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ANZ bad debt may climb to $100m


ANZ expects its bad debts will jump by at least $100 million for the first half of its financial year because of its exposure to the downturn-hit resources sector.

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The lender expects its group credit charge will rise well above the $800 million it forecast because of a small number of local and multinational resources-related exposures.

Shares in ANZ dropped by about 4 per cent in early trade. The stock was $1.02 lower at $24.32 by 10.16am (AEDT).

In its February forecast, ANZ based its estimate on a slowdown in Asia, and warned that slowing growth and heightened volatility could lead to a higher bad debt charge.

Analysts had expected a charge of $735 million from ANZ, the most Asia-centric of Australia’s big four banks.

“While the overall credit environment remains broadly stable, we are continuing to see pockets of weakness associated with low commodity prices in the resources sector and in related industries,” chief financial officer Graham Hodges said on Thursday.

Companies in the energy and resources sectors have been hit by iron ore, coal and crude oil prices slumping to decade lows in recent months.

The largest companies in the mining and energy sectors, including BHP Billiton, Rio Tinto and Shell have recently outlined losses on the back of waning demand in China and rising global supplies.

ANZ said it is continuing to monitor its exposures carefully and will update the market with any changes in the credit outlook.

“This is a challenging part of the cycle for these customers with implications for the banking sector as individual circumstances evolve,” Hodges said.

The bank last month lifted first quarter cash earnings 3.5 per cent to $1.85 billion, although net profit, including one-off expenses, was down about three per cent to $1.6 billion.

The bank will announce its results for the six months ending March 31 on May 3.


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