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ANZ NZ underlying half-year profit up 19%

Tuesday 3rd May 2011

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ANZ New Zealand reported a continuing improvement in financial performance for the half year to March as the economy recovered, although momentum was moderated by de-leveraging across the market.

The bank today said underlying profit in the six months was $605 million, 19% up from the preceding half year and 63% ahead of a year earlier.

Net interest income of $1.29 billion in the most recent half was up just $7 million from the previous six months and up 6% from the year before.

Provision for credit impairment dropped to $85 million, down from $131 million six months earlier, and from $330 million a year earlier.

ANZ New Zealand chief executive David Hisco said that while provisioning levels had continued to steadily improve, the February earthquake in Christchurch was likely to affect individual provisions in the short to medium term. It was too early to fully quantify the impact of the quake, but the bank believed it was adequately provisioned.

With demand for credit subdued, revenue growth in the latest half year from the preceding six months was helped by continued switching of fixed rate lending to variable rate lending. That benefit was partly offset by the impact of deposit competition, Hisco said.

Further operational efficiency, and improved service and business outcomes were expected from a planned move to a single banking technology platform and a simplified regional management structure.

Project charges of $141 million were incurred in relation to those changes, and were included in adjustments between statutory profit and underlying profit.

Statutory profit of $478 million was down 1% on the preceding half and up 24% on a year earlier, with a $98 million post tax charge related to the move to a single banking technology platform.

The strong improvement in results compared to a year earlier was driven by the economic cycle, Hisco said.

Parent company Australia and New Zealand Banking Group reported a 23% rise in first half underlying profit to a record, as bad-debt charges fell, but warned of slow lending growth ahead as businesses avoid borrowing and households focus on savings.

Australia's fourth biggest lender said the transition to commodities focused economy would hurt traditional industries, while seven interest rate increases since late 2009 was muzzling the mortgage market.

"I don't think lending growth will recover to pre-crisis levels. We are in a new normal," chief executive Michael Smith told reporters.

"Parts of the Australian economy have hit a soft spot with consumers and businesses becoming more conservative."

Underlying profit in the six months to March 2011 rose to A$2.82 billion (NZ$3.83 billion) from A$2.3 billion a year ago, to come in line with the consensus forecast of A$2.85 billion.



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