Australia's ANZ Group has reported a 5 basis point rise in overdue home loans, with payments over 90 days late now at 84 basis points. Inflation and high borrowing costs are straining household budgets, leading ANZ to increase its bad debt provision to AUD 45 million. Despite these challenges, ANZ's total loan book grew by 3% in Q3, with significant gains in institutional lending. The bank maintains a strong CET1 ratio of 13.3%, though it faces regulatory scrutiny over potential misreporting of government bond trades.
Australia's ANZ Group has shared its latest financial updates, revealing a concerning trend in home loan payments. In the third quarter, the bank reported an increase in overdue home loans, with payments that are more than 90 days late rising by 5 basis points to 84 basis points. This rise can be attributed to ongoing inflation and high borrowing costs, which continue to impact household budgets across Australia.
Despite this challenge, ANZ Group saw an overall increase in its total loan book from the previous quarter, indicating that the bank is still lending actively. The institution's growth in net loans and advances was recorded at 3%. Among various segments, the institutional division showed the most significant growth, while ANZ's home loan growth outperformed some of its competitors.
Analysts have noted a mixed picture for ANZ. While the increase in lending growth is generally viewed positively, much of this is occurring in lower-margin markets, such as trade lending. The positive takeaway is that ANZ's asset quality trends seem more favorable when compared to its peers in the banking sector. The bank's gross impaired assets, which track loans that are significantly overdue but not yet defaulted, slightly decreased to 0.19% of total loans, down from the prior quarter.
With the economic landscape shaped by rising inflation, ANZ customers are feeling the pinch. This is reflected not only in payment delays but also in the increased financial pressure on households. The total provision the bank has set aside for bad debts rose sharply to AUD 45 million from AUD 17 million, signaling that ANZ is preparing for potential future losses as more borrowers struggle to meet their obligations.
On a particularly noteworthy point, ANZ is currently under regulatory scrutiny relating to its reporting practices, specifically concerning suspected misreporting of government bond trades. Such scrutiny may create additional challenges for the bank moving forward.
In terms of financial health, ANZ has maintained a strong capital position with a Common Equity Tier One (CET1) ratio of 13.3%. This figure, while slightly down from 13.5% at the end of the previous quarter, still reflects a robust core capital base that exceeds regulatory requirements. The bank also reported a 2% increase in customer deposits, buoyed by a significant 6% rise in institutional deposits-a sign that business clients continue to have confidence in ANZ.
As ANZ navigates these challenges in a climate of increasing costs and economic uncertainty, the bank's focus will likely remain on maintaining balance and reassuring its customers. It remains to be seen how these trends will affect the wider Australian economy in the months to come, as both borrowers and lenders adapt to the constantly evolving financial landscape.
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