ANZ New Zealand 9-month profit slips 4% on rising impairments

Tuesday 18th August 2015

Australia & New Zealand Banking Group's local unit reported a 4 percent decline in nine month profit as an increase in charges on bad debts outpaced the lender's gains in interest income.

Cash profit slipped to $1.26 billion in the nine months ended June 30, from $1.27 billion a year earlier, the lender said in a statement. That included a $58 million charge for credit impairment, compared to a $20 million write-back on impairments a year earlier. Net interest income rose 4 percent to $2.14 billion, while operating expenses edged up 2 percent to $1.11 billion. Statutory profit rose 5 percent to $1.3 billion.

"The New Zealand division is delivering strong balance sheet growth with above-market performance in mortgages, business lending and deposits," parent ANZ said. "Revenue growth was underpinned by continued high levels of customer acquisition and brand consideration and an improved digital offering."

The Australian group reported a 4.3 percent increase in cash profit to A$5.4 billion, with its Australian retail and commercial units outperforming the lender's peers, particularly in the mortgage market.

The New Zealand branch grew its loan book 8.8 percent to $113 billion as at June 30 from a year earlier, with a 7.5 percent gain in mortgage lending to $65.9 billion and a 9.7 percent expansion in non-housing term loans to $43 billion.

The bulk of the local unit’s credit impairment charge came from retail lending other than home loans, which was its biggest cost in the same period a year earlier. The bank's provisioning for mortgage debt was $164 million as at June 30, compared to $161 million a year earlier, and it booked a $3 million impairment charge from the home loan book, compared to a $13 million release a year earlier.

Non-retail exposures, which includes the bank's business lending, had total provisions of $362 million, down from $419 million a year earlier, and total impairment charges of $3 million, compared to a $65 million gain in 2014.

ANZ's term deposits expanded 1.5 percent to $34.4 billion, while other interest-bearing deposits grew 18 percent to $39.3 billion.

The dual-listed shares rose 0.7 percent to $33.56 on the NZX, and last traded at A$29.52 on the ASX.

BusinessDesk.co.nz

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