ANZ chief’s dire warning for homeowners

Homeowners are falling behind on mortgages, with the value of past due loans held at ANZ rising 22 per cent over the past year, the bank reported on Tuesday.

Despite the signs households are struggling with the weight of successive interest rate rises and the cost of living, chief executive Shayne Elliott insisted the numbers were “still remarkably low”.

There was a major increase in the number of loans now 60-89 days past due, up 63 per cent in the 12 months to March.

Loans now 90+ days past due have also risen 39 per cent over the same period. ANZ said the increases across all ageing categories were driven by home loans.

Mr Elliott said while it was clear in the data that interest rates, bracket creep and rising rents, food and grocery prices were causing stress, he claimed it was less than even before Covid.

“When you stand back and think about the bigger picture, the numbers are still very, very low. And in fact, they’re much lower than they were even before Covid, so you sort of go back to more recent normal times,” he said.

The ANZ chief attributed it to just how hard it was for prospective borrowers to be approved for a home loan or a credit card in the first place.

With rates expected to stay higher for longer as the Reserve Bank continues to battle stubbornly high inflation, Mr Elliott conceded he expected the number of customers experiencing financial difficulty to increase.

Overall, 79 per cent of ANZ home loan customers were ahead of their repayments, Mr Elliott said.

“But we would expect the number of people under stress to increase. Those interest rates will – are – continuing to hurt,” he said.

“So you’d expect there to continue to be a slowdown and there will be, we will see, more customers get into stress. And that’s why having a strong bank like us who’s able to lean in, who has the resources to be able to help where we can, is so important”

In the latest half-year report released on Tuesday, ANZ reported a $3.55bn cash profit for the six months to March, but the result was down 7 per cent from last year.

“This was a strong half on the back of a record result in 2023, profit was down just one per cent on the back of the half,” Mr Elliot said.

“The number of customers rose in this half, whilst still lower than other halves we expect that number to increase.”

Looking ahead, Mr Elliot said the bank’s acquisition of Suncorp Bank is expected to be finalised in June, which will bring across 1.2m customers.

“We’re really attracted to the deposit base, that deposit base has significant value but we wanted the customers, we wanted the deposit base and we want to bring them over.”

In February, the Australian Competition Tribunal set aside an August decision by the Australian Competition and Consumer Watchdog declining to authorise the acquisition.

The takeover was initially rejected by competition watchdog in 2023 after it raised concerns about the market dominance of the big four banks.

ANZ chief financial officer Farhan Faruqui said the bank was confident stable results will continue in the future.

He said the bank forecasts the banking sector is beginning to return to a “streamlined level” as several indicators, including housing prices, have started to moderate.

However, Mr Elliot said ANZ estimates major project pipeline costs will reach $100bn by 2026, compared to $40bn seen during the pre-pandemic years.

The bank announced an interim dividend of 83c per share, franked at 65 per cent.

“We will continue to maximise the franking credits to our shareholders as they’re more valuable to you, our customers, than us,” Mr Faruqui said.

The bank also announced it would buy back up to $2bn of shares on the market as part of a capital management plan.

This decision came after it sold off 16.5 per cent of AmBank shares.