ANZ NZ still reports a $789m profit, despite bad debt charges rising by $200m, but it won’t pay a dividend because the Reserve Bank wants it to preserve capital. Countdown reports a sales surge.

Chastened: ANZ Bank New Zealand reported a $200 million rise in bad debt charges to $232m in its first half result, which was broadly in line with the Covid-19 losses reported by its Australian parent on a per capita basis.  ANZ’s net profit fell 15 percent to $789 million, but ANZ is not paying a dividend for the first half. Last year it paid its Australian parent an interim dividend of $405m, and the year before that a dividend of $805m.

Cash staying here: The Reserve Bank has ordered the Australian-owned banks in New Zealand not to pay dividends this year to help preserve capital here. The Australian regulator, APRA, also suggested on April 7 Australian banks defer their interim dividend decisions until the Covid-19 situation was clearer. ANZ Group deferred its interim dividend yesterday.

Bonanza: Countdown reported a 13.7 percent spike in first quarter sales as shoppers stocked up ahead of the Covid-19 lockdown. That growth rate was higher than its parent Woolworths across the Tasman, where sales were up only 11.3 percent.

Bubble shopping: Online sales jumped 36.2 percent in the quarter, amounting to almost eight percent of total sales. The supermarket chain said that it had expanded its online capacity, including its first e-store in Auckland, while four other stores have temporarily been converted into dedicated online hubs.

Property cooling: In a taste of things to come, the Reserve Bank’s latest mortgage lending figures of $6.2 billion for March only capture a portion of the lockdown period and April data is expected to show a more dramatic slide. Lending to both existing owner-occupiers, at $3.7 billion, and investors, at $1.3 billion, eased off in March, while high LVR lending remained relatively contained. The bulk of the remaining $1.1 billion went to first home buyers.

Drying up: There were around 1,100 fewer house sales during the month due to the Level 4 lockdown versus March 2019. Auckland sales fell 80 percent on a like-for-like basis from the prior three weeks.

In demand: Auckland International Airport reported its $200m share offer to bolster its equity capital received $489m million of bids from more than 32,000 shareholders. However major shareholder Auckland Council wasn’t one of them.

Boom times: A significant rise in trading volumes and a fee increase helped the NZX report a first quarter revenue rise of 18 percent to $18.5 million. Secondary market revenues rose 45.9 percent to $5.1 million. The Covid-19 pandemic has spurred a dramatic increase in trading amid a highly volatile market.

Volumes spike: Equity trades almost doubled to 2.2 million with a value of $13 billion during the quarter. But there has also been tension among brokers, with technical issues earlier in the month plaguing the exchanges settlement system. The NZX is promising a major upgrade of its trading platform in the coming months.

Business confidence bottoming? A slight improvement in the final reading for the April ANZ Business Outlook survey indicated a bottoming out in business confidence. April headline business confidence fell three points from March to a net minus 67 percent versus a preliminary read of minus 73 percent earlier in the month. A net 55 percent of businesses expected weaker activity for their own business, which was also a small improvement on the preliminary read of 61 percent.

Stiff upper lip: Lloyds Banking Group reported its first quarter profit fell 95 percent after the bank was forced to take a £1.4b (NZ$2.9b) charge to cover a surge in bad debts linked to the Covid-19 outbreak.

Unforecastable: Lloyds is the UK’s largest provider of home loans, one of its biggest backers of businesses and is often viewed as a bellwether for the British economy. The bank said it was expecting to put aside more money to cover bad loans in the second quarter, but said it was difficult to forecast its outlook.

Outraged: Never one to keep his views to himself ,Tesla and SpaceX CEO Elon Musk has expressed outrage at stay-at-home orders in the U.S. meant to slow the spread of the coronavirus pandemic, calling them “fascist” and likening them to “forcibly imprisoning people in their homes”. During an earnings call Musk said forcibly imprisoning people in their homes’ against all their constitutional rights and breaking people’s freedoms in ways that are “horrible and wrong” were not why people came to America to build the country. Musk described the current situation as an “outrage.”

Supportive: Meanwhile, fellow tech billionaire and Facebook CEO Mark Zuckerberg took the opposite view, saying that he worried that reopening places too quickly would almost guarantee future outbreaks and worsen health and economic outcomes. On a conference call with investors, Zuckerberg said, “The efficacy of the shelter-in-place orders and how well that’s going I think will be a big determinant of how long and how painful the economic fallout will be.”

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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