ANZ reports rise in half-year profit, and distressed mortgages
ANZ has reported a modest increase in after-tax profit for the six months ending March, bucking the trend for weakening bank profitability.
Even after losses on the economic hedges the bank uses to protect itself from currency and interest rate movements, ANZ reported a statutory profit of $1.04 billion, up from $1b in the same period last year.
ANZ is the third of the big banks to report half-year profits. BNZ reported a drop of 5.3% in after-tax profit, while Westpac only reported an increase in profit after unwinding provisions for expected loan losses following Cyclone Gabrielle in February last year which never eventuated.
A dip in bank profitability was expected with the Reserve Bank Te Pūtea Matua warning last week that bank profitability was falling. Like the chief executives of BNZ and Westpac, ANZ chief executive Antonia Watson said ANZ was supporting mortgage borrowers as missed payments on home loans continue to rise.
ANZ reported that borrowers owing $659 million on their home loans were now 90 days or more behind on the repayments, up from $462m at the end of March last year.
The combined value of home loans in arrears by 90 days or more at ANZ, Westpac and BNZ had passed the $1b mark at the end of March, the three banks’ financial statements showed.
However, many other homes owners are behind on their repayments, although not to such a serious extent.
ANZ’s disclosure statement showed it had $1.95b of home loans where payments were overdue at the end of March, up from $1.57b at the same point last year.
Last week, the Reserve Bank said it expected missed payments on mortgages to continue to rise as more households moved onto higher mortgage rates, and those already struggling ran to the end of their savings and other buffers.
Watson said stubbornly high inflation, high interest rates, and rising unemployment was making life hard for households and businesses.
“The pressures are likely to continue throughout the year with unemployment expected to rise further, and more households and Kiwi businesses feeling the impact of that,” she said.
She said most households had now moved onto higher interest rates, but 17% remained on mortgage rates of less than 5%.
Watson described ANZ’s half-year performance as solid. Despite a sluggish housing market, the bank grew its home lending by $10.1b, she said.
She said the bank had been investing heavily in fraud defences to help combat the wave of scams and fraud being directed at New Zealanders.