ANZ has set aside another $2 billion for the coronavirus fallout as more than 60,000 mortgage deferrals hang in the balance

ANZ Bank has released its full year result. (Hendrik Osula, SOPA Images, LightRocket via Getty Images)
  • ANZ’s full-year profit took a 42% hit, falling to $3.76 billion the bank announced on Thursday.
  • The biggest factor came in the $2 billion the bank put aside in impairment costs to brace for the full impact of the coronavirus pandemic.
  • It brings its total rainy day fund to $2.74 billion, as it closely watches its remaining 61,000 home deferrals.
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One of Australia’s largest banks is bracing for the full impact of the pandemic, and putting aside some serious rainy day savings to see it through.

ANZ announced a 42% hit to its full-year profits on Thursday, falling to $3.76 billion, as it more than triples its coronavirus fund.

The big four bank put aside another $2 billion in impairment charges, bringing its grand total since the pandemic began to $2.74 billion.

While CEO Shayne Elliott said it was “significantly more” than the bank needs, he warned the impact of the pandemic still “doesn’t’ come through in the result for 2020”.

“That may yet come and [it is] more likely to have real impacts in 2021,” he said.

“The real COVID impact, if you will, was really restricted to the massive amount of money we’ve put aside to protect the bank from the potential for any future credit losses that may come if people did get themselves into difficulty in the future.”

One major concern for Elliott and his board will be the 51,000 Australian and 10,000 New Zealand home loans still not making repayments. Up to 80% of those continue to have a steady or improved income, ANZ noted, suggesting 12,200 have either lost jobs or hours.

While the bank used its full toolkit to get that total of 61,000 down from 119,000 earlier in the year, it will remain the biggest risk all banks face going into 2021.

That’s in addition to more than 10,000 businesses not currently making repayments. These have been whacked a little harder than their lender, having been forced to shut and facing reduced spending since March.

However, even they have been somewhat incubated from the full impact of the pandemic, as safe harbour laws allowed illiquid businesses to continue trading and JobKeeper subsidies workers’ wages.

Like their lender, they too will have to feel the full brunt of COVID in the year ahead.