ANZ Bank's NZ unit posts 1% increase in 1H earnings as impairment charges weigh

Tuesday 5th May 2015

Australia & New Zealand Banking Group's New Zealand division reported a 1 percent increase in cash profit as impairment charges on its commercial lending book offset wider margins from an expanded home loan portfolio.

Cash profit in New Zealand increased to $605 million in the six months ended March 31, from $601 million a year earlier, the Melbourne based parent said in a statement. Of that, the lender's residential business reported a 4 percent gain in cash earnings to $238 million while its commercial division posted a 2 percent decline to $368 million. Net interest income advanced 6 percent to $1.24 billion. The bank recognised a $20 million impairment charge on bad debts, compared to a $37 million gain a year earlier.

"The individual credit impairment charge increased 53 percent reflecting a slowing in the level of write backs particularly in the CommAgri portfolio, partly offset by lower levels of new and top-up provisions," New Zealand chief executive David Hisco said in his review. "The release from collective provisions was $49 million lower due to portfolio growth and reduced rate of improvement in credit quality compared to the March 2014 half."

The Australian parent reported a 5 percent gain in cash profit to A$3.67 billion, with a 6 percent increase in net interest income to A$7.14 billion. The bank posted a 3 percent gain in statutory net profit to A$3.51 billion, and its board declared an interim dividend of 86 Australian cents per share, up from 83 cents a year earlier.

The bank's New Zealand unit grew its loan book 6 percent to $99.52 billion as at March 31 from a year earlier, while customer deposits rose 11 percent to $61.43 billion. Its net interest margin widened to 2.52 percent from 2.49 percent a year earlier, and ahead of the group's 2.04 percent margin.

ANZ's New Zealand residential loan book increased 1 percent to $37.37 billion, lagging behind the 6 percent gain in its CommAgri loan book to $37.6 billion and a 12 percent rise in its small business banking to $24.54 billion.

The bank's New Zealand business is currently in talks with the First Union, which represents about a quarter of its workforce of pay and entitlements. The New Zealand unit shrank its full time equivalent staff by 2 percent to 5,090 in the half from a year earlier, while the wider group increased its FTEs 3 percent to 51,243.

ANZ's global wealth unit, which incorporates the bank's funds management businesses, reported a 13 percent decline in cash profit from New Zealand to A$62 million, which included a A$26 million cross border settlement on an insurance claim in March last year. The bank's funds under management in New Zealand grew 32 percent to A$17.04 billion, while its in-force insurance premiums advanced 13 percent to A$199 million in New Zealand.

The dual listed shares rose 0.4 percent to $34.85 on the NZX, and have increased 3.6 percent this year.

BusinessDesk.co.nz

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