ANZ reports a cash profit of $2.99 billion.

  • By Elizabeth Fry

 

ANZ has reported a 28 percent jump in first-half cash profit of $2.99 billion on the back of the ongoing economic recovery and a robust property market. 

The result was boosted by the release of $491 million of bad debt provisions made at the onset of the pandemic and which are now not needed. 

ANZ chief executive officer Shayne Elliott said 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. 

“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.”   

The chief executive said work done over the past five years to simplify the bank’s operations, strengthen the bank’s balance sheet, and de-risk the group helped it deliver a strong result this half. 

“Following the trends of the first quarter, all parts of our business performed well. Costs were down and we also increased investment in new digital capability that will provide ongoing productivity improvements and better customer outcomes.” 

Elliott said Australia's retail and commercial divisions had another good half, becoming the third-largest home lender in the market. Deposits performed well, with retail and small business customers behaving prudently by building solid savings and offset balances through the half. 

Revenue was down 8 percent as ANZ charged its customers lower fees. Net interest income for the six months to March was flat at $6.98 billion. However, margins improved to 1.63 percent from 1.57 percent. 

“Lower revenues in our Institutional business were largely expected due to the impact of falling interest rates as well as a normalisation of Markets revenue after an exceptionally strong 2020. Our disciplined focus on credit management has been positive with our largest customers going into the pandemic from a position of strength and adapting fast to the rapidly changing environment.”  

Lower costs 

Pleasingly, costs of $4.48 billion were down on the $4.77 billion for the prior half. 

“Despite the volatile environment with significant demand from customers, the bank was again able to reduce the cost of running the bank through streamlining and automation while processing record volumes,” Elliott added.  

Elliott noted that the New Zealand business continued its recent strong performance with record lending growth combined with disciplined cost management. “This is a well-run business that is an important part of our overall portfolio and is well-placed to manage increased regulatory capital demands,” he added. “Most of the New Zealand capital build is done.” 

ANZ’s common equity tier 1 ratio strengthened to 12.4 percent while cash return on equity increased to 9.7 percent. 

The lender will pay an interim dividend of 70 cents.