NAB to fund low-income Aussies

The major bank has pledged to provide 100,000 loans annually to low-income Australians as part of its ambition to improve the financial wellbeing of its customers and communities.

The commitment comes as research commissioned by NAB found that more than 2.6 million Australians have no savings at all, leaving them unprepared for a financial shock such as an unplanned medical expense.

NAB's chief executive officer, Andrew Thorburn, said that the bank wanted to better understand the issue of financial resilience and how it could do more to help.

“Banks are central to the lives of Australians, including assisting them with some of the most important decisions they will make such as buying a home or starting a business,” the CEO said.

“But it’s just as important [that] we back people when they need it most. That’s why we have committed through our partnership with Good Shepherd Microfinance to provide 100,000 loans annually to low-income Australians within two years.

“These loans are for items such as a second-hand car, fridge or washing machines — items that can seem small but make a big difference.”

Part 1 of the Financial Resilience in Australia report, produced by the Centre for Social Impact (CSI) at UNSW Sydney in partnership with NAB, reveals that only one in three (31 per cent) Australians are feeling financially secure — a 5 per cent decline on the previous year.

The research found that fewer Australians are prepared for "a rainy day", with only half having savings equal to three or more months’ pay.

It also found that Australians are less financially resilient than in previous years, with more than 2.4 million adults either severely or highly stressed about money than last year.

Financial resilience is described as “being able to bounce back from a financial shock. This includes having savings and access to appropriate credit, as well as support from family, friends, community and government organisations.”

Mr Thorburn said that the cost of living is a real concern for many Australian households, so when they are hit with an unexpected bill, it can be difficult to bounce back.

“To build financial resilience, it is really important that Australians have access to support, products and services so that when times are tough, they can get the help they need.”

NAB has worked in partnership with Good Shepherd Microfinance for the past 14 years to provide products, support and education to Australians who don’t typically qualify for bank products and services.

“We are proud that through our long-standing partnership with Good Shepherd Microfinance, we’ve provided more than $212 million in no and low interest loans to [more than] half a million Australians who need support,” Mr Thorburn said.

“But as the research shows, there is more to be done and we are committed to helping.”

NAB has allocated $130 million for microfinance products and last year with Good Shepherd Microfinance provided 26,000 loans to low-income Australians. Mr Thorburn has set a target to increase that to 100,000 loans annually within two years.

Chief executive officer at CSI Professor Kristy Muir said that it is concerning to see that Australians are feeling less financially secure.

“Financial stress can have significant impacts on a person’s life,” Professor Muir said. "We know that a growing number of Australians are financially stressed and don’t have appropriate, affordable or accessible supports to help them survive a financial shock. It’s important that society has the right safeguards in place.

“By understanding more about what Australians need to help them access appropriate and affordable supports, they will be better placed to withstand financial adversity and [be] better equipped to face and bounce back from adverse events.”