BUSINESS FINANCE NEWS – NOV 7, 2020

A brief summary of news you probably missed!


Strange Bedfellows, Judo Flips, Pandemic Window Dressing

Strange Bedfellows

Need a business loan?  Head down to the post office! 

In a huge departure from its core business, Australia Post is jumping into bed with a large broking house to offer lending services to its small business clients.

Undoubtedly, AusPost will receive a commission for every referral to its new partner, Valiant Finance.

Valiant’s online platform will be integrated into the Post Office website and POS systems which will allow small business customers to get quotes and arrange appointments.

Pandemic Window Dressing?

NAB and ANZ will both reduce interest rates on some business loans following the Reserve Bank’s rate cut, but a cynic might suggest it’s window dressing.

NAB will slice 200 basis points off the interest rate of its  QuickBiz loan which comes on top of a similar cut in March.

QuickBiz is an unsecured loan of up to $250K for existing customers and $100k for newbies but with an interest rate of 8.95% no one is going to be dancing a jig.

The ANZ is also cutting rates for borrowers requesting access to the government’s guarantee scheme.   The pricing (4.24% p.a.) is OK, but so it should be when half the loan amount is underwritten by Canberra.

Smart Company reports that ANZ has set fixed-rates of 2.85% for new vehicle and equipment purchases.

Free Money, Who Cares?

Apparently, the RBA’s decision to keep interest rates at an all-time low isn’t encouraging people to borrow more and that’s bad news for banks who are witnessing lower profits. 

“Money is essentially free today. Making it more free doesn’t really change anything,” according to ANZ group CEO, Shayne Elliott which has reported a 40% slump in profits.

“There’s all this liquidity flushing around, and I don’t have much productive use for it, because people don’t want it.”

The pandemic is partly to blame.  Credit growth has contracted as workers and businesses hoard cash, an expected rise in business failures and elevated unemployment have also contributed.

Ouch…that hurts!

The privately owned, Judo Bank, is smarting from a pandemic induced hit to its bottom line, but remains determined to persevere.

The Sydney Morning Herald reports that the two-year-old alternative business funder reported a net loss of $50.5 million for the year ending June 30 and has identified $424 million worth of business loans requiring close monitoring with up to 18% expected to become non-performing.

That said, the bank claims to have weathered the Covid storm better than most lenders.  It has added nearly a billion dollars in lending during Covid “reflecting the frustration small business owners have with the big banks”.