 ANZ full-year profit plunges on expected virus fallout Sydney (AFP) Oct 29, 2020 - Australia's ANZ Bank announced Thursday its post-tax profit had plunged 40 percent as the lender set aside billions to cover loans unlikely to be repaid because of the coronavirus pandemic. The bank reported profits of Aus$3.58 billion (US$2.52 billion) for the full year ending September 30, attributing the lower return to credit impairment charges of Aus$2.74 billion before tax. A further Aus$815 million was set aside to cover expected virus-related lending losses in Asia. The bank said about 119,000 home loans across Australia and New Zealand were deferred during the crisis, with roughly 40,000 remaining frozen as at October 15 and another 11,000 requesting an extension. "We never could have forecast 2020, a year that started with devastating bushfires in Australia and unwound with the waves of a pandemic that continues today," CEO Shayne Elliott said in a statement to the Australian Securities Exchange (ASX). "While we still cannot predict its course, we remain confident we can deal with its impacts." A dividend of Aus$0.35 per share will be paid out to shareholders, the bank said. ANZ also announced a new climate change policy that includes a commitment not to finance new thermal coal mines or coal-fired power stations from 2030. The decision drew the ire of Australia's conservative government with Resources Minister Keith Pitt telling the bank to "focus on home loans, not activism". Australia is roundly criticised by environmental groups as a climate laggard, with corporations increasingly ahead of the government on action to reduce carbon emissions. The company's shares dropped 2.45 percent to Aus$18.69 at the start of trade.
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Asian markets sank Thursday after a meltdown in New York and Europe sparked by France reimposing a nationwide lockdown to battle a new wave of virus infections, with fears other major economies could follow suit.
With sentiment already dampened by US lawmakers' failure to pass a new stimulus and election uncertainty, the news out of Paris was the last thing investors wanted to hear as the recovery from this year's global financial rout was already stuttering.
France's President Emmanuel Macron's decision to shut down the country for a month came as Germany said it would impose drastic new curbs as experts warned hospitals would soon be overwhelmed.
The moves followed weeks of exponentially rising new infections across Europe that have forced governments across the continent to put containment measures in place, with warnings that Britain could be next.
The announcements pummelled European markets with Frankfurt diving more than four percent and Paris more than three percent. All three major indexes on Wall Street fell more than three percent as equities suffered one of their worst sessions since the dark days of February-March.
In early trade, Hong Kong, Sydney, Seoul and Manila were all down more than one percent.
Tokyo, Shanghai, Taipei and Singapore were all off around 0.7 percent while there were also losses in Wellington.
"Market sentiment is turning, with investors buffeted by US election uncertainty and now economic worries from rising Covid-19 cases across Europe, sparking concerns that measures to control the virus will hamper economic activity," said Kerry Craig at JP Morgan Asset Management.
- Need for stimulus -
Lori Heinel, of State Street Global Advisors, added: "And then you've got the lack of stimulus, which in our estimation is still necessary to get us through this period until we get an ultimate medical solution."
However, while the mood on trading floors was downbeat, analysts said markets were unlikely to return to their March lows, buoyed by vast sums in central bank support and expectations that a US stimulus will eventually get passed.
"Downside risks to the economic outlook have increased to magnitude 10," said Axi's Stephen Innes.
But he added: "History tells us mobility restriction sell-offs can be harsh even if the economy's incremental negative impact is mitigated through targeted lockdowns.
"But what always tends to come through like a chocolate cake with a cherry on top, especially when the markets are in their deepest despair, is that stimulus always seems to save the day."
And JP Morgan's Craig said the long-term economic recovery "still looks solid" and "the drag on economic activity in Europe will be less severe than in April".
Oil prices edged up slightly in Asia, having cratered five percent Wednesday on fears that new lockdowns will again hammer demand for the commodity.
And Innes warned: "The return of the 'sudden stop' economic nightmare will play a considerable role in the oil market's mindscapes over the next few weeks, and it is this fear that keeps traders awake at night."
Traders are keeping an eye on the release of US economic growth data for the third quarter, which is released later in the day, with estimates for a surge of about 30 percent. However, observers point out that that was helped by a multi-trillion-dollar rescue package, which has now run out.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.7 percent at 23,261.98 (break)
Hong Kong - Hang Seng: DOWN 1.3 percent at 24,377.02
Shanghai - Composite: DOWN 0.6 percent at 3,249.49
Euro/dollar: UP at $1.1754 from $1.1749 at 2200 GMT
Dollar/yen: UP at 104.44 yen from 104.31 yen
Pound/dollar: UP at $1.2991 from $1.2987
Euro/pound: DOWN at 90.43 pence from 90.45 pence
West Texas Intermediate: UP 0.6 percent at $37.62 per barrel
Brent North Sea crude: UP 0.6 percent at $39.36 per barrel
New York - Dow: DOWN 3.4 percent at 26,519.95 (close)
London - FTSE 100: DOWN 2.6 percent at 5,582.80 (close)
dan/jah
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