Industry recedes from 2020 recession

APRA’s year-end banking record is dismal, but hopeful.

In 2020, a year of crisis and Covid, a point of difference for the Australian banking sector is that it is not the Australian general insurance sector.

Insurance profits last year were zero, at least for general insurance, as provisions and losses exploded.

For the country’s 147 banks, the pandemic shattered 35% of 2019 profits, leaving dividend-addicted boards of directors a combined net profit of A $ 22 billion to set aside for rainy days or to appease their lives. owners with pocket money.

Total provisions for the industry rose 13% to $ 14.6 billion, APRA said yesterday.

Impaired assets and past due items soared 17% to $ 36.4 million.

Credit write-offs were three times higher in 2020 at $ 12.4 billion compared to 2019 – and in the GFC is a guide, bad debt charges for banks in 2021 will again be the same, only worse.

“Total capital and Tier 1 (CET1) ratios have reached historically high levels of 17.6% and 12.2% respectively, with driving factors such as higher retained earnings due to distribution of lower dividends, lower risk-weighted assets and concessional treatment of the principal of eligible loans subject to deferral of repayment, ”APRA wrote in the quarterly statistics of ADI Performance.

“The ADI industry has resisted the December quarter, with high capital ratios and strong liquidity and funding positions,” APRA said.

“The industry’s profitability improved during the quarter due to lower bad and bad debt charges.

“Overall growth in loans and advances has been slow, although home loans have increased moderately, supported by homeowner loans.

“Despite a moderate increase in new loans with higher loan-to-assessment and debt-to-income ratios, available indicators do not suggest any significant easing in home lending standards, as these measures remain broadly in line with historical averages.

“Key measures of asset quality were stable thanks to a series of borrower support measures, but the outlook is uncertain as support measures change in the coming quarters.”


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