ANZ unfazed by e-writedowns

By Phil Boeyen, ShareChat Business News Editor

Thursday 26th April 2001

ANZ Bank (NZSE: ANZ) has reported a record interim profit of A$895 million, up 10% on the previous year despite writing off more than A$40 million on internet investments.

Earnings per share in the banking and financial services company rose 13% in the half-year ended March to A55.8 cents per share.

The result included a A$65 million profit on the sale of the company's stake in St George Bank, although that was offset by A$84 million of investment write-downs.

Australian operations accounted for A$704 million or 79% of the net profit result; New Zealand business added A$126 million and other overseas markets A$65 million.

CEO John McFarlane says the company is on track to achieve its targets, including earnings per share growth of greater than 10% and cost-income ratio around 45%.

In the latest result the bank's cost-income ratio fell 3% to 49.4%, the first time the figure has fallen below then 50% mark.

"We were able to hold the increase in costs to 4%, which largely reflected the increase in costs associated with GST and costs from the acquired Eftpos New Zealand."

Mr McFarlane says the company has continued its prudent approach to investments and reassessed the market value of several investments.

"As a result we wrote down the carrying value of Panin by A$43 million, E*Trade by A$21 million and other internet investments by A$20 million."

Mr McFarlane says the bank's new strategy based around three themes - specialisation, e-transformation and growth - is progressing well.

In February the bank split its main profit driver, general banking, into two new customer businesses called Metrobanking and Regionalbanking.

"As a result, ANZ now has 16 main specialist business units, each being part of ANZ but also having the freedom to develop within its own competitive space.

"We believe this will allow a more entrepreneurial spirit within our businesses whilst benefiting from the synergy of cross-business collaboration."

For the first time the bank has disclosed the earnings of its main business units.

The figures show that operating profit from personal banking grew 26% to A$420 million compared with last year. General banking accounted for A$191 million followed by mortgages at A$112 million.

Corporate business grew 22% to A$356 million while international and subsidiaries operating profit rose 9%.

The bank will pay an interim dividend of A33 cents, up 4 cents on last year.

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