ANZ New Zealand boss Antonia Watson says confidence is key to getting New Zealand's economy back on track and the "worst thing" that could happen would be for the country to be forced back into level 4 lockdown again.
The head of the country's largest bank believes people's confidence would take a hit if restrictions were increased again.
"The worst thing that could happen would be for New Zealand to be put back on level 4."
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Watson said the initial flood of calls for financial help from customers had slowed down after the flurry in the first few weeks of lockdown.
"A lot of the initial requests were about how do I get liquidity. People were worried about their job and wanted to know how they would see themselves through the next few months. We have seen that slow down."
Watson said the bank was less worried about home loan borrowers than its business borrowers as tough lending rules meant most had some wiggle room.
ANZ has already deferred 19,600 home loan repayments and moved 20,900 home loans to interest-only.
The home loan deferral scheme gives borrowers six months off having to make mortgage payments although the interest is accrued and added to their loan during that time.
Watson said the deferrals gave people time to think about their job security and see what it looks like.
"A lot of it will depend on how quickly the economy can get going again. The quicker people can get certainty the better."
She said an increase in mortgagee sales was possible but was seen as a last resort by banks. During the GFC it had 50 a month at the worst point.
She said Kiwis were more inclined to get themselves out of trouble before banks could force the sale. "It's very rare to go to mortgagee sale."
Watson said the bank would be closely monitoring how customer's incomes were impacted and the economic recovery.
The bank yesterday announced a $200 million provision set aside for loans that may not be paid back due to fallout from the Covid-19 coronavirus.
Watson said the provision was based on economic forecasts from several weeks back and the situation was evolving quickly.
"This is a 31 March number not 29th April," she said yesterday after the ANZ revealed a 15 per cent drop in its net profit for the half year.
She said more provisioning was likely to follow in the second half of its financial year.
The $200m provision was weighted towards business lending although businesses were in a better position heading into the Covid-19 pandemic than the 2008 Global Financial Crisis, Watson said.
The GFC saw the ANZ's provisioning for bad and doubtful debts balloon out to $880m at its peak in 2010.
So far it was seeing its business customers had only used on average about 34 per cent of their existing working capital.
Watson said the employer wage subsidy had been a key player in providing support for businesses and providing liquidity.
"They got the 12 weeks' pay very quickly."
It was also a reason why not many were tapping into the loans offered under the business finance guarantee scheme, of which the Government is guaranteeing up to 80 per cent.
ANZ's parent reported the NZ arm had received 820 requests for BFGS loans and Watson said it was more like 1000 approaches now.
She said BFGS would more likely be used by businesses looking to rebuild and would be tapped into more once there was more certainty around the move to alert levels 2 and 1.
"The focus will change to wanting loans to rebuild business."
Asked if the bank had seen many business failures yet, Watson said it was still early days.
"There is no doubt people are doing it really tough out there. As Finance Minister Grant Robertson has said it is inevitable we will see some businesses fail."