ANZ Beats Q3 Views as Bad Debts Stay Low, Mortgage Demand Slips

The bad-debt charge came in at $102 million, well below the analyst range that ran as high as $205 million. Non-performing loans held steady even after three Australian interest rate increases this year.

Lending growth and slightly wider margins supported the quarter, ANZ said. The housing slowdown is visible across the sector – mortgage applications at major banks have dropped between 12% and 20%.

Australia's housing market is losing steam. Auction clearance rates are at six-year lows. Average property prices have fallen about 2% over four months, according to Cotality.

ANZ finished June with a common equity tier one ratio of 12.51%, giving it a strong capital buffer. Lower costs and subdued bad debts supported profitability.

The quarter shows ANZ absorbing the slowdown better than many expected. The slide in mortgage applications signals housing is becoming a bigger drag on Australia's banking sector.