Agribusiness credit quality weaker

Agribusiness, consumer, property and smaller financiers were the most problematic categories of borrower for ANZ in the half year to September 2009, the bank's latest "pillar 3" report shows.

ANZ reported a rise of $1.5 billion, or 40 per cent, in impaired loans over the half year.

Of this, impaired agribusiness loans more than tripled to $458 million over six months, probably reflecting the insolvency of a number of forestry financing schemes.

There was a rise of $325 million (to $802 million) impaired consumer loans. The level of past due consumer loans fell a little over the half year after rising rapidly in the prior half year.

Impaired loans to "property services", which must include many, though not all, property developers, increased $300 million to $1.58 billion.

Impairment of loans to customers operating in "financial, investment and insurance" increased 29 per cent to $741 million over six months.

As previously disclosed by ANZ in its profit published a month ago, there was a disproportionate rise in impaired loans in New Zealand over the last six months, with one third of impairments from NZ lending.

Also of note is that ANZ's estimate of its level of (notional) risk-weighted assets, devised to reflect operational risks, fell $1.8 billion over 12 months to $16.2 billion.

The bank said this was because of "the application of an updated capital methodology".