On Thursday, ANZ Group, Australia's fourth-largest lender, reported that asset impairments in the first quarter surged to their highest levels since 2021, mainly due to mortgages, causing its shares to decline by 3%.
The earnings announcements from Australia's major banks have been relatively subdued, with the Big Four benefiting from increased loan income in a high-interest-rate setting, but facing challenges such as sluggish credit expansion and growing bad debts.
Australia's central bank recently lowered interest rates, aiming to ease debt repayment for borrowers and alleviate financial pressures on consumers and banks.
Despite the top lender expanding its net interest margin, concerns about the financial burden on borrowers due to rising living expenses were raised, while margins decreased in recent financial reports.
Additionally, Australia's largest business lender disclosed that impaired or defaulted assets reached their highest level in at least two years in the first quarter as a proportion of total loans.
ANZ stated that its gross impaired assets rose to A$1.90 billion ($1.21 billion) in the quarter ended December 31, the highest recorded since September 2021.
Citi analysts mentioned that although the increasing impaired assets may worry the market, they are well secured, and the provisioning appears sufficient.
ANZ noted a decrease of 1 basis point in delinquent home loans in Australia compared to the previous quarter, while New Zealand saw an increase of 75 basis points. The bank's net loans and advances grew by 4% in the quarter, driven significantly by institutional lending, with quarterly customer deposits also rising by 2%.
Citi analysts highlighted robust deposit growth across various sectors, particularly in commercial areas, indicating a strategic emphasis on gathering savings deposits.
The bank's common equity tier 1 (CET1) ratio stood at 11.5% as of December 31, slightly below Citi's projection of 12.0% and down from 12.2% on September 30.
ANZ's shares dropped by up to 3.3% by 0018 GMT, while the broader market experienced a 1% decline. The company did not disclose profit figures or its net interest margin in the limited trading update.
($1 = 1.5765 Australian dollars)