The economic uncertainty sparked the coronavirus pandemic has prompted millions of Australians to save more and improve their financial wellbeing, Commonwealth Bank says.
New research by the nation’s largest bank found more than half of its customers improved their financial health during 2020, paying down debt and increasing savings.
CBA measures financial wellbeing by seeing how well customers are managing their everyday finances such as balancing income, expenditures and borrowings. It also looks how prepared a customer is financially in response to an emergency.
Between February and November, 52 per cent of CBA customers said their financial position had improved, while 24 per cent flagged the pandemic had made them worse off. A further 24 per cent said there was no change to their financial health.
CBA financial wellbeing manager, Mo Khalil, said the bank’s index showed promising signs the majority of Australians were spared the worst of the deteriorating economic conditions caused by the virus.
“This improvement is primarily driven by people spending much less than they earned over this period,” Mr Khalil said.
“While incomes did fall over this period, it would’ve been much worse if the short-term government support and one-off stimulus measures weren’t in place to support Australians.”
According to the index, conditions improved from 47.2 points to 50.5 points over the period — the largest increase since CBA began monitoring financial wellbeing of its customers in 2018.
Mr Khalil also noted falls in income over the period were mostly offset by large reductions in expenses during stay at home orders, which caused a significant drop in the amount of spending in the economy.
CBA has also linked home and personal loan repayment deferrals to the better level of savings held by customers.
Saving deposits have increased across the country and is mostly being driven by ongoing uncertainty about future financial positions beyond the tapering of federal government support measures such as JobKeeper and JobSeeker.
Mr Khalil said the uptick in financial wellbeing could only be a short term effect and may not reflect the longer term impacts of the pandemic.
“This is a relatively positive trend at the macro level as it suggests the government and industry interventions that have been put in place during the worst of the pandemic have worked as intended,” he said.
“However, there are still many Australians that didn’t fare as well as during COVID-19, including those on government benefits other than JobKeeper and JobSeeker, and older Australians.”
According to CBA, the number of people receiving JobSeeker benefits between February and November doubled compared to pre-pandemic levels.
“Maintaining the improved spending and saving habits customers exhibited during the pandemic will be an ongoing challenge as income support unwinds and opportunities to spend post-lockdown and through the Christmas season increase,” Mr Khalil said.