ANZ profit falls at start of virus impact
ANZ has reported a profit drop as the beginnings of the impact of
Covid-19 is felt.
The New Zealand arm of the bank reported a profit of $789 million for the six months to the end of March, down 15 per cent compared to the same time a year earlier. The ANZ group made
A$1.55 billion (NZ$1.65b) in the six months, down 51 per cent.
The group’s profit decline was driven by credit impairment charges of A$1.674b, including increased credit reserves for
Covid-19 impacts of A$1.031b. In New Zealand, ANZ was lifted by sales of its insurance arm OnePath Life and ANZ’s share in Paymark.
But its result included a $200m increase in its credit impairment charge, to $232m, reflecting the threat of Covid-19 to the economy.
ANZ New Zealand chief executive Antonia Watson said banks were a reflection of the financial well-being of customers and the economies in which they operated. She said the bank was also suffering a margin squeeze because of the very low interest rate environment.
How quickly things would improve would depend on how promptly New Zealand could get the economy moving again, she said.
‘‘While the Covid-19 crisis only began in earnest in New Zealand at the end of March the collective provision has increased substantially to recognise the possible impacts on economic activity as we go through FY20 and beyond. The extent to which this impact continues in the second half will depend on how and when New Zealand fully emerges from lockdown.’’
More activity was happening in level three, she said, but businesses and consumers needed confidence that the country was moving in the right direction. A shift back to level four would be a heavy blow.
She said the bank had not had to claim the wage subsidy and had been able to pay staff in full through the lockdown period and would continue to do so. The wage subsidy had been very effective for ANZ’s business customers.
ANZ had helped 30,000 personal loan, home loan and business loan customers with repayment deferrals or adjustments to lending, worth about $12b. It had deferred
19,600 home loans and moved
20,900 home loans to interest-only. Watson said while house prices were expected to drop, New Zealanders’ household balance sheets were generally in good shape.
The country was in a better position going into this downturn than it had been in the Global Financial Crisis, she said.
ANZ had granted 1345 temporary overdraft facilities to businesses needing more working capital, worth around $25 million.