The big four banks went hard on pandemic-related provisions only to reverse some of that pessimism this year.
Now that the big four bank reporting season is over, there’s one thing that really stands out — the massive contrast between the COVID-19 crisis and the GFC when it comes to bad debt provisioning.
The big four were slow to recognise how bad the GFC was going to be, with only modest write-offs in 2007-08 of $5.62 billion, up from the boom-time low of just $2.24 billion in 2006-07. This was followed by a huge jump in 2008-09 to a record $13.1 billion in write-downs, followed up by a still historically large collectively write-down of $8.2 billion in 2009-10.
This time around, all of our major banks went way over the top with excessive COVID-related provisions only to very quickly reverse some of that pessimism, as shown by results released by NAB, ANZ, Westpac and CBA over the past week.
Keep reading about how the big four banks responded to the pandemic…
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