ASB has only 370 distressed home loan customers

“We're still seeing that customers are resilient. We're working with 370 customers who really need support and different solutions,” Shortt told GoodReturns after the bank released its first-half results.

These support measures include making mortgage payments interest only or allowing interest payment holidays.

The reason why so few customers require such support is “we've been really careful in that low interest rate environment to make sure that we've used high test rates,” Shortt says. These are rates used to test whether a customer could afford to pay a higher interest rate.

Shortt says 68% of customers are paying interest rates above 6% and that includes 36% of customers paying interest rates of more than 7%.

But 32% of customers have still to roll off much lower fixed rates onto current much higher rates.

Shortt says that it isn't the interest rate per se that matters but the increase in the dollar amount that has to be paid.

In general, when customers do get into trouble it's because their payments increase by $1,000 a month or more, she says.

Despite the much higher interest rate environment, ASB's charges against profit for bad debts fell to just $10 million for the six months ended Dec 31 from $49 million in the same six months a year earlier.

Shortt says ASB's provisions against its total loan book is $600 million and that level has not changed, although its composition has.

While some industries, such as tourism, have recovered from the covid pandemic, other industries have experienced greater difficulties because of rising input costs, she says.