$153.5 billion worth of deferred loans: What this means for Australian lenders

Like many countries, Australia has already started to witness the economic ramifications the COVID-19 pandemic has caused. As a result, the Australian Government released several stimulus packages in hopes to help support the economy from the short term hit of COVID -19. Interest rates have been cut to new record lows of 0.25% and a record number of deferred loan payments totalling $153.5 billion have been made [1].

What have been the financial impacts so far?

Credit risk and availability has been impacted significantly and it is clear that short term bank profits will fall, and we will start to see a trend of impaired loans [2].  The fiscal and monetary policies put in place by the government has immediately helped the many tens of thousands of individuals who are now facing unemployment but Australia has already seen a decline in loan growth despite efforts made by lenders in offering attractive rates to businesses and individuals. The Reserve Bank has estimated that the unemployment rate could peak at 10 per cent in 2020, suggesting loans growths will be slow.

Australian banks have taken a hard hit from the economic pressure placed upon them by COVID-19, however, the good news is that Australian banks have shown that they have enough capital to endure the stress of the pandemic. It is difficult to say what exactly will happen in financial forecasts and real signs will start to amount in Q2.

Additional pressures placed on banks because of the deferment of loans

The Australian Banking Association states that Banks have deferred repayment of 429,000 mortgages totalling $153.5 billion[3]. Additional pressures will be placed on banks to cope with such high volumes of loan deferment which would involve additional resourcing. Here are the top reasons banks have outsourced support during COVID-19:

  1. Additional support resourcing: Banks are being inundated with the enquiries (telephone and email) from clients, who will have key questions around how they defer their loans as well as any questions around when payments go back normal. They will have to cope with the influx of processing deferred loans, and ensuring they are done so swiftly and accurately.
  2. Handling customer complaints and enquiries: With the increased demand placed on banks to defer loans many have struggled to keep up with the increase in customer complaints. Banks will need to mitigate potential negative press associated with claimant complaints during this time and ensure that all complaints are handled fairly and promptly. Banks will also face an increase of enquiries with customers requesting more clarity on the deferral process. ABA CEO Anna Bligh reported that one bank received a years’ worth of calls in a week. This highlights the sheer volume and influx of additional customer care handlers’ banks need to outsource. [4]
  3. Resuming back to normal processes: Post COVID-19 all these credit approvals, payment holidays and any other government schemes need to be placed back to original systems and procedures and that too will require a substantial resource pool of administrative and regulatory delivery roles. Those in financial services will be inundated with additional demands placed upon them that will have to be processed efficiently and effectively – and the only rapid, efficient and effective way to do so will be with the implementation of additional contingent workforces.

How are workforces changing to adapt? 

We have seen two key trends in workforces – especially over the last several weeks. The first being the change from permanent roles to contingent ones, and the second, organisations cutting costs by hiring on a project basis rather than attaining permanent staff. Now more than ever individuals are leaving their 9-5 roles because of redundancies caused by the pandemic. Many have taken on new remote contingent roles in varying industries, especially in customer services and various eCommerce platforms. Organisations are also turning to the contingent workforce to help alleviate additional pressure placed on them, particularly in order to cope with increased demands, they are and will be facing. Trends in the market reveal that many organisations are starting to plan for the influx of work they can expect in the months ahead now and are doing so by resourcing a contingent workforce that can solve the issue of additional demand and supply.

Are you preparing for the post-COVID-19 world? 

The post-COVID-19 world will present enormous amounts of opportunities for those who are prepared, and many are starting their preparations to transition into new market norms by equipping themselves with contingent workforces. The time is now, and many have started their endeavours of recruiting these contingent remote workforces, to ensure they will be ready for when the wave of new work comes in.

For over 30 years Momenta has deployed skilled contingent professionals within the Financial Services across the globe especially during times of crisis when organisations need to implement contingent workforces on a deadline. Today, our global ecosystem of over 30,000 associates, provide professional services to leading companies worldwide. Our clients rely on this knowledge and experience to fill their own skills gap, delivering on key projects both efficiently and economically.

More importantly, Momenta understand the actual tasks that you may want assistance with.  So rather than merely sending you CVs or bodies, we can ensure that we pre-screen effectively.  Further, our account managers will be familiar with your challenges and understand not only the deliverables you need to provide within your organisation but the challenges you will be facing in setting up the units you need to satisfy your organisation’s requirements and the Regulator, and the public’s expectations of it.

If you require help with contingent resourcing, please call us today.


[1] “Repayments Deferred on 1-in-14 Home Loans, Industry Figures Show.” SBS News, 16 May 2020, www.sbs.com.au/news/repayments-deferred-on-1-in-14-home-loans-industry-figures-show. Accessed 16 May 2020.
[2] GlobalData Financial Services. “Australia and Its COVID-19 Recession Will Heavily Impact Banks.” Private Banker International, 25 Mar. 2020, www.verdict.co.uk/private-banker-international/comments/australia-covid-19-recession-banks/. Accessed 15 May 2020.
[3] Australian Banking Association. “Banks Defer Repayment of 429,000 Mortgages Due to COVID-19.” Australian Banking Association, 15 May 2020, www.ausbanking.org.au/banks-have-now-deferred-more-than-400000-mortgages/. Accessed 14 May 2020.
[4] “Banks ‘Inundated by Calls’ at Record Levels from Distressed Customers Says ABA’s Anna Bligh on Ausbiz.” Www.Ausbiz.Com.Au, 7 May 2020, www.ausbiz.com.au/media/banks-inundated-by-calls-at-record-levels-from-distressed-customers-says-abas-anna-bligh?videoId=914. Accessed 18 May 2020.