Interest rates on upward trajectory

ANZ Bank believes the era of ultra-low global interest rates is coming to an end as inflationary expectations take hold, after a recent hike in New Zealand official rates and forecasts that the US will soon follow a similar path.

“We do think rates will rise,” the head of ANZ’s institutional business Mark Whelan told analysts.

“Now, because we have more of a global business in our markets business, we’ve already seen NZ rates rise and we’ll benefit from that, there’s already talk in the US about when US rates will rise, and also it’s an issue of when Australian rates will rise.”

His comments came as earlier on Thursday ANZ reported a 72 per cent jump in annual net profit to $6.2bn.

The earnings jump came about amid a partial reversal of Covid-19-related provisions.

ANZ chief executive Shayne Elliott (pictured) said the year had demonstrated the benefit of a diversified portfolio of businesses, with solid returns for shareholders and successful navigation of the pandemic.

“Experience tells us the full impact of Covid-19 will not be fully understood until at least the end of 2022, however we’re well positioned financially and culturally to respond,” Mr Elliott said.

“There will be opportunities that arise and we are investing for growth with the mindset and agility to continue to deliver for customers, shareholders and the community.”

The ANZ chief acknowledged the challenges with the bank’s mortgage business, saying second-half volumes were impacted by processing issues, a competitive refinancing market, and customers paying down their loans faster.

A range of improvements were under way, which were having a positive impact on the business.

The board declared a final dividend of 72c, taking the annual payout to $1.42, up 82c on 2020.