ANZ profit surges, hikes dividend
Major bank ANZ will pay shareholders an interim dividend of 70 cents per share, as it reports half-year cash profits from continuing operations have jumped to $2.99 billion in the six months to March 31.
The result is an increase of 113 per cent on the corresponding period last year and is a 28 per cent jump on the previous half.
ANZ said the support packages introduced during COVID-19, including loan relief for businesses and home owners, were phased out over the March half. ANZ has reduced its provision for bad loans by $491 million, which is a stark contrast the same period last year where this was increased by $1.7 billion.
ANZ chief executive Shayne Elliott said improving credit conditions allowed the bank to write more than $500 million in new loans over the half, but added there was still a $4.3 billion reserve if conditions deteriorate and reminded investors the health crisis was not over.
“There is still significant uncertainty. You only need to look at how the pandemic is playing out overseas, as well as recent lock-downs, to realise how quickly the situation can escalate,” Mr Elliott said.
ANZ was the first bank to defer its half-year dividend last year as the prudential regulator urged caution while the country braced for a spike in COVID-19 cases.
Mr Elliott said the bank’s strong capital position allowed the dividend to be now paid at double the rate of ANZ’s final results in October, and higher than the 63 to 70 cents range predicted by analysts.
“Our disciplined approach to capital management also meant we could support customers through the COVID-19 pandemic without the need to dilute existing shareholders through equity raisings,” Mr Elliott said.
ANZ reported costs were down 2 per cent over the year as the bank focuses on improving its technology and automation. The bank reported it processed “record volumes” including 92,000 new Australian mortgages which lifted its position to third-largest home lender.
The bank also saw growth in New Zealand, with 42,000 new home loan accounts and funds under management in pension fund KiwiSaver increasing to a record level of $NZ 17.9 billion ($16.59 billion).
ANZ reported lower revenues in its institutional business, with $224 billion in customer deposits compared to $259 billion the same time last year. Mr Elliott said this dip was “largely expected” due to the impact of the falling interest rates.
The bank said users of its app had increased by 23 per cent compared to the same period last year and transactions were up 26 per cent. Mr Elliott said the bank’s improving conditions matched the health in the economy, but he also urged caution.
“While many households and businesses are still doing it tough, Australia and New Zealand are emerging from the sharpest contraction in economic activity in a generation quicker and stronger than many believed possible,” Mr Elliott said.
“This is a credit to government intervention and the industry working hard to provide customers with the support needed at a critical time.”
Evans and Partners analyst Matt Wilson said the profit results are 5 per cent higher than expected, adding ANZ is in a strong place both financially and operationally.
“The work to digitise core processes and platforms continues at pace and this will be more visible to customers towards the end of the year,” Mr Wilson said.
More to come
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Charlotte is a reporter for The Age.
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Source: Thanks smh.com