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CBA received 144,000 mortgage deferral requests

by Annie Kane5 minute read

The major bank has received repayment deferral requests on more than 144,000 home loans, 71,000 business loans and 25,000 personal loans as a result of the COVID-19 crisis.

In its March 2020 trading update, the Commonwealth Bank of Australia (CBA) revealed how the coronavirus pandemic has been impacting the bank and its customers.

According to the bank, it has received over 1 million calls and online requests for help and has seen an 800 per cent increase in calls to its financial assistance line.

Since launching its COVID-19 financial assistance package, which includes loan repayment holidays for up to six months (capitalised into the loan), the bank has reportedly received repayment deferral requests on approximately 144,000 home loans, 71,000 business loans and 25,000 personal loans. While the major bank did not reveal how many of these had been granted, it outlined that the total balance of mortgage deferral requests was $50 billion.

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The vast majority (71 per cent) were for owner-occupied mortgages, with the remainder (29 per cent) being for investment loans. 

Deferrals were largely for principal and interest repayments (84 per cent), with just 16 per cent for interest-only.

CBA also registered repayment deferrals for 70,700 business loans (balance of $15.2 billion) and 25,000 personal loan account deferral requests.

According to the bank, by reducing repayments for all variable principal and interest home loan accounts to the minimum required on 1 May 2020, it has “released up to $3.6 billion of additional cash flow into the economy”.

The bank also revealed it had approved over $555 million of new lending from over 6,500 applications under the government’s Coronavirus SME Guarantee Scheme.

The scheme was found to be particularly popular with those in retail trade (making up 18 per cent of applications), construction (16 per cent), accommodation, cafes and restaurants (14 per cent) and business services (12 per cent).

CBA’s update also outlined that home loan growth remained above system, particularly driven by new business volumes in the quarter. 

In the quarter ending March 2020, the CBA group (including Bankwest) had written $24 billion in new loans – up from $20 billion in the prior comparative period. 

Brokers continued to write approximately 47 per cent of new loans for the group (or 41 per cent of CBA loans (excluding Bankwest).

Overall, CBA reported an unaudited statutory net profit of approximately $1.3 billion in the quarter.

The group also revealed that it has made an additional credit provision of $1.5 billion for forward looking adjustments in relation to COVID-19 – and that it had entered into the sale agreement for 55 per cent interest in its superannuation and investment business Colonial First State (CFS) with global investment firm KKR.

The transaction implied a total valuation for CFS on a 100 per cent basis of $3.3 billion, which will result in CBA receiving cash proceeds of approximately $1.7 billion, making for a post-tax gain of $1.5 billion. The post-tax gain figure included separation and transaction costs for the bank of around $180 million.

CBA CEO Matt Comyn commented: “The Commonwealth Bank is focused on doing everything we can to support Australia in these challenging times. The bank is well funded, with significant levels of excess liquidity and strong capital.

“The strength of the bank means we are well placed to support our customers and the broader Australian economy.”

He added: “Since the onset of the COVID-19 pandemic, our package of support measures has included over $9 billion in support to ~100,000 businesses, repayment deferrals on approximately 240,000 loans, reduced interest rates for borrowers, increased interest rates for depositors and waived fees and charges.”

Mr Comyn continued: “The measures put in place by the government and the Reserve Bank, and the actions taken by regulators, have cushioned the economic impact, kept businesses intact and supported people who have been most impacted.

“I am proud of the ongoing efforts of everyone across the group, and I know that the Commonwealth Bank will continue to support our people, our customers and the broader Australian community.”

[Related: Banks freeze $6.8bn in loans]

cba

Annie Kane

Annie Kane

AUTHOR

Annie Kane is the editor of The Adviser and Mortgage Business.

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