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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Australia and New Zealand Banking Group Limited    ANZ   AU000000ANZ3

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

(ANZ)
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Surging repayments drive Australian credit card loans to 15-year low

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09/07/2020 | 04:24am EDT

Australians' credit card debts fell to a 15-year low in July, data showed on Monday, as the pandemic drives a global surge in repayments that analysts say will hurt banks at a time when consumers are also reining in their spending.

Reserve Bank of Australia figures showed total interest-incurring credit card balances fell 3.2% month-on-month to A$22.5 billion ($16 billion) in July, the lowest since July 2005.

That follows unprecedented falls since April for a year-to-date drop of 21.2% - already more than twice as large as any full-year decline since such records began in 2002.

"With people feeling insecure about their jobs, and vulnerable to policy missteps, the best thing they can do with their money is to pay off debt", in a longer-term negative for the credit cycle, Credit Suisse strategist Damien Boey said.

It is also a global trend as savings rates have surged and debts dropped as lockdowns have limited spending on entertainment and other discretionary purchases.

A record quarterly drop in U.S. credit card balances last quarter pushed household debt there to its lowest in six years. That puts pressure on credit growth and fee income at banks.

ANZ Bank and Commonwealth Bank of Australia have seen their credit card loan books drop by about A$2 billion, about 20% or more, since the onset of the pandemic, their chief executives told a parliamentary committee last week.

"It's a massive shift and it is a prudent and conservative action by our customers," ANZ CEO Shayne Elliott said.

Jefferies' banks analyst Brian Johnson said the pandemic had also accelerated a move away from credit cards toward debit transactions, which along with millenials' preference for buy-now-pay-later methods would hurt banks revenue.

"The behavioural shift from credit to debit reduces their fee income at the same time as reduced activity reduces their fees as well," he said.

(Reporting by Tom Westbrook; Editing by Himani Sarkar)


Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 1.44% 19.78 End-of-day quote.-19.69%
COMMONWEALTH BANK OF AUSTRALIA 0.82% 69.9 End-of-day quote.-12.52%
CREDIT SUISSE GROUP AG 2.72% 9.878 Delayed Quote.-24.62%
NATIONAL AUSTRALIA BANK LIMITED 0.62% 19.53 End-of-day quote.-20.71%
WESTPAC BANKING CORPORATION 0.97% 18.78 End-of-day quote.-22.49%
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Financials
Sales 2020 17 997 M 12 847 M 12 847 M
Net income 2020 3 809 M 2 719 M 2 719 M
Net Debt 2020 - - -
P/E ratio 2020 14,5x
Yield 2020 3,17%
Capitalization 56 083 M 39 886 M 40 035 M
Capi. / Sales 2020 3,12x
Capi. / Sales 2021 3,11x
Nbr of Employees 37 834
Free-Float 99,8%
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Technical analysis trends AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
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Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 21,13 AUD
Last Close Price 19,78 AUD
Spread / Highest target 32,5%
Spread / Average Target 6,83%
Spread / Lowest Target -39,8%
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Managers
NameTitle
Shayne Cary Elliott Chief Executive Officer & Executive Director
David M. Gonski Chairman
Michelle Jablko Chief Financial Officer
Gerard Florian Group Executive-Technology
Paula Jane Dwyer Independent Non-Executive Director