ANZ sees end of an era
ANZ Bank has flagged a very different operating environment characterised by greater uncertainty and rising interest rates and inflation after a 30year period of falling rates.
Announcing a 10 per cent lift in interim net profit to $3.53bn – a day after the Reserve Bank hiked the cash rate by 25 basis points – chief executive Shayne Elliott said ANZ would continue to adjust its risk appetite, business settings and investment priorities “as required”.
“We are already seeing increased demand from our business customers and we are well-placed to continue to support them as they manage in a world of higher inflation and interest rates,” Mr Elliott said.
The ANZ chief also said the bank would apply to the prudential regulator to establish a non-operating holding company to establish separate banking and non-banking businesses.
The proposal, which will separate non-banking services to help customers own their homes sooner or run their businesses better, is subject to board, regulatory, investor and court approvals. Mr Elliott said it didn’t make a lot of sense to have ancillary businesses subject to the same level of prudential regulation as the core banking operation, citing Macquarie Group as a local example of a global trend.
“It’s actually the next step in the evolution of building an agile, contemporary organisation that’s better able to service its customers,” he said.
In the operations, ANZ said its troubled home loan business had benefited from investment in processing capacity so that turnaround times were now comparable to competitors. The bank remained on target to grow in line with its peers by the end of the current financial year, while keeping an eye on its margin performance.
This followed a 6 basispoint decline in the net interest margin from 1.65 per cent in the prior half to 1.59 per cent, with the exit NIM at the end of March one basis point lower at 1.58 per cent.
The dividend was unchanged at 72c a share, consistent with the target dividend payout ratio of 60-65 per cent.
The total provision was a net release of $284m, comprising a collective provision release of $371m and a specific provision of $87m.
Mr Elliott said costs across the group remained tightly managed.
“Productivity remains a key priority as we prioritise investments on increasing operational resilience and positioning the bank for new growth opportunities,” he said.
“These investments include the new retail banking platform in Australia, further developing our sustainable finance capabilities, building a new retail foreign exchange proposition due later this year, rolling out Salesforce as a single customer service tool across the entire enterprise, and the continued migration of our applications to the cloud.”