No fallout yet from Aussie banks' problems

By RICHARD BRADDELL

Australia's slowing economy has produced a crop of problematic bank lending, but commentators see no signs yet of an impact on New Zealand subsidiaries.

Australian banks are said to be sitting on about $A1 billion ($1.24 billion) in bad loans to large corporates, including up to $A246 million to insurer HIH, whose Australian operations went into receivership last month.

Also included is $A150 million from the collapse of the Fletcher Challenge-Citic forestry partnership.

But thechairman of KPMG's banking and finance group, Andrew Dinsdale, said the chances were good that actual losses would be nothing like that.

He said, though, that if the Australian recession continued, it would ultimately affect New Zealand.

The author of Massey University's Centre for Banking Studies newsletter, David Tripe, said there was anecdotal evidence that New Zealand banks were experiencing more problem housing loans, but this had yet to appear in quarterly disclosure statements.

"If there were some problems, that would make us feel more comfortable about the sorts of [high] levels of profits that banks have been earning in recent times," he said.

Even the National Bank, which had relatively high levels of impaired loans, was still low by international comparisons.