ANZ stands by Super Regional Strategy delivers 3% 1H15 profit growth
(6 May 2015 – Australia) ANZ Bank released its half year earnings on 5 May, reporting a statutory profit after tax of A$3.5 billion, up 3 percent and cash profit of A$3.7 billion, up 5 percent.
ANZ chief executive Mike Smith was happy with the result, describing it as a balanced financial performance with solid progress made to reshape the business in response to a more challenging macro-environment.
Profit before provisions (PBP) was up 4 percent and customer deposits grew 12 percent while net loans and advances were up 10 percent.
International and Institutional Banking (IIB) profit increased by 7 percent, with Asia Pacific, Europe and America (APEA) standing out with profit up 18 percent.
ANZ’s customer franchise continues to strengthen, especially in Asia where customer revenues have increased 13 percent, largely through increased focus on lower capital intensity, higher return products like Foreign Exchange, Cash Management and Debt Capital Markets.
ANZ is also growing strongly in the region’s key trade and investment flow corridors including those between Australia and Hong Kong, China and Hong Kong and Australia and Singapore.
Global Wealth achieved positive results and is delivering industry-leading innovation for our customers.
“International and Institutional Banking (IIB) performed well given the twin effects of expansionary monetary policy on Institutional lending margins and lower commodity prices on trade volumes,” Smith said.
“These more difficult macro conditions will be part of our operating environment for the foreseeable future.
“We are responding by increasing the pace of execution of our Super Regional strategy within IIB so we continue to improve returns from the franchise while benefiting from growth opportunities in Asia.
“Given our business mix, which includes a substantial Commercial and Institutional business portfolio, and the more constrained environment, ongoing investment is being made to position ANZ for the future,” Smith said.
“Our domestic markets in Australia and New Zealand have again delivered strong growth and returns. We are investing heavily in areas of future profitability, particularly for our Australian business.
“This includes a focus on key segments such as Home Lending and Commercial Banking in geographies and segments where we are underweight such as New South Wales.
New Zealand has again performed well following the business simplification program and brand merger.
The New Zealand business increased momentum, with income growth of 6 percent coupled with disciplined cost management delivering an 8 percent PBP uplift.
More buoyant consumer and business confidence has driven economic activity and in turn lending volumes which ANZ’s market leading network has successfully leveraged.
Profit growth of 1 percent reflected a lower level of provision write-backs than in the prior comparable period.
In its statement the bank said its brand in New Zealand is stronger than ever and together with improved digital options and service delivery, this is growing customer numbers across the business.
Home lending has increased 6 percent with market share increasing in key regions like Auckland and Christchurch.
Streamlined products and processes along with digital tools to better enable our team in the field are delivering great outcomes for our Commercial and Agri business with lending up 6 percent.
Profit for Global Wealth increased 11 percent driven by strong underlying performance from the Insurance business which benefited from growth in in-force premiums, stable claims and improved lapse experience.
Private Wealth and Funds Management experienced strong investment market performance and improved volumes with Funds Under Management up 11 percent at the end of the half.
Global Wealth continues to focus on improving the customer experience and increasing penetration of the existing bank customer base, with wealth solutions increasingly integrated with the banking offer and more options for the self-directed customers.
The business now serves over 2.4 million customers across the region, managing more than A$68 billion in investment and retirement savings.
Smith said the foreseeable future would provision for China’s slowing economic growth and ANZ is confident about the benefits of its Super Regional Strategy over the longer term.
ANZ’s Capital Ratio at the end of the first half was 8.7 percent, up 40 basis points on the same half in 2014.
The Group’s capital management strategy seeks to manage shareholder returns while funding growth and progressively adjusting to any changes to regulatory capital requirements.
The program considers both capital efficiency and capital generation and has a variety of tools at its disposal to ensure ANZ remains well positioned.
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