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Two of Australia’s major bank bosses have markedly differing views on the near-term outlook for the Australian economy after the nation sunk into its first recession since the early 1990s.

But both have a bleak view on house prices.

Westpac chief Peter King told federal MPs on Friday the June quarter was certainly a tough one, with a seven per cent contraction.

“We think from here it should improve,” he told the House of Representatives economics committee on Friday, with the bank predicting 1.8 per cent growth in the September quarter.

But he said the outlook for unemployment was more complicated when taking into account government support.

The bank was looking at a peak of eight per cent compared with 7.5 per cent now and just over five per cent at the beginning of the crisis.

However, National Australia Bank CEO Ross McEwan was more pessimistic.

He expects a flat economic outlook for the rest of the year, which would leave annual growth down 7.8 per cent before recovering by 4.5 per cent next year.

“We are expecting borders opening on our assessment by the end of the year,” Mr McEwan said.

“It will be significantly lower if they don’t open.”

The bank is also assuming a very stimulatory budget in October

NAB expects the jobless rate to hit 10 per cent in the first three months of next year and high levels of unemployment through to the end of 2021.

On house prices, Westpac expects they will fall 10 per cent because of the COVID-19 crisis from a starting point in April. Prices have already declined three per cent.

NAB expects declines could be as high as 15 per cent, with larger cities suffering the most.

The committee’s regular catch-up with the major banks inevitably turned to Westpac’s money laundering scandal.

Mr King believes the $900 million the country’s second largest bank has set aside for an eventual settlement with financial regulator AUSTRAC over breached anti-money laundering laws is adequate.

He said the bank had admitted to a substantial majority of breaches and continued to work with AUSTRAC.

“It remains our preference to settle the matter,” Mr King said.

Deputy chair of the committee and Labor MP Andrew Leigh wondered why the bank thought $900 million would be adequate to cover the fine when he understands the financial regulator is looking at a potential $1.5 billion.

“Based on our review of the matters we have determined that $900 million was the right provision,” Mr King replied.

He also said the bank would reassess its dividend policy after deciding not to pay one to its shareholders after its third quarter earnings dropped by 22 per cent as a result of the pandemic.

Mr King said the bank intended to move away from “broad packages” to assist customers during the pandemic and towards more individual tailored arrangements.

Mr McEwan said his bank would continue to provide assistance from further deferrals or interest only payments on loans.

“At the same time, we will sometimes need to make the hard but right decisions,” he said.

“Lending more money to customers who have little chance of repaying it will cause more harm in the long term.”