Mortgage holders under pressure, says CBA boss

Commonwealth Bank CEO Matt Comyn has told the federal government that many Australians are under pressure from higher inflation, interest rates and rents.

The head of Australia’s biggest bank was speaking to the federal House of Representatives Standing Committee on Economics on Thursday. The committee convened to hear from the CEOs of the big four banks – CBA, NAB, ANZ, and Westpac.

Comyn (pictured above) acknowledged favourable economic factors such as “a strong labor market”, the return of immigration, and “a robust export sector”, which he said positioned Australia relatively well in the current economic environment.

“Despite these positive indicators we are acutely aware that many Australians are finding it tough, household confidence is now as low as it was during both the GFC and COVID,” Comyn said.

Inflation, although peaking in December, remained “uncomfortably high”.

“Those with mortgages are bearing the brunt of monetary policy, but renters are also facing sharp increases. While the number of customers who are failing to make repayments is still very low by historical standards, it is clear that many more are feeling under pressure,” Comyn told the committee.

“Many households are pulling back on discretionary spending and dipping into accumulated savings.”

Among younger individuals who had purchased their first homes during the pandemic, Comyn said the majority had reduced their spending, with one-third decreasing it by more than 30% year on year.

“We have a range of support measures available, including payment deferrals, interest only loans, and repayment plans. We are proactively contacting customers and I encourage any of our customers who are facing difficulty to talk with us about these options,” he said.

The rise of fraud and scams

“Helping customers when they need it is a priority for us. Another issue impacting customers is the rise in fraud and scams, which are impacting Australians at unacceptable levels,” he said.

“We are extremely focused on combating scams and protecting our customers.”

Comyn said CBA had taken steps to combat scams, launching services such as NameCheck to prevent mistaken payments, resulting in customer savings of over $11 million in just three months. The bank had also launched CallerCheck, partnered with Telstra to identify scam calls, and implemented stricter measures on crypto transactions to reduce fraud.

“We have introduced 24 hour holds for certain crypto transactions and blocks on transactions to exchanges with high levels of fraud. In addition, we are making changes to monthly trading limits to keep customers safe. However more needs to be done.”

Comyn called for a collaborative effort that involved banks, social media platforms, and telecommunication companies quickly sharing information and taking down scam websites, blocking scam text messages, and preventing payments linked to scams.

“Through the era of instant payments and the emergence of crypto currencies the system has prioritised speed of payments, customer convenience, and innovation. Across the board safety needs to be better prioritised,” Comyn said.

“It is clear that to reduce scams and improve customer safety, we need to slow down some types of payments.”

Comyn stressed the importance of implementing a regulatory framework that adequately addressed fraud and scams.

Payments review

“I’d like to acknowledge the government’s Payments Review – it is a substantial and considered piece of work,” Comyn said. “It has been 30years since some of the payments law was written, the government is proposing to broaden the definition of payment service provider to include all participants in the system.”

“This will mean ensuring all participants play their part in protecting customers and the system operates effectively and safely.”

CBA invests in infrastructure

Comyn also highlighted the investments made by CBA in enhancing it infrastructure. He said the bank had dedicated more than $600 million towards developing core systems that supported the consumer data right and facilitate real-time payments.

“It is good that multinational players view Australia as a market for innovation and for growth – but only if they are also investing in the infrastructure they are using, contributing positively to the broader ecosystem, and acting as agents of competition rather than as gatekeepers,” he said.

“These are just some of the issues that are impacting Australians and we welcome the serious approach the government is taking to engage on them.”

NAB and ANZ CEOs have their say

On Wednesday, it was NAB CEO Ross McEwan’s turn to speak to the House of Representatives Standing Committee on Economics.

McEwan said that despite a slowing economy, Australia enjoyed low unemployment, a strong demand for the nation’s natural resources, and migration was increasing.

“NAB’s wellbeing survey shows financial stress is growing, with one in four feeling worse off financially than just a year ago,” McEwan said. “Despite this, our customers are proving resilient. They are adapting and making considered changes to where they spend. Our research shows Australians are saving by re-prioritising their spending.”

McEwan said since interest rates started rising in May 2022, NAB had reached out to more than half a million customers to see how they’re doing, including 8,600 home loan customers “who we thought were most at risk”.

“But after checking in with them, surprisingly only 14 wanted immediate help,” McEwan said. “The number of customers in hardship, while growing, remains below pre-COVID levels.”

In his speech to the committee on Wednesday, ANZ CEO Shayne Elliot said while some customers were struggling, most were managing their way through the current financial pressures.

“For example, only $6 of $1,000s in our Australian home loans portfolio was overdue by more than 90 days,” Elliott said. “This is better than before the pandemic.”

Elliot said there were at least three factors behind this level of resilience – the strong labour market, record levels of households savings and improved credit standards.

He also welcomed the recent release by the government of its roadmap on payments and “the strong, collaborative focus on scams by the Assistant Treasurer.