Australian loan deferrals: compare favourably with APAC countries

Australian and New Zealand banks lead the way.

New analysis from Standard & Poors on loan deferrals and credit losses illustrates the strength of the Australian banking system. Analysis shows that Australian and New Zealand banks are leading the way in the Asia-Pacific when it comes to the reduction in the number of loans deferred during the early stages of the COVID-19 crisis.

0.5% of loans deferred

Australia had just 0.5% of loans deferred in February 2021 after a peak of 10% in May 2020. The resumption of loan payments by the majority of customers is evidence that the coordinated effort of industry and government during 2020 supported Australian banking customers and assisted economic recovery.

Shock absorbers

Capital concessions applied by APRA to deferred loans have been proven effective in creating shock absorbers in Australia’s credit system. Credit losses for Australian banks, as a proportion of all customer loans, were less than 0.5% during the peak of the COVID-19 crisis in 2020 and are estimated to decline to the longer-term trend of 0.1% in 2021.

This compares favourably with actual and predicted credit losses in other Asia-Pacific jurisdictions.

APRACOVID-19DataLoan DeferralsS&P