$3.55 billion COVID-19 impact knocks ANZ profit down 40 per cent

$3.55 billion COVID-19 impact knocks ANZ profit down 40 per cent

ANZ (ASX: ANZ) has seen its profits slide by 40 per cent during the 2020 financial year after $3.55 billion of impairment charges relating to the pandemic took their toll.

The company managed to record a statutory profit of $3.58 billion for the year, and shareholders will still enjoy a final dividend of 35 cents per share.

The decrease in profits was primarily driven by full-year credit impairment charges of $2.75 billion due to the impact of COVID-19 and a first half impairment of Asian associates of $815 million, also related to the pandemic.

"We could never have forecast 2020, a year that started with devastating bushfires in Australia and unwound with the waves of a pandemic that continues today," noted ANZ CEO Shayne Elliott.

"While we still cannot predict its course, we remain confident we can deal with its impacts."

The company's Common Equity Tier 1 Capital Ratio remained strong at 11.3 per cent, down just two basis points from FY19, while return on equity decreased to 6.2 per cent.

Income also fell by 6 per cent to $17.6 billion.

"As a bank, we entered 2020 in robust condition," Elliott said.

"We have a strong balance sheet with record levels of capital and liquidity as well as provisions for potential future losses.

"We want our customers to know we will continue to do all we can to support them through the tough times."

The Big Four Bank also gave an update on how it has been supporting its customers during the COVID-19 pandemic.

Around 95,000 of its more than 1 million home loan customers have received a deferral on loan repayments, with approximately 55,000 having completed their deferral or advised their intended action at maturity.

Of those accounts, 79 per cent are returning to full payment, 20 per cent have requested a further deferral, and 1 per cent have restructured their loan or sought additional support.

In terms of business customers, around 23,000 have received a deferral on business loan repayments. Of those, 15,000 have completed their deferral or advised their intended action at maturity.

"Events of the last 12 months make it difficult to predict the course of the next year," Elliott said.

"What I do know however is we are in excellent shape to navigate whatever challenges emerge.

"While we are not managing the business expecting things to return to the way they were before the pandemic, nor are we sitting idle waiting for the next event to happen to us, ANZ is well placed to respond to the opportunities that are emerging as a result of accelerated structural shifts in the economy."

Shares in ANZ are down 3.05 per cent to $18.58 per share at 11.02am AEDT.

Updated at 11.29am AEDT on 29 October 2020.

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