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ANZ chief executive Graham Hodges expects the decision to tighten its lending policy will mean it misses out on some new mortgage business but the bank remains in a strong position with close to historic liquidity levels.
ANZ, the biggest home mortgage provider in the country, announced this week it had cut its loan to value ratio from 90 to 80 per cent.
Speaking after the confirmation of the bank's general disclosure statement yesterday, Hodges said he believed the move was prudent for the bank and its customers in light of the likelihood of more downside in the property market.
But he admitted it was likely to drive some new customers away.
"We will miss a little bit of business as a result of that."
Hodges said the bank had been keeping a close eye on increasing pressures on household budgets with the rise in fuel and food costs and although that had come back down it was concerned about the impact of rising unemployment.
The loan criteria changes would allow it to be more flexible around its arrangements if people did get into trouble.
"If you are already up against the limit there is less flexibility for the bank. It gives us a new buffer to deal with it."
Hodges said either through good management or luck not many of its mortgages had been due to roll over during the past few months, when it had been nearly impossible for banks to borrow money on the international markets.
But he said the markets had started freeing up in the past month and the bank had recently been able to get back into commercial paper transactions by borrowing half a billion on a short-term three-month rate.
It was continually testing the market now. But Hodges said longer term lending, that of more than a year, was being undertaken only by banks with government guarantees.
The ANZ has secured a retail guarantee from the Government but is still waiting for its wholesale one to come through.
Hodges would not make any profit forecasts but said the bank was well-placed going into the new year with close to $9 billion in liquidity - a historic level for the ANZ.
