(22 August 2011 – Australia) ANZ chief Mike Smith said the bank is eyeing Asian acquisition opportunities among the stresses in some of Europe’s big banks.”Many of the banks in Europe are actually now earning a return on equity which is less than their cost of capital,” he said.
”Therefore, they’re going to have to find ways of increasing capital … at some stage, some of them will probably have to sell their family silver, which is the Asian assets.”
His comments came as ANZ reported a 1.3 percent increase in third-quarter profit.
He said there were still reasons for optimism in the bank’s key Australian and New Zealand businesses despite global market volatility.
He was not going to overreact to the turmoil, insisting ANZ – which is attempting to expand in Asia – had the right strategy in place.
Underlying profit for the three months to June 30 was A$1.4 billion. The earnings increase was struck on a slight rise in revenue and margins, and helped by a 10.3 percent drop in the charge for bad debts.
But the result failed to excite the market, particularly after a sharp drop in trading income. Investors sent ANZ’s shares down A93¢, or 4.5 percent, to A$19.50.
Even with the lending pick-up, deposit growth had exceeded loan growth by about A$15 billion so far this year, Mr Smith said.
In recent days, most of the big banks have cut fixed-term deposit and lending rates as consumers grow more skittish about the economy. The savings rate of Australians is the highest in more than 20 years.
The result takes ANZ’s profit for its financial year to date to A$4.2 billion, up 16.1 percent on the same period a year ago.
Mr Smith said that despite market turmoil, there was ”good reason for optimism” in key domestic markets in Australia and New Zealand.