Bad loans up for ANZ in NZ, down for parent in Oz

Photo / Dean Purcell

Bad loans are increasing in ANZ's New Zealand operations, at the same time as they are declining in Australia.

Half-year results, released yesterday, showed net impaired assets in this country had grown to $1.7 billion from $1.2 billion a year earlier, making up almost 27 per cent of the group total.

The net impaired assets of parent company ANZ Banking Group - A$4.5 billion ($6.1 billion) - had decreased by 8.2 per cent since March last year.

ANZ defines impaired assets as "financial assets [such as loans] where doubt exists as to whether the full contractual amount will be received in a timely manner, or where concessional terms have been provided because of the [customer's] financial difficulties".

Claire Matthews, a senior lecturer at Massey University's Centre for Banking Studies, said bad loans had become less common in Australia, mainly because it had weathered the global financial crisis better than others, including New Zealand.

"[Australia] didn't have a recession and it's continued to operate quite well, so it just hasn't had the impaired asset problem," she said. "New Zealand, on the other hand, did go into recession for a period of time and it was hit harder by the global financial crisis."

ANZ New Zealand reported an underlying profit of $605 million for the half year to March 31, 63 per cent up on the $372 million reported in the prior comparable period.

Statutory, or bottom-line, profit was up 23 per cent at $478 million, and included a $98 million after-tax charge relating to the movement of ANZ and National Banks into a single, core banking system. A provision for credit impairment charge of $85 million was down 35 per cent, or $46 million, from $131 million in the preceding half year and $330 million in March last year.

ANZ New Zealand chief executive David Hisco said provisioning levels had continued to improve steadily, although February's earthquake was likely to affect individual provisions over the short to medium term.

"It is still too early to fully quantify the quake's impact, however we believe we are adequately provisioned," he said. "The Christchurch earthquakes and continued deleveraging across consumer and business sectors are impacting New Zealand's economic recovery."

But he said deposits had grown strongly and the Rugby World Cup would deliver a boost to the economy during the second half of this year.

Parent company ANZ Banking Group reported a net profit of A$2.66 billion ($3.61 billion), a 38 per cent increase on the result a year earlier.

But the profit missed the A$2.77 billion median estimate of six analysts surveyed by Bloomberg.

ANZ shares on the NZX fell 33c to close at $32.52 last night, while on the ASX they fell A50c to close at A$23.80.

- Additional reporting: Bloomberg