Value Investor: Are ANZ's provisions prudent?

A downtrend in provisioning for bad and doubtful debts by major banks has reduced the sector’s resilience to economic shocks and downturns.

ANZ is reporting outstanding profits but below the surface its resilience is getting progressively weaker. The major banks have been reducing provisioning as bad debt experience has reduced. This downtrend in provisioning for bad and doubtful debts cannot continue much further and reduces the sector’s ability to withstand economic shocks and downturns.

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