“Hopefully, there is light at the end of the tunnel – but we are not sure how long the tunnel is.”
Loan delinquency – when customers have trouble meeting their repayments on time – is expected to drop soon.
As it stands, 6500 borrowers are in the bank’s hardship category, up from 4500 last year.
“We expect those delinquencies to increase a little bit through to the middle of next year, and then we see them declining.
“There are tough times out there but we are a bit surprised about how resilient our customers have been.
“They have paid off debt early, when interest rates were low, and have got savings buffers,” she said.
Watson said a healthy portion of customers, 29%, were six months ahead in their mortgage repayments, although that figure was down from 40% about 18 months ago when interest rates were very low.
In previous years the Reserve Bank has raised some red flags about the extent of farm debt, which led to ANZ encouraging farmers to pay off more principal.
Just over 10 years ago about 80% of ANZ’s farm customers were on interest-only plans.
That dropped to 34% at the end of 2021, but now it’s back up to more than 50%.
“Again it was a buffer that the system had farmers paying principal and interest, but now that things have become tougher, particularly in the sheep and beef sector, we have had the ability to put them back on interest-only terms, so it provides a little bit more cash flow to offset the decline in revenue and the increase in costs,” she said.
Speaking to the result, the bank had demonstrated resilience over the year.
“While the results of stubborn inflation, an Official Cash Rate at restrictive levels and a lack of economic growth are still feeding through the system, we’re starting to see a brighter picture emerge,” she said.
The bank reduced the total credit impairment provision charge to $44 million, a drop of $139m.
Revenue for the year was $5.05b, up 1%.
Expenses were $1.76b, an increase of 6%, driven by inflationary pressures on staff and vendor costs.
Net interest margin – the difference between the interest the bank earns mostly on lending and the interest it pays primarily on deposits – dropped by 7 basis points to 2.57% for the New Zealand division.
“This was driven by customers’ preference for higher earning term deposits together with continued sharp price competition in the market,” Watson said.
The bank remained the country’s largest lender to the agricultural sector, with total lending of $15.4b.
Just over half the bank’s capital is invested in New Zealand’s farms and businesses.
Business lending remained subdued within a competitive market, due to a combination of lower commercial property lending and customers remaining cautious about taking on further debt.
Demand for ANZ’s “Good Energy Home Loan” was high, with 6730 households drawing down more than $255m in lending in the financial year.
ANZ NZ put 10,000 buyers into their first home, with many taking advantage of the KiwiSaver first-home withdrawal policy.
More than 100,000 people have now made a withdrawal from an ANZ KiwiSaver scheme to get into their first home, it said.
ANZ NZ is the country’s largest KiwiSaver provider with $21.8b in funds under management. This grew by $2.8b in the year to September 30, 2024.
Earlier this week, BNZ reported a net profit of $1.51b in the year to September, a result broadly the same as the previous year.
And on Monday, Westpac’s New Zealand division reported a net profit of $1.06b in the year to September, up about 10% on the year before.
Across the Tasman, parent ANZ Group reported a net profit of A$6.54b ($7.25b), down 8%.
The full-year numbers were complicated because of ANZ’s acquisition of Suncorp’s banking division, which required a number of one-off adjustments.
ANZ announced a final dividend for the September year or A83c, franked at 70%.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.