Australian Chief Finance Officers’ optimism continues to bounce back from the COVID-19 induced shocks since 2020, with over 80% of the country’s senior finance executives saying that they feel optimistic about the prospects for their company over the next 12 months.
According to the latest edition of Deloitte’s biannual CFO Sentiment survey, confidence overall is down slightly compared to six months ago, but nearly 25% of CFOs are still feeling highly optimistic as they look to emerge from the COVID-related challenges of the last two years.
Deloitte’s CFO Sentiment survey findings
- 81% of CFOs are optimistic or highly optimistic, about their financial prospects
- The 23% mark for those highly optimistic is the highest recorded
- 95% rated uncertainty levels as being higher than normal
- Net optimism about the financial prospects going forward is currently at 79%
- 58% think now is a good time to be taking on increased balance sheet risk
- 74% expect interest rates to rise in 2022
- 93% believe securing and retaining key talent is one of their key risks
Stephen Gustafson, the CFO, Partner and Program leader at Deloitte shared his insights.
“In the midst of this global pandemic and such uncertain times, positive levels of CFO sentiment, and resilience generally, were really encouraging. Pleasingly, this remains the case.”
“After a shaky Omicron-induced start to 2022, uncertainty remains a challenge and, perhaps not surprising, nearly all CFOs surveyed believe uncertainty is higher than normal.”
“But against this backdrop, there’s next to no pessimism around.”
“With nearly 25% of CFOs highly optimistic and 58% optimistic, this is a positive result when the global economic downturn of 2020 caused by COVID hit CFO optimism hard.”
Risk concerns from talent to China
The report also looks at a number of other issues on CFO radars.
“On the risk front, there is widespread concern about talent. An extraordinarily high 93% of CFOs agree that securing and retaining key talent will be a risk to their businesses in 2022.”
“This was a concern, but these aspects dwarf concerns about other risks. Businesses will certainly need to get innovative in 2022 as they seek new ways to attract and retain top talent.”
“Another significant risk assessment is of an economic slowdown for China, given the current state of Australia-China relations, and uncertainty levels being at an all-time high.”
“Yet 58% of CFOs still think now is a good time to take more risk onto their balance sheets.”
“This is likely supported by record-low interest rates, albeit now on the rise, but also shows that CFOs continue to adapt to the uncertain environment business is operating in.”
ESG – action on the rise
“Our Australian Chief Finance Officers recognise that investors, customers and their employees want action on environmental, social and governance in response to climate change.”
“70% say their ESGs are in the early or advanced stages of progress, so a strong majority are at least working towards or planning on embedding ESGs into their companies.”
“But some are also not yet confident in their abilities to drive ESG action in their organisations.”
“A lack of resources and having the relevant skills and knowledge available are barriers to driving change, and 65% have difficulty in measuring returns on investment of ESG action.”
And looking ahead…
“CFO interest rate expectations have changed dramatically over the past year.”
“Now at the start of 2022, almost three-quarters expect rates will rise this year, likely driven by the much better than expected ability of Australia’s economy and jobs to bounce back from pandemic impacts, along with the highest rates of price inflation seen in several years.”
“Overall, the uncertainty of the outlook remains filled with challenges, but also opportunities.”
“Positively, our survey indicates that Australian Chief Finance Officers remain comfortable navigating in this pandemic environment, and are positive about the future.”
“Risks and challenges aside, they are still focused on pursuing opportunities and growth.”