They are competitors in Australia’s banking industry but the bosses of the country’s two largest financial institutions agree on one thing.
There is still work to do restore the trust of customers after the findings from the royal commission earlier this year.
Commonwealth Bank of Australia and Westpac have already doled out millions of dollars in remediation payments to compensate mistreated customers, and expect the bill to run into billions.
“The royal commission … has forced us to confront a number of failures where we haven’t served our customers appropriately,” Commonwealth Bank CEO Matt Comyn told the House of Representatives economics committee on Friday.
“We have set about making significant changes to ensure, not only they are remediated in full and promptly, but also taking proactive steps to ensure these things don’t every happen again.”
He said his bank has already paid out $1.2 billion in remediation payments and this is expected to grow to $2.2 billion.
Earlier, Westpac boss Brian Hartzer told the hearing his bank has provisioned for $1.4 billion in remediation costs, but couldn’t rule out additional charges beyond the current financial year.
“It is sadly inevitable that there will always be some errors … There is likely to be more but we have no idea of how much that will be,” Mr Hartzer admitted.
On the state of the economy, Mr Hartzer said the interest rate cuts led by the Reserve Bank have had some benefits, such as the bounce-back in real estate sales.
But he believes further interest rate cuts by the central bank may have a negative impact on the economy, rather than giving it a boost.
“I do have sympathy for the view that for some people further reductions in interest rates are seen as a negative symbol rather than a positive,” he said.
The Reserve Bank has cut the official cash rate three times this year to a record low 0.75 per cent, and in its latest quarterly monetary statement on Friday said it is prepared to ease monetary policy further should the economy require such stimulus.
Mr Hartzer doubts Australia will eventually see negative interest rates, but Westpac is still preparing for the possibility.
“We think it is much more likely, from here, that if there was a desire for further monetary stimulus it would probably end up taking a different form, rather than actually going to negative headline rates,” he said.
Recent bank results show an ultra-low interest rate environment is having an impact on profitability.
“It will continue to have an impact even if there are not further declines in official cash rates,” Mr Hartzer said.
The heads of ANZ and National Australia Bank will appear before the committee next Friday.