The share prices of our major four ASX banks have been hit hard in recent weeks as the S&P/ASX 200 Index (ASX: XJO) has seen sharp falls across the board.
Yesterday, the government announced that a range of non-essential businesses including clubs, pubs, churches, casinos, gyms, indoor sporting venues and entertainment venues were to be shut down. Although restaurants and cafes are still permitted to serve takeaway food and conduct home delivery, all sit-down meals have been banned. This decision is likely to cripple some small businesses in these industries.
Essential services such as banking will remain open for now, but how are retail banking branches likely to be impacted in the months ahead if the coronavirus crisis deepens?
Some retail bank closures appear likely
It looks highly likely that our big four banks will be forced to close some of their branches, at least in some isolated areas. This comes as an increasing number of customers stay away from retail areas, and banks deal with the impact on their staff of the closure of some schools and the decision by some parents to keep their children home from school.
Commonwealth Bank of Australia (ASX: CBA) recently announced that its branches will all remain open for now. However, it is asking all customers to use its digital tools where possible. CBA also is enforcing the government's 1.5-metre social distancing guideline in all of its branches. The other three major ASX banks have also implemented social distancing measures in their branches and asked customers to use digital services wherever possible.
National Australia Bank Ltd. (ASX: NAB) has announced that it plans to keep as many branches open as possible for essential banking services. However, it did point out that it may be required to temporarily close some locations to ensure that staff can care for their children and dependents.
NAB has also increased its online transfer limit to $40,000 as another means to discourage customers from entering branches, and customers can deposit cheques by taking a photo of them in the NAB app.
Australia and New Zealand Banking Group (ASX: ANZ) hasn't yet provided any information of potential branch closures. It has, however, informed its customers not to visit any of its branches if they have been in contact with the coronavirus, told to self-isolate or travelled internationally in the last 14 days.
While Westpac Banking Corp (ASX: WBC) recently announced that it will work hard to keep branches open, the bank admits it may see isolated branch closures over the coronavirus crisis period.
Foolish takeaway
Although some isolated bank closures are highly likely over the months ahead as the coronavirus crisis looks set to continue, I believe any impact on the share prices of the big four ASX banks due to these closures would be negligible.
Our big four banks will continue to play a vital role in our economy and are well equipped to handle consumer and business transactions done remotely. In fact, for some time now, banks have been trying to downsize the number and size of their physical branch outlets in order to reduce overheads and increase overall profit margins.
