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CORRECT: ANZ New Zealand's first-half earnings rise 24%, driven by institutional business

Tuesday 2nd May 2017

Text too small?

(Fixes incorrect net interest margin in 3rd paragraph)

ANZ New Zealand, the local unit of Australia & New Zealand Banking Group, lifted first-half earnings 24 percent on a modest pickup in the lender's banking business and strong trading conditions from its institutional arm. 

Cash profit, the preferred earnings measure for the Australian-owned banks, rose to $928 million in the six months ended March 31 from $815 million a year earlier, the Auckland-based lender said in a statement. Net profit rose 14 percent to $869 million. The New Zealand banking business posted a 2 percent gain in earnings to $717 million, while the institutional business almost doubled earnings to $198 million joining a groupwide gain in that division that's shed an eighth of its workforce to cut costs. 

ANZ's New Zealand banking division expanded its loan book 4 percent to $114.7 billion, led by a 7 percent increase in mortgage lending to $70.44 billion, while customer deposits grew 8 percent to $82.24 billion. Net interest margin shrank 10 basis points to 2.3 percent as more of the bank's customers switched to less profitable fixed-rate loans. 

"All our business units performed well in this half due to our continued simplification of the business," ANZ New Zealand chief executive David Hisco said. "We've boosted our focus on digital innovation which has positioned us well for a period of rapid change in banking." 

ANZ reported a groupwide 23 percent increase in cash profit to A$3.41 billion as it slashed 14 percent from its operating expenses, in part by changing the way it accounted its software capitalisation the year earlier, and by cutting its workforce by 6 percent. Credit impairment charges on bad debt shrank 20 percent to A$719 million. The board declared a fully-franked interim dividend of 80 Australian cents per share, unchanged from a year earlier. 

The New Zealand unit's credit impairment charges fell 20 percent to $40 million with improvements in the bank's commercial and agricultural portfolios, while the lender's local banking division trimmed headcount by 2 percent to 6,250. Including the New Zealand institutional business, staff numbers fell 4 percent to 7,761 on this side of the Tasman. 

ANZ group chief executive Shayne Elliott today announced plans to implement a new 'Agile' working environment across the banking group, adopting working styles typically used in software companies, "that will allow us to respond much faster to changing customer expectations, engage our staff and attract new talent, and reduce waste and bureaucracy". The bank plans to start rolling out the new way of working in early 2018, starting with the Australia banking division. 

ANZ's New Zealand unit increased income from funds management and insurance by 6 percent to $183 million in the six-month period, due to expanding funds under management. As at the March 31 balance date, the bank had $27.15 billion and the latest Morningstar KiwiSaver report showed the lender's KiwiSaver funds crossed the $10 billion mark at the end of the March quarter, while Hisco said the lender had more than 725,000 KiwiSaver investors. 

The lender's ratio for funds management expenses to average funds under management rose to 0.32 percent from 0.27 percent a year earlier. The Morningstar report showed ANZ's fees on KiwiSaver funds were 0.56 percent for the default conservative option, rising to 1.1 percent for a growth investment. 



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