Outlook on provisions disputed

ANZ boss Mike Smith and his NAB counterpart, Cameron Clyne, have different views about the trend in bad debts. Both banks increased their impairment provisions by more than 50 per cent but Smith believes the cycle is at a turning point, while Clyne is not so optimistic.

Of ANZ's overall growth in provisions, 46 per cent came from New Zealand. In most parts of the business there has been a slowdown in arrears.

ANZ chief financial officer Peter Marriott said there was evidence that things are flattening, and may be trending down, in Australia.

Smith said: "Provisions will be about the same in the first half of 2010 and, maybe, lower in the second half. There are signs that it is stabilising."

Clyne said bad debts had flowed through corporates and SME but had not yet had a big impact on the consumer market. He said that was likely to happen, given that unemployment was still rising.

Clyne said unemployment was the key factor in defaults on home loans and consumer finance. While economists have cut their forecasts for the peak in unemployment, the jobless rate was still rising.