ANZ New Zealand 9-mth earnings jump 19% on smaller bad debt charges, cost cutting

Tuesday 15th August 2017

ANZ New Zealand, the local unit of Australia & New Zealand Banking Group, boosted nine-month earnings 19 percent as the country's biggest lender benefited from smaller impairment charges on bad debt and cut costs.

Cash earnings, the preferred measure of the Australian-owned banks, rose to $1.38 billion in the nine months ended June 30 from $1.16 billion a year earlier, the Auckland-based lender said in a statement. That was largely due to impairment charges more than halving to $51 million and an 8 percent drop in operating costs to $1.09 billion. The bank's net profit rose a more modest 7 percent to $1.28 billion due to a $104 million fair value loss on various hedging instruments.

The increased earnings were "due mainly to disciplined cost management and lower charges for credit impairment," ANZ New Zealand said. "Net interest margins have recently stabilised after a period of contraction caused by increased funding costs and a customer preference for fixed home loans."

The Australian group's cash earnings were up 5.9 percent to A$1.79 billion for the third quarter, in what chief executive Shayne Elliott said was a period of further progress rebalancing the business to improve returns. Since taking over the Melbourne-based lender, Elliott embarked on restructuring the business to exit less profitable businesses, the latest being ANZ's wealth management division, and introducing more agile working styles to cut down on bureaucratic waste.

ANZ's New Zealand business lifted mortgage loans 5.5 percent to $76.26 billion as at June 30 from a year earlier, while non-housing loans edged up 0.6 percent to $44.13 billion. Term deposits rose 20 percent to $45.72 billion a year earlier, although ANZ New Zealand continued to tap increasingly more expensive wholesale markets, with total debt issues rising to $19.39 billion as at June 30 from $16.89 billion a year earlier.

The bank's dual-listed shares were unchanged at $31.80 on the NZX and have increased 0.4 percent so far this year.

(BusinessDesk)

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