ANZ Bank’s profit increase
Australia and New Zealand Bank (ANZ) today announced a statutory profit1 after tax of $5.7 billion and an underlying profit2 of $6.0 billion for the financial year ended 30 September 2012, both up 6% over the prior year (YOY). The proposed final dividend of 79 cents per share (cps) fully franked is 4% higher YOY. The total dividend for 2012 is $1.45 per share.
Group Balance Sheet and Performance Highlights3; Profit before provisions (PBP) increased 5% YOY (4% HOH) reflecting Group-wide productivity gains, improved performance from the Australia Division in the second half, early benefits from the New Zealand simplification program, growth in International and Institutional Banking par- ticularly in Asia and an improving contribution from the Global Wealth and Private Banking Division.
The Group invested $1.3 billion in targeted growth initiatives in 2012 with productivity improvements driving flat expenses HOH and positive revenue/cost jaws YOY and HOH. ANZ continues to increase the diversity of its revenue base with 21% of Group revenues derived outside of Australia and New Zealand during 2012. Global Markets revenue increased 14% to $1.9 billion with customer
sales income up 10% to represent 61% of total income.
Net interest margin excluding Global Markets declined 3 basis points (bps) from the end of the first half4; reflecting increased funding costs in particular from deposits, as well as asset pricing pressure in Institutional. Deposits grew 12% with lending up 8% (FX adjusted). ANZ continues to have the lowest wholesale funding requirement of its domestic peers. Customer funding comprises 61% of total funding.
The Group is well positioned for the implementation of Basel 3 from January 2013. As at 30 September 2012, ANZ’s Common Equity Tier 1 ratio (CET1) was 10.0% on a Basel 3 harmonised basis5 or 8.0% under the Australian Prudential Regulation Authority’s (APRA) Basel 3 standards. Return on Equity reduced by 60 bps to 15.6%. Benefits from the Group’s capital efficiency focus were somewhat offset by higher regulatory capital holdings and reduced earnings on capital in a lower interest rate.