Bank provisions may be out of step with trends in their impaired assets. Dud loans at banks increased 30 per cent in 2010. Yet provisions increased by only 11 per cent.
All four major banks adopted the same course in 2010.
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ANZ saw the biggest jump in the level of gross impaired assets, up 30 per cent. The purchase of the Royal Bank of Scotland businesses explains most of the rise, and the terms of that takeover also explain the rise in provisions for ANZ of just 11 per cent (the industry average).
The bank effectively allowed for much of the difficulty with the RBS assets in the purchase price.
For the other key measure of credit quality - loans overdue by 90 days or more - ANZ reported a fall in 2010, down 2.6 per cent.
Westpac boosted its provisions by 6.9 per cent. Yet its gross impaired assets rose 21.6 per cent and its 90-day past due loans jumped by a steep 63 per cent.
NAB was only bank to reduce its level of total provisions, which were down 2.9 per cent.
Impaired assets at NAB increased by around 10 per cent, while 90-day loans jumped 10.6 per cent.
Commonwealth Bank's provisions increased 10 per cent when impaired assets surged 24 per cent, while 90-day loans jumped 28 per cent.
Provisions, both collective and individual, as a ratio of gross impaired assets fell across all the banks, except in the case of Westpac, whose individual provisions rose.
CBA was the standout, with individual provisions at 38.2 per cent of gross impaired assets, down from 41.4 per cent, and collective provisions at 66.4 per cent, down from 76.6 per cent. CBA's overall asset quality was also the second-best, with a gross impaired asset ratio at 1.02 per cent.
CBA's 90-day trend was, however, not so pleasing and neither was the jump in bad debts written off during the year, which rose 49 per cent to A$2.07 billion.
In terms of asset quality, Westpac's gross impaired assets as a ratio of total loans was the lowest, at 0.95 per cent, but the sharp 63 per cent jump in 90-day past due loans could serve as a warning that this ratio could easily spike in the future.
ANZ's asset quality was the worst, with much of the worsening happening in the past year. The ratio of gross impaired assets to loans rose to 1.80 per cent from 1.46 per cent, overtaking NAB in the process, whose ratio rose to 1.68 per cent from 1.57 per cent last year.