Impaired Assets

I have mentioned before that there are generally two phases in times of economic difficulty. The first where high profile businesses that have flown too close to the sun stall and collapse and the second phase where middle sized corporations start to struggle. Figures released by APRA yesterday through the RBA bulletin indicate that problem loans are creeping up. Impaired assets, as at the June qtr, are at their worst point for the GFC.

New impaired assets in the June qtr stood at $10.8 bln which is more than a third higher than the average level of new impaired assets for each of the three preceding quarters.

Loan write-offs by banks during the June 2009 quarter were the highest since the GFC commenced at $2.6 bln which is up from the average of the last three quarters.