meanwhile, the bankers struck an extremely bullish tone that the business sector is going to “outperform” the consumer sector. This is partly owing to the fact that the world has started to rely heavily on some of Australia’s primary industries like agriculture and energy, particularly amid the war in Ukraine. “In one day, 30 per cent of the world’s food just came off the market – grain, barley, canola, you name it,” Irvine said. “We need to feed the world. There is going to be a really big food crisis coming in the short term, particularly Africa and the Middle East.”
According to Chris de Bruin, Westpac’s chief executive of consumer and business banking, while the prospect of higher interest rates is weighing on consumer sentiment, this was not the case on the business side. “About 75 per cent of our customers are telling us that they are going to expand products and services in the near future and that they want more capital to grow,” de Bruin, who has worked in London, Canada, Singapore and Abu Dhabi, said, adding that Australian businesses had done well to manage their supply chain issues, but needed support from lenders.
