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Thursday, 29 October 2020

Borrowers begin to exit deferrals (ANZ full-year update)

Bank profits slashed

ANZ reported in its full year update that 51,000 Australian home loan accounts were still active deferrals as at 15 October 2020, from a portfolio of 1.08 million accounts. 

Average loan sizes for deferrals were significantly higher than system, meaning that active home loan balance deferrals by value accounted for a larger share of the overall pie at $19 billion.

Source: ANZ

Active loan deferrals have come down sharply from 86,000 in August.

Source: ANZ

Notably early October seems to have been a marked turning point for borrowers beginning to exit home loan deferrals, with repayments now beginning.

Source: ANZ

There is still plenty of work to be done here, though, as the composition of deferrals data has consistently implied. 

Source: ANZ

Dividend cut

Overall, there's been lots of progress over the past three months as the economy has reopened.

And with some friendly regulatory assistance, home loan arrears can get down to a more comfortable 2 to 3 per cent range in the first quarter of next year. 

There's no total escaping of the pain for the banks, though, as cash profit crashed 42 per cent lower.

The final dividend of 35 cents per share is a big drop from last year.