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ANZ hit by Bad Debt

ANZ hit by Bad Debt

(9 April 2008 – Australia) ANZ bank has indicated that provisions for bad and doubtful debts will jump to A$975 million for the six months ended 31 March 2008. The increase in provision from A$567 million for the full year in 2007, indicated by chief executive Mike Smith in a trading update, was caused by global market volatility despite underlying business continuing to perform well for ANZ.

ANZ indicated that turmoil in global markets and the weakening of the global economic outlook was likely to impact credit quality in its Institutional portfolio.

The bank also said that the increase in the collective provision reflects risks which are yet to crystallise, including a small number of downgrades in selected commercial property and broking industry segments.

ANZ has specific problem exposures to institutional accounts including Centro Properties, as well as troubled stockbrokers Tricom and Opes Prime.

ANZ chief executive officer, Mike Smith, said that there are likely to be flow-on effects for the commercial portfolios from global market conditions and tighter Australian monetary policy and credit conditions.
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