Weekly update: 17.03.23

“What is underpinning this bank failure is a number of things, but not least of all, it’s a very niche bank with high exposure to one part of the economy. And that’s the part of the economy that’s been quite volatile and troubled… remember that [in Australia] we have some of the best capitalised banks in the world” 

– ABA CEO Anna Bligh speaking to Sky News regarding SVB closure.

---

Parliamentary Update:

• The Prime Minister made a series of key announcements on Australia’s AUKUS Nuclear-Powered Submarine Pathway, including a joint leaders statement with US President Joe Biden and UK Prime Minister Rishi Sunak.
• The House of Representatives Standing Committee on Economics conducted public hearings with the Productivity Commission and the Australian Competition and Consumer Commission (ACCC) on 16 and 17 March 2023. These hearings form part of the Committee’s inquiry into promoting economic dynamism, competition and business formation.
• Housing Minister Julie Collins made an announcement on social and affordable housing in Melbourne with Victorian Housing Minister Colin Brooks.
• The Joint Standing Committee on Trade and Investment Growth held public hearings as part of an inquiry into ‘Australia’s transition to a green energy superpower’.

---

Policy Update:

• The ABA hosted the US Assistant Secretary of the Treasury for Terrorist Financing for a roundtable discussion on anti-money laundering, counter-terrorism financing and sanctions. It was a constructive discussion on how banks and regulators can work together effectively and efficiently.

• The ABA received a briefing from the International Justice Mission about the intersection of modern slavery and scams.

---

Economic Update:

• As at December 31, 2022 there was $244b sitting in mortgage offset accounts, a growth of 42 per cent since December 2019, Figure 1.

Figure 1: Balances sitting in offset accounts, $m, July 2019 – December 2022

• The value of non-performing loans (i.e. those 90+ days in arrears) continues to fall, while loans 30-89 days past due has increased slightly, though remain below pre-COVID levels, Figure 2. The proportion of non-performing loans relative to the housing portfolio now sits at 0.59 per cent, down from 0.62 per cent in the September quarter and 0.79 per cent in December 2019.
• An increase in loans 30-89 days past due should not be taken to mean we will see a corresponding increase in 90-day arrears (i.e. non-performing loans) in a few months. Although loans do have to pass through this category to become non-performing, people can miss a single repayment before returning to regular payments, particularly over the Christmas period. So while it’s good to monitor loans 30-89 days past due this shouldn’t be used with certainty as a lead indicator of non-performing loans.

Figure 2: Housing loans past due and non-performing, $m, July 2019 – December 2022

---

Communications and Media Update:

• ABA CEO Anna Bligh spoke at the University of Queensland’s ChangeMakers event, part of a panel discussion on ‘who’s using your data?’ Anna discussed the risks and opportunities arising from the digital transformation underway across many sectors.

• Key media issues that we managed included a high volume of media enquiries regarding the collapse of Silicon Valley Bank. We issued a statement here. Read the transcript of Anna’s interview on Sky News here.  
• We also issued a media release about how the Australian Banking Association (ABA) has engaged the Australian Network on Disability (AND) to undertake a review of the ABA Accessibility Principles for Banking Services.

---

Upcoming Events:

---

Submissions Lodged:

• Options for an Australian SMS sender ID registry

---

Upcoming Submissions:

---

Selected Media:

• AFR – Labor’s climate disclosure will backfire, business warns
• Sky News – ‘Australia’s banking system is very well protected’: Concerns after Silicon Valley Bank collapse
• The Age – ‘Incredibly hard to see’: Investors play down SVB contagion fears
• SMH – Regulators vow to watch Aussie banks closely amid hopes worst is over

Weekly Update