Covid crash: ANZ Bank’s $ 562 million profit drop

ANZ New Zealand’s cash earnings have plunged 29 percent to $ 1,371 billion in the financial year through Sept. 30, as the bank was hit by an increase in Covid-driven credit impairments. 19.

The country’s largest bank, owned by ANZ, listed on ASX, disclosed its financial results this morning.

His after-tax net income fell 27% to $ 1,336 million.

ANZ NZ CEO Antonia Watson said the results reflect a significant increase in the charge for expected credit losses due to changes in the economic environment.

The bank’s credit impairment charges increased from $ 99 million to $ 401 million.

“Covid-19 brought unprecedented challenges to our country and consequently to many companies, including ANZ NZ, and this is reflected in our result for the entire year.”

The results also reflected the sale of UDC Finance in September 2020, along with profits in the previous financial year from OnePath Life sales and ANZ NZ’s stake in Paymark.

ANZ New Zealand saw its operating income drop from $ 4.326 trillion to $ 4.049 trillion, while its expenses also increased from $ 1.585 trillion to $ 1.736 trillion due to higher regulatory costs and a deterioration of goodwill related to the planned liquidation of the scheme. Bonus Bonus.

Watson said that despite the difficult year, ANZ NZ had continued to perform well, showing that the bank could overcome difficult economic conditions and play an important role in supporting clients during the crisis.

So far, ANZ NZ had provided financial assistance to around 43,000 personal, residential and business loan clients through payment deferrals, moving to interest only or loan adjustments covering loans of around $ 27 billion.

“The New Zealand economy has a lot going for it. In addition to our management of Covid-19, our commodity prices are holding up as countries shore up their food supply chains,” Watson said.

“Business confidence and other indicators of economic activity have recovered rapidly. Businesses have some certainty about the future that simply doesn’t exist in other countries.”

Watson said the bank had also seen many clients seize the opportunity to improve their financial situation by increasing their savings and paying off their personal or home loan debt.

Net loans and advances were stable at $ 133 billion, while its deposits increased from $ 109.2 billion to $ 120.9 billion.

Watson said that while he was optimistic that many companies would survive, the next few months would be difficult.

“While the efforts of people in New Zealand to contain the spread of Covid-19 have reduced its impact, we must remember that there has been a considerable cost to many in the community.”

Watson said the result for the full year was satisfactory given difficult economic circumstances.

“While the record low interest rate environment and fee reductions have affected underlying revenues, client deposits increased 11 percent and underlying gross loans increased 3 percent (overall unchanged after the sale of UDC) “.

Despite an increase in its loan provision charges, Watson said the bank’s focus on responsible lending meant credit quality remained strong.

Watson said the remediation and increased regulatory requirements had contributed to a 10 percent increase in cash operating expenses.

That work had included significant investment in a number of technology systems to ensure that ANZ could meet the Reserve Bank of New Zealand’s requirements for an independent bank.

Parent ANZ announced a net profit after tax of A $ 3,577 million, 40% less than in the previous year.

Its cash earnings from continuing operations fell 42 percent to A $ 3.76 billion.

In a statement, the bank said the decline was primarily due to credit impairment charges of A2.74b, which are increasing over the prior year due to the impact of Covid-19 and a first-half Asian partner impairment of A $ 815 million.

It will pay a dividend of AU $ 60 cents per share compared to AU $ 1.60 a year earlier.

ANZ CEO Shayne Elliott said the bank could never have forecast 2020, a year that began with devastating bushfires in Australia and ended with the waves of a pandemic that continues today.

“As a bank, we enter 2020 in strong condition. We have a strong balance sheet with record levels of capital and liquidity, as well as provisions for potential future losses.”

Elliott said that Covid-19 was contained in New Zealand and remained well-positioned to benefit from its subsequent economic recovery.

“While it was a difficult income environment, given low interest rates and a focus on reducing or simplifying fees, we have maintained market leadership in our target segments.”

The ANZ New Zealand company had more than 529,000 mortgage loan accounts and around 24,000 had received deferral of their payments.

As of October 15, there were about 10,000 accounts in a deferral plan, roughly 2 percent of the bank’s mortgage book.