The change in New Zealand's Covid-19 alert levels will mean the economic recovery is more likely to be bumpy, says the chief executive of one of the country's largest banks.
Vittoria Shortt, ASB CEO, made the comment as the bank released its full year result to June 30 showing a 20 per cent drop in its cash net profit to $967 million.
Shortt said the bank's lower profit was due to the significant impacts of Covid-19 and the lower interest rate environment.
The bank increased its impairment losses on financial assets to $306m, up from $198m.
"This substantial increase in provisioning levels reflects our current view of the impact of Covid-19."
Its net profit after tax was down 25 per cent to $958m.
While loans and advances rose 3 per cent to $90 billion and deposits were up 12 per cent to $74b the bank saw a big squeeze on its margin which fell 12 basis points to 2.11 per cent.
Shortt said the global uncertainty due to Covid-19 was causing significant economic and social disruption.
"Trade disputes and heightened political tension may further disrupt global trade and the business environment.
"We are also conscious of the impact of the physical and economic effects of climate change and the effectiveness of current and planned responses remains uncertain."
She said while New Zealand had some encouraging signs of business confidence rebuilding and spending levels rebounding, the change of alert levels announced by the Government last night demonstrated there was no room for complacency and economic recovery was more likely to be bumpy.
"We are anticipating difficult times ahead for businesses and people in the industries most impacted by Covid-19, in particular tourism, international education and retail.
"For confidence to be maintained, it's more important than ever to find new solutions to minimise unemployment and help businesses reset and take action."
Shortt said the bank had provided a range of financial support measures to 31,000 personal and business customers between March and June 30 totalling more than $11b.
"Pleasingly many of our customers are reverting to their previous payment arrangements as they haven't been as impacted as they thought they might. However, the next 18 months are likely to be tough for some of our personal and business customers, particularly as different support packages such as the wage subsidy and loan repayment deferral schemes begin to end."
Shortt said the bank began contacting customers on relief packages in June to understand their personal circumstances and had contacted more than 12,000 customers so far.
"We've created a new dedicated team of specialists who can tailor solutions to best meet the personal circumstances of those most impacted by Covid-19, particularly to help families stay in their homes. Our message is don't go through this alone, talk to us and together we will find a level of support that works."