NAB takes aim at red tape hobbling recovery – The Australian Financial Review

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3.Dec, 2020 0 news

NAB takes aim at red tape hobbling recovery – The Australian Financial Review

“Some of the processes at NAB and across Australia are heavier than I’m used to,” Mr Irvine said.

“There is more paper in the process and more elements to the process. In some of our lending processes there are 20 different processes that need to get done and I want to collapse those meaningfully so that we are faster and stronger.”

In his previous role, Mr Irvine was the head of business banking for the Bank of Montreal, which like NAB has a long history of banking the agriculture industry. NAB is understood to finance around $1 out of every $3 lent to agribusiness in Australia and Mr Irvine is keen to build on that.

Mr Irvine has put the finishing touches on a refreshed strategy for his division, which includes business and private banking, with the five key themes distributed to its top 300 bankers.

Among them are the bank’s quest to deepen relationships with customers by giving more business customers transaction accounts instead of just loans; ensuring those same customers are aware of the private bank; and chasing more business in sectors where the bank has already carved out a profitable niche, such as healthcare.

“We are really, really optimistic about Australia right now. We see growth, we see resilience, we’re open for business and that’s why we are hiring,” Mr Irvine said.

After GDP collapsed 7 per cent in the June quarter and rose 3.3 per cent in the September quarter, NAB is now forecasting a 4 per cent recovery in GDP in 2021. The development of the vaccine and Victoria’s success in defeating the virus provided the two key turning points for sentiment, according to Mr Irvine.

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“Everyone forgets that there was a real risk that we might not be able to find a vaccine. There are many viruses out there that have been out there for years, decades or centuries, even where there is no vaccine, and so thankfully that’s not the case with COVID,” Mr Irvine said.

As part of the refreshed strategy, Mr Irvine wants to deploy greater use of data and analytics to serve as both an early warning system for customers in trouble while also delivering product and solution efficiencies for both the bank and customers.

Mr Irvine does not see the looming March 31 deadline on capital relief for deferred loans as something that keeps him up at night, saying the bank was well advanced in working through the list of borrowers in trouble.

“The vast majority of our portfolio will be on normalised repayment structures and we are already working with those that we anticipate having more challenges, so March 31 isn’t a date that we are necessarily looking at,” Mr Irvine said.

As of October 27, NAB’s book of frozen SME loans had fallen 76 per cent to just $5 billion from $21 billion at the peak in June, dove-tailing perfectly with APRA statistics that revealed the proportion of frozen SME loans across the system had fallen to just 4 per cent on October 31 from a June peak of 17 per cent.

There were examples of customers where COVID-19 had irrevocably damaged their business and the bank was working with them to find the best way out. However, for many stricken businesses the virus had simply acted as an accelerant for longstanding problems.

“A large chunk are actually customers who were already in some difficulty pre-crisis, some form of trouble pre-crisis and the crisis has exacerbated things for them. So we often forget that’s the largest chunk here – customers who had a pre-existing business mix or a business proposition challenge,” Mr Irvine said.

Mr Irvine said customers were continuing to come out of loan deferral arrangements on schedule but the bank wouldn’t be in a position to provide an update on the November numbers until later this month. NAB’s annual general meeting is set to take place on Friday December 18.

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