ANZ NZ profits up 0.3pc, interest margin falls

Cash profit, which excludes one-offs and non-cash accounting items, rose 1 percent to A$7.2 billion ($5.11 billion) for the year, narrowly missing analysts’ forecast of A$7.3 billion.

After NAB pointed to margin pressure in its business bank on Wednesday, ANZ said net interest margins had contracted, by 8 basis points over the year to 2.04 per cent. In the second half, however, margins were flat. It declared a final divided of 95 Australian cents a share.

“We have continued to see growth in our core customer franchises in Australia, in New Zealand and in key Asian markets, partly offset by the effect of macro-economic headwinds on the worldwide and Institutional Banking Division”, Smith added.

Smith says there are significant opportunities for the NZ but lower economic growth, intense competition, the growing cost of regulation and market volatility present headwinds for all banks.

“Today’s weaker-than-expected CPI report is a game changer”, ANZ rate strategists said. However, for New Zealand it is a drain on our resources which could be invested in New Zealand projects to create jobs and lift the economy. Its credit impairment charge for the New Zealand division was $59 million, compared to a release of $9 million a year earlier.

Cash profit for the 12 months to September 30 was up 1.0 per cent on last year’s $7.12 billion, with net profit increasing 3.0 per cent to $7.49 billion. In addition, on completion of the Esanda Dealer Finance sale, ANZ expects a 0.2% uplift in its CET1 ratio.

“I’m not too anxious by it.[but] it’s not going to get better though in a credit sense, we really are on the bottom”, Mr Smith told the bank’s website, BlueNotes.

Australian transactions via digital channels increased by 10 per cent over the year, and have increased by 39 per cent since 2012.

ANZ and rivals blamed the rate hikes on tougher capital rules introduced by the financial system inquiry that have forced the major banks to raise $18 billion in new equity from shareholders.

“We have completed the roll out of Transactive – that’s our cash management platform – in 17 countries”, the CEO said.

ANZ is my favourite big bank, but I do not believe its shares are a good investment at this time.