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ANZ has reported a drop in earnings as the impact of Covid-19 is felt.
The New Zealand bank arm reported a profit of $ 789 million in the six months to the end of March, 15 percent less than in the same period the year before.
The ANZ group earned A $ 1.55 billion (NZ $ 1.65b) in the six months, 51 percent less.
The decrease in group earnings was driven by credit impairment charges of A $ 1,674b, including the increase in credit reserves for Covid-19 impacts of A $ 1,031b.
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In New Zealand, ANZ was lifted by sales of its OnePath Life insurance arm and ANZ’s stake in Paymark.
But its result includes a $ 200 million increase in its credit impairment charge to $ 232 million, reflecting Covid-19’s threat to the economy.
ANZ New Zealand Executive Director Antonia Watson said the banks were a reflection of the financial well-being of customers and the economies in which they operated.
“New Zealand’s response to Covid-19 has resulted in extraordinary changes in the economy, the fortunes of companies and the lives of customers,” he said.
“While the Covid-19 crisis only started in earnest in New Zealand in late March, collective provision has increased substantially to recognize potential impacts on economic activity as we move forward in FY20 and beyond. The extent to which this impact continues in the second half will depend on how and when New Zealand comes out of the block entirely.
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ANZ says companies are “shrinking” but the next few months will be difficult.
“New Zealand has made much better progress in fighting the virus than almost all countries, and that potentially paves the way for a faster economic recovery. While that is encouraging, there will be many challenges as the country emerges from the high level of response and begins to rebuild itself.
“Banks have an important role to play in helping New Zealanders through recovery, and ANZ New Zealand is ready to take on that task.”
ANZ had assisted 30,000 personal loan, mortgage and commercial loan clients with deferments or loan adjustments, worth approximately $ 12b.
It had deferred 19,600 home loans and moved 20,900 home loans only to interest. It had granted 1,345 temporary overdraft facilities to companies that needed more working capital, worth around $ 25 million.
“We have helped thousands of businesses shrink by using financial strategies such as deferring loan payments or increasing overdraft facilities in preparation for possible additional impacts in the near future,” said Watson.
“We also participate in the Commercial Finance Guarantee Plan, a joint venture agreement for loans to small and medium-sized companies with the Government. It is early for this scheme since the companies make use of the liquidity provided by the Covid wage subsidy scheme -19, payment deferrals and temporary facilities before committing to additional term loans.
“We are optimistic that many companies will survive, but we know that the next few months will be difficult and we are preparing for a higher than usual number of loan defaults.”
ANZ will not pay dividends to shareholders this semester.
