The National Australia Bank Ltd (ASX: NAB) is seeing clear and widespread signs of businesses recovering from the coronavirus pandemic that drove last year's recession.
NAB's CEO Ross McEwan shared the news in his opening statement to the House of Representatives' Standing Committee on Economics this morning.
Business owners and investors can now be reassured that the CEO of Australia's largest business bank believes the country's recovery is even better than he expected it to be.
ASX investors can rejoice, NAB affirms Australia's recovery
McEwan told the House of Representatives that businesses will be the most important factor in Australia's recovery.
He said NAB is currently approving more business loans that the banking giant was before the pandemic. Also, the bank's latest monthly business survey has shown business conditions are at a record high.
"I see this when I visit customers around the country. They are more confident, and they are looking to expand. Others, particularly farmers, are choosing to pay off their loans faster – a trend we have seen previously in good times," McEwan told the House of Representatives.
McEwan stated that, of the 130,000 business loans and mortgages NAB had paused in 2020, over 98% are no longer on deferral.
While the news will put a spring in the step of many Australians, McEwan warned not to get too excited just yet.
"The data we have is short term," he said.
"We are only months into the recovery. Challenges and uncertainty do remain. While most of our customers are back on track, some sectors such as hospitality, transport, professional services and tourism continue to hurt because of COVID and more recently the floods and the cyclone in WA."
NAB CEO's advice to the government
McEwan said government support measures, such as the SME Recovery Loan Scheme, are vital to Australia's economic recovery. Though he cautioned sometimes they won't be enough.
He said the government must make it easier for small business to innovate and modernise their businesses. While he supports first home buyer incentives, he said states need to simplify their approval processes for land developments. Doing so would combat the housing crisis, he said.
He also said more needs to be done to resecure the international student market, commenting that more international students will bring life into Australia's CBDs and supply businesses with seasonal labour.
According to McEwan, to do all of the above, the government must prioritise 3 actions:
First of these priorities is for all of us to get behind the rollout of the COVID vaccine. I will be encouraging all my colleagues at NAB to be vaccinated and will support them to do so. Last week as I had my flu shot at work, I was considering how large employers like NAB could assist with the rollout of the vaccine. We would be happy to do so at the right time.
Secondly, as I've said before, we need to have a national plan for living with the virus. Short term lockdowns in capital cities disrupt travel plans, they undermine confidence and deter activity.
And the third is reopening our international borders. The travel bubble with New Zealand is very welcome and more of these arrangements are needed. This will show that Australia can manage international arrivals which is critical for confidence.
At the time of writing, the NAB share price is trading 1.19% lower on the ASX, swapping hands for $26.62.
