ANZ sees testing times
Bank turns corner as profit jumps to $6.5bn
ANZ has reported a betterthan-expected full-year cash profit, with the lender turning around its troubled mortgage unit and reaping the benefits of higher rates, but chief executive Shayne Elliott warned of a “testing” six months ahead for the economy.
Cash profit jumped to $6.5bn for the 12 months ended September 30, up 5 per cent from the prior corresponding period, the bank said in an ASX statement on Thursday.
Analysts were expecting cash profit to print at $6.3bn.
Statutory profit after tax jumped 16 per cent to $7.12bn.
ANZ shares tumbled 4 per cent in morning trade, to $24.79, as investors digested the result and outlook.
The lift in profit was underpinned by momentum in its retail division, with second-half profit up 6 per cent, as well as institutional, which saw revenue jump 10 per cent half-onhalf, driven by customer demand and disciplined margin management, the lender said.
Aggressive rate rises by the Reserve Bank shone through in ANZ’s net interest margin, which jumped to 1.68 per cent in the second half, from 1.58 per cent over the six months through March. Over the year, NIM contracted just 1 basis point, to 1.63 per cent.
All four of its divisions – retail, commercial, New Zealand and institutional – had revenue growth in the year.
But Mr Elliott cautioned on the uncertain outlook as central banks struggled to control inflation.
“Cost-of-living pressures are starting to have a meaningful impact and the next six months will be testing. This is particularly an issue for firsttime homeowners who are only starting to build up their equity as well as those with less stable employment,” he said.
“There is uncertainty ahead, however we have the business in good shape to withstand volatility.”
Mr Elliott said all divisions had made a material contribution to the full-year profit, as he called out improved processing times in its home loan business.
“We restored momentum in Australian home loans with application approval times back in line with industry peers,” he said. “We continued the re-platforming of Australia retail on to ANZ Plus, which is our new digital bank, with deposits already exceeding $1.2bn and growing at a rate faster than any new digital bank in Australia.”
ANZ will pilot a fully digital home loan product next month, with a broader rollout scheduled for 2023.
The bank declared a final dividend of 74c a share, bringing the full-year payout to $1.46 a share. That compares to 2021’s full-year dividend of $1.42 a share.
Jarden chief economist Carlos Cacho said the result was a solid beat, with cash profit, margins and dividend all beating expectations.
“ANZ appears to have succeeded in turning around mortgage momentum, albeit our tracking suggests this is partly due to aggressive pricing,” he said.