The Commonwealth Bank of Australia (CBA) has again faced parliamentary scrutiny on Thursday, with the House of Representatives Standing Committee on Economics probing the country's largest bank over small business lending.
Of particular concern to Liberal MP Craig Kelly is that CBA has responded to the Banking Royal Commission by limiting lending to smaller and riskier businesses.
"It's absolutely essential that when small business decide to take an entrepreneurial risk and they're putting their home and assets on the line that they know if something goes wrong that they have fair access to justice," Kelly said, directing his question to newly appointed CEO Matt Comyn.
"The last thing we want in this nation is where people don't take that risk because of the concern that if something goes wrong down the track that their bank is going to do them over unjustly."
Comyn responded by telling the committee that his bank is a beneficiary of Australia performing economically well, and that lending to small businesses has not lulled due to the Royal Commission.
Australia is a nation of small business operators -- defined by the Australian Small Business and Family Enterprise Ombudsman as a business employing less than 20 employees and by the Australian Taxation Office as businesses turning over below AU$10 million.
As of July 2017, 97 percent of business in Australia were small businesses employing less than 20 people -- that is, 2.1 million individuals are employed by a small business.
"Small businesses represent an enormous contribution to GDP output, so it's certainly our stated objective to provide credit to any business that we would consider to be credit worthy," Comyn said.
"I do think that the industry quite rightfully is under a lot of pressure and scrutiny."
He conceded, however, that institutions like CBA have enormous resources to draw upon when it comes to dealing in court with customers or small businesses that are fighting determinations made by the bank.
"It is an unfortunate element of a business banking model which is not all of the loans we make will be repaid in full. If they were, that would actually be a weakness in our banking system because we simply wouldn't be providing enough credit to facilitate economic growth in Australia," Comyn continued.
"That's a very fine balance, and any individual who is subject to their business not performing well, or their inability to repay their loan ... we do need to take steps to minimise losses on behalf of those owners."
Joining Comyn was the bank's chief risk officer David Cohen, who told the committee that CBA has not sought to reduce credit in response to the Royal Commission.
He said the bank has, however, somewhat "moderated its appetite" when it comes to lending across the board.
"In the process of going forward, we want to make sure that we're only operating in parts of the market we feel comfortable with overall risks that may emanate from that, including reputational," Comyn added.
CBA reported 12-month statutory net profit after tax of AU$9.4 billion, a 4.7 percent decrease from FY17.
Operating income for the year ended June 30, 2018, was AU$25.9 billion, up 2.6 percent year on year, and operating expenses totalled AU$11.6 billion, up 9.2 percent over the prior year.
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