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ANZ NZ 2020 half-year result shows early impacts of Covid-19

Thursday 30th April 2020

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ANZ New Zealand today reported statutory net profit after tax (NPAT) of NZ$789 million for the six months to 31 March 2020 – a 15% decrease on the corresponding half in the 2019 financial year.

Cash NPAT was NZ$677 million, down 39%, reflecting a significant uplift in credit provision charges due to changes in the economic environment, together with benefits in the prior comparable period3 (PCP) from the sales of OnePath Life (NZ) Limited and ANZ New Zealand’s share in Paymark Limited.

These sales partly contributed to ANZ New Zealand’s 13% decline in revenue PCP. Expenses increased 13%, largely driven by increased regulatory compliance spend. Both customer deposits and gross lending were up, 5% and 3% respectively.

As at 31 March 2020, the ANZ Bank New Zealand Limited group remains well capitalised with a total capital ratio of 13.9%, up from 13.6% as at 30 September 2019.

ANZ New Zealand Chief Executive Officer Antonia Watson said banks are a reflection of the financial well-being of customers and the economies in which they operate.

“New Zealand’s response to Covid-19 has resulted in extraordinary changes to the economy, the fortunes of businesses and the lives of customers,” Ms Watson said.

“While the Covid-19 crisis only began in earnest in New Zealand at the end of March the collective provision has increased substantially to recognise the possible impacts on economic activity as we go through FY20 and beyond. The extent to which this impact continues in the second half will depend on how and when New Zealand fully emerges from lockdown.

“New Zealand has made much better progress in fighting the virus than nearly all countries, and that potentially paves the way to a quicker economic recovery. While that’s encouraging there will be many challenges as the country emerges from the high level of response and starts to rebuild.

“Banks have an important role in helping New Zealanders through the recovery, and ANZ New Zealand is ready to take on that task.”

ANZ New Zealand has been working closely with the Government and regulators to help business and retail customers manage their finances during a time of severely curtailed economic and business activity.

Key Points:

- Statutory profit down 15% at NZ$789 million.

- Cash profit down 39% at NZ$677 million, partly impacted by the PCP sales of OnePath Life (NZ) Limited and ANZ New Zealand’s 25% share in Paymark Limited.

- Revenue down 13%, impacted by items in the PCP.

- Expenses increased 13% due to higher regulatory compliance spend.

- Credit impairment charge up $200 million from $32 million to $232 million reflecting Covid-19 developments.

- Total capital ratio up to 13.9%, from 13.6% as at 30 September 2019.

- Customer deposits up 5% and gross lending up 3%.

- KiwiSaver funds under management grew 4% to $14.0 billion.

- No ordinary dividend paid.

The company has implemented key Government-led initiatives, such as home loan deferrals and the Business Finance Guarantee Scheme, as well as a major programme of reduced fees, charges and interest rates to help customers through the Covid-19 crisis. So far, ANZ New Zealand has provided financial help to around 30,000 personal, home and business loan customers through repayment deferrals or adjustments covering lending of around $12 billion.

“We have helped thousands of businesses to hunker down by using financial strategies such as deferring loan repayments or increasing overdraft facilities in preparation for potentially further impacts in the near future,” Ms Watson said.

“We’re also a participant in the Business Finance Guarantee Scheme, a risk sharing arrangement for small to medium enterprise lending with the Government. It is early days for this scheme as businesses make use of the liquidity provided by the Covid-19 Wage Subsidy Scheme, payment deferrals and temporary facilities before committing to further term lending.

“We’re optimistic many businesses will survive, but we know the next few months will be difficult and we’re preparing for a higher-than-usual number of loan defaults.”

Consistent with other New Zealand banks, ANZ Bank New Zealand Limited will not pay dividends on ordinary shares or redeem non-Common Equity Tier 1 capital instruments until the Reserve Bank of New Zealand (RBNZ) considers New Zealand’s economic outlook sufficiently recovered following Covid-19.

“We support the RBNZ’s current efforts to strengthen the financial system and position it for shocks such as the one the country is currently experiencing,” Ms Watson said.

“Strong regulatory oversight and lessons from previous crises have prepared us, with more capital, greater liquidity and the ability to be flexible to the needs of our customers.”

Digital banking continues to rise as customers used ANZ New Zealand’s mobile banking app ANZ goMoney for more than 58 million transactions in the six months to March 2020. “While digital remains the most popular way to bank, in recent weeks our Contact Centre has been the lifeline for customer service and received almost 25% more calls in March than in February.”

Recent global market volatility has impacted KiwiSaver account balances and Ms Watson said ANZ Investments had contacted 350,000 of ANZ KiwiSaver schemes’ members reminding them investments are for the long-term, and short-term ups and downs are part of the investment cycle.

To help support customers through Covid-19’s economic impacts, in recent weeks ANZ New Zealand has:

- Provided financial help to around 30,000 personal, home and business loan customers through repayment deferrals or adjustments covering lending of around $12 billion.

- Deferred 19,600 home loan repayments and moved 20,900 home loans to interest only.

- Granted 1,345 temporary overdraft facilities to businesses needing more working capital, worth around $25 million.

- Become a participant bank in the Business Finance Guarantee Scheme.

- Contacted 177,000 customers over the age of 70 to offer banking support, and set up dedicated phone teams to help solve immediate needs and guide them through self-service/digital options.

- Reduced customer fees, charges and interest rates across a range of products including home loan, credit card, personal loan and overdraft rates.

- Reduced commercial business and agri loans and overdraft base rates.

- Waived the fee for contactless debit transactions for around 14,000 small business customers until the end of June, with collective savings of around $500,000.

- Contacted more than 350,000 of ANZ’s KiwiSaver schemes’ members about significant volatility in global markets and reminding them about the long-term nature of investments.

- Donated $2 million in total to Women’s Refuge, Age Concern New Zealand, and the Salvation Army’s 70 foodbanks, as well as the Red Cross and a series of local charities in the Pacific to support vulnerable people through the Covid-19 crisis.

- Started proactively contacting customers who may be having financial difficulties to see how we can help.

- Opened 61 branches across New Zealand on Wednesday mornings to help vulnerable customers make 31,000 transactions while the country was in lockdown.

Source: NZ New Zealand Limited

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