Covid 19 coronavirus: ANZ puts aside more money for doubtful loans

The country’s biggest bank increased its credit impairment charge by another $79 million in the three months to June 30 as more borrowers came under financial pressure amid the coronavirus pandemic.

The impairment charge comes on top of the $233m ANZ Bank New Zealand reported in its six months to March 31 half-year result.

The New Zealand bank, which is owned by the ASX-listed Australian bank ANZ, doesn’t normally break out its quarterly figures.

But a spokesman for ANZ New Zealand said it was issuing the update because of the uncertainties around Covid-19.

“We wanted to update shareholders, bond holders and customers ahead of our full-year result, which will be issued in October.”

Unaudited figures for ANZ NZ shows its net profit was $351m in the three months to June 30, down from $391m in the three months to March 31 and the $393m it made in the December quarter.

Its credit impairment provisions rose 8.4 per cent to $838m.

The bank said the result reflected the impact of Covid-19 on the economy, ANZ NZ and its customers.

During the June quarter the bank provided deferrals on 24,000 home loans valued at $6 billion – around 6 per cent of New Zealand’s home loan portfolio.

It also granted 2700 temporary overdraft facilities to businesses needing more working capital, worth around $46m.

Between March 23 and July 31 the bank said it provided financial support for more than 39,000 personal, home and business loan customers.

Its deposit book rose 2.1 per cent to $115.8b and its lending book was flat at $136b.

The bank’s KiwiSaver funds under management rose 10.7 per cent to $15.5b between March 31 and June 30, reflecting a bounce back in the markets. It was up just 4.7 per cent since September 30.

Despite the tough economic situation the bank said it remained well capitalised, with a total capital ratio of 14 per cent, up from 13.9 per cent.

Australian parent ANZ announced third-quarter net profit of A$1.327b ($1.456b) and proposed an interim dividend of A25 cents per share. New Zealand imputation credit of 3c per share would be attached.

ANZ chief executive Shayne Elliot said the bank was better placed than when it went into the GFC with investments in data analytics and real-time monitoring systems allowing it to spot trends quickly and respond to customers’ needs promptly.

“You only need to look at the reintroduction of community lockdowns in Victoria and
Auckland to realise we all still have a way to go before this virus is behind us.

“There will be more challenges along the way, however I’m confident Australia, New Zealand and the key Asian countries where we operate are well placed to lead a global economic recovery.”

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