ANZ CEO Antonia Watson monitors how inflation, interest rates and fuel costs will affect bank’s customers

Hence, while Watson is concerned New Zealand is staring at another period of uncertainty at a time the economic recovery is still fragile, ANZ hasn’t increased its provisions for expected credit losses by much.

At $805 million at the end of March, its provisions were $3m higher than at the end of the prior six months. They were also $33m below the level at the end of March 2025.

Speaking to the Herald, Watson said while ANZ increased provisions to account for the conflict, which escalated at the end of its last reporting period to March, it reduced provisions for credit losses related to the agricultural sector.

The sector is doing well as commodity prices are high, the New Zealand dollar is weak and farmers have received big payouts because of Fonterra selling its Mainland businesses.

In the six months to March, households and businesses were also making the most of interest rates being low by getting ahead of their loan repayments and increasing their savings a little.

More than 44% of home loan customers were ahead on repayments by six months or more, and 48% held a savings buffer of at least $5000.

“Our customers have been pretty used to uncertainty,” Watson said.

But looking ahead, she believed it was a “watch, wait and see” situation.

She noted higher fuel, fertiliser and freight costs, together with ongoing supply uncertainty, were weighing on rural communities and were expected to influence investment and growth decisions.

House prices were also soft, with the housing market facing weaker confidence in the economic outlook and upward pressure on mortgage rates.

Watson didn’t believe it was necessary, at this stage, for the Government to underwrite bank loans to businesses, as the Australian Government is and the New Zealand Government did during the Covid-19 pandemic.

She agreed with the Government’s approach to ensure any support it provided in response to high fuel prices was temporary and targeted.

Watson didn’t believe ANZ needed regulatory support to enable it to encourage customers struggling to meet their mortgage repayment obligations to defer repayments.

She noted interest rates were exceptionally low when this occurred during the pandemic.

“If you think about good customer outcomes, it’s just not a good thing to do when interest rates are a little bit higher,” she said, acknowledging this type of support was still available for customers who needed it.

The catch is that the interest borrowers have “holidays” from repaying still accrues.

Sector-wide data gathered by the Reserve Bank shows banks’ non-performing housing loans ratio rose from 0.2% pre-pandemic to a peak of 0.7% in early to mid-2025, thanks to a period of high interest rates and negative growth. By March this year, the ratio sat at 0.6%.

As for banks’ non-performing business loan ratio, this rose from 0.5% pre-2020 to a peak of 1.2% in mid-2025. By March, it fell to 1.1%.

ANZ reported a statutory profit of $1.26 billion in the six months to March – no change from the previous six months and a 1% decrease from the same period the previous year.

Jenée Tibshraeny is the Herald‘s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.