ANZ is not expecting any mega blowout in defaults from mortgage and business borrowers who received loan repayment holidays earlier this year.
In a marked shift in the bank’s public rhetoric on the likelihood of a bad debt avalanche at the end of September, chief executive Shayne Elliott indicated the majority of supported borrowers would be able to service their loans when repayment pauses expire.
“We think that the majority of our people on deferrals will probably get back on their feet in their own way, they need a bit of time,” he told Bluenotes.
“And we can see it in the data actually.“Many of the people who asked for a deferral did it as an insurance policy, they hadn’t actually lost their job, they didn’t have a fall in income, but they just thought it might be a safe thing to do while it was available.
“So not everybody’s necessarily today in harm’s way.”
Elliott said that a “small number” of customers had told the bank they were not likely to survive the economic downturn financially.
“There are some, it’s a relatively small number, who actually don’t think they’re going to be able to get back on their feet,” he said.
“And for those people who identify as probably having some long term difficulty, we put them into our version of an intensive care program, a hardship program, where we can sit down and talk to them about what we might do in the long term.”
ANZ’s provisioning charges were sharply lower in the June quarter compared to the record charge taken in the March half, an indication that the bank is slightly less concerned about the severity of future loan defaults.
Elliott revealed that 6000 home loan customers who obtained repayment holidays had completed or unwound deferral arrangements by the end of July. But the bank allowed thousands of other home borrowers to suspend repayments during the month.
There were 84,000 mortgage borrowers on repayment deferrals at the end of July compared to 81,000 at the end of June. They accounted for 9 per cent of the bank’s mortgage borrower base and 12 per cent of home loan balances.
The total number of business borrowers on repayment pauses stood at 22,000 at the end of July – up 500 on June 30.
These borrowers accounted for A$9.5 billion of loans.