ANZ New Zealand chief executive Antonia Watson says New Zealand is probably headed into tougher times, with inflation expected to remain above the Reserve Bank's target range. Photo: AFP
ANZ New Zealand has seen a drop in full-year profit as it feels the effects of a tougher second-half.
The bank's margins came under pressure in a slowing economy, and as it set aside more money for bad debts.
ANZ earns $2.3 billion profit, but warns of tough times ahead
Key numbers for the 12 months ended September compared with a year ago:
- Net profit $2.13b vs $2.3b
- Revenue $5.01b vs $4.55b
- Cash profit $2.26b vs $2.06b
- Net interest margin 2.64% vs 2.47%
- Impairments ($183m) vs ($39m)
Its net profit, which included gains and losses from economic hedges, fell 7 percent, while its cash profit rose 10 percent.
ANZ New Zealand chief executive Antonia Watson said it was a year of two halves, with the first half reflecting the tailwinds of Covid-19 fiscal stimulus.
"But in the second half of the year our performance slowed due to the more difficult environment New Zealand is entering," she said.
"However, we're a well-managed, resilient business and remain well placed to support our customers and the New Zealand economy as we enter more challenging periods," Watson said.
The bank set aside an additional $144 million for potential bad debts.
It said in the past year, it had reached out to more than 290,000 customers identified as at most risk of financial stress to offer reassurance and support.
Watson said the percentage of customers 90 days behind on their repayments remained low at 0.6 percent, despite it steadily rising.
"It's still at relative historic lows, certainly lower than our equivalent in Australia," she said.
"New Zealand is probably headed into tougher times. Inflation is expected to remain above the Reserve Bank's target range, interest rates will likely be higher for longer and unemployment is expected to rise."
Watson said ANZ expected to see more stress amongst businesses and mortgage holders.
"The majority of our home loan customers have moved onto higher interest rates, and most have adapted well. A third of home loan accounts are ahead by six months or more. But around 34 percent are on rates lower than five percent with around a third of those rolling onto higher rates over the next six months."
ANZ's net interest margin - the difference between what the bank borrowed money at and lent out at - rose 17 basis points in the year ended September. However, margins fell 7 basis points in the half-year.
"That's because the slower housing market meant banks were fighting even harder for customers; global inflationary pressures saw wholesale interest rates rise and many New Zealanders moved their savings from on-call accounts to higher-interest-earning term deposits," Watson said.