Newcastle Permanent details its approach to deferral check-in

by Madison Utley14 Sep 2020

With the Australian Banking Association (ABA) reporting half of the 900,000 loans deferred since the onset of the COVID-19 pandemic are imminently due for review, and ASIC making it clear lenders are to take a highly personalised approach when determining each borrowers’ next step, much discussion has been held around what that process may look like.   

Now, Australia’s second largest mutual bank, Newcastle Permanent, has provided details regarding how it supported customers from the beginning of the pandemic, and how it plans to move into the next phase of consultation as deferrals come to an end.

Overall, the bank has enabled 2,286 customers who hold approximately 1,900 loans defer their repayments, amounting to $463.6m – just under 5% of the group’s total loan portfolio.

According to Newcastle Permanent CEO Bernadette Inglis, the low percentage can be attributed to the group’s “approach to lending combined with its prudent lending policies”.

“I believe that our personal and individualised approach to the unprecedented situation presented by the pandemic has resulted in us delivering the best possible outcome for our customers,” Inglis said.

“It has been our priority to speak with every customer (over 3,100) who enquired about hardship assistance and ensure we supported them with the most appropriate solution for their individual circumstances.  

“As a result, as at 30 June, our 60+ day home loan arrears ratio sits at 0.12% well below the major banks at 1.02% and mutual sector at 0.77%.”

Additionally, many Newcastle Permanent customers who deferred their loan did not require the full six-month period, falling instead within the one to five month range.

At the end of July, under 800 loans remained in a deferred repayment arrangement, an already-low number the group expects to “significantly reduce in the coming months”.

“Encouragingly, of our customers who exited repayment deferral on 30 June, all except a handful have made their July repayment,” said Inglis.

“We will continue to maintain individual contact with our customers who remain in deferral so that those who are in a position to resume their repayments can do so.”

The CEO has expressed pride that 92% of Newcastle Permanent customers indicated they were satisfied with the outcome of their hardship request and highlighted that “even more believed they were responded to within a reasonable timeframe”.