ANZ takes hit as bad loans put profits in the slow lane
ANZ has posted a full-year profit plunge after increasing its provisions against loans going bad as borrowers struggle to recover from the economic fallout of the global health crisis.
The bank’s cash profit for 2019-20 was $3.7bn, down 42 per cent from $6.4bn for the previous financial year.
“This decrease was primarily driven by full-year credit impairment charges of $2.74bn, which increased from prior year due to the impact of COVID-19 and a first-half impairment of Asian associates of $815m, also related to the pandemic,” ANZ said yesterday.
S&P Global Ratings said both the provisions and consequent earnings hit were broadly in line with its expectations. The ratings agency said the provisions positioned the bank well to absorb the credit losses that COVID-19 would likely inflict.
“We maintain our view that the bank’s capital position is likely to remain strong,” it said.
Total loan deferrals have fallen to $71bn, down from their peak in June of $125bn.
Australian home loan deferrals have reduced to $51bn, with about 20 per cent of households extending their deferral period by a further four months and less than 1 per cent transferred to hardship.
ANZ chief executive Shayne Elliott said the bank had entered 2020 in robust condition.
“We have a strong balance sheet with record levels of capital and liquidity as well as provisions for potential losses,” Mr Elliott said.
The bank declared a final dividend of 35c per share, compared with 80c a year ago.
Its full-year payout dropped to 60c from $1.60 in fiscal 2019, having paid a deferred interim dividend of 25c on September 30.
ANZ shares fell 2.4 per cent to $18.70 yesterday. future
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