COVID Induced Deferred Loan Balances Slashed - APRA
(01 April 2021 – Australia) The value of COVID impacted loans declined to A$14 billion in Q1 2021 from a peak of A$274 billion according to a final update on deferred loan balances by the Australian Prudential Regulatory Authority (APRA).
The value of ‘frozen’ loans has declined by two-thirds month-on-month as of February 2021, as borrowers recommence full loan repayments, effectively ending the deferred loan experiment. Residential mortgages represent the lion share of deferrals as of Q1 2021, with A$11.7 billion in loans still halted compared to a mere A$1.5 billion in SME loans according to APRA.
Since January 2021, over A$22 billion in borrowings exited deferral, with only A$500 million worth of loans having their deferrals extended.
NAB has seen the highest proportion of customers cease loans deferrals, reporting only A$900 million in stalled balances. CBA confirmed A$2.3 billion in loans remaining in deferral, while ANZ and Westpac reported that A$3.9 billion and A$5.1 billion remained frozen respectively.
“The economic recovery that is both welcome and well under way will nevertheless be uneven, and there is still some way to go. Globally, the health and economic picture is mixed. New shocks could emerge at any time” stated APRA Chairman, Wayne Byres.
“Business has been bloody resilient. We do worry about the recovery in Victoria, but outside of Victoria businesses have had quite a lot of time to get their ducks in a row and understand what normalised trading looks like. Demand for credit has returned, with businesses looking for asset finance and working capital as they built stores of inventory” commented CBA Business Banking Group Executive, Mike Vacy-Lyle.