ANZ profits fall on bad debt
(29 April 2009 – Australia) ANZ, the second of the Big Four to release their half year earnings, has announced a below expectation fall in cash and net profit, with bad debts a primary contributor.
The bank’s cash earnings, which do not include volatility, were down to $954 million from $1.67 billion in the prior corresponding period. This represents a significant 42.9 percent drop.
ANZ recorded a 28 percent fall in net profit to A$1.42 billion for the half year to the end of March, compared with A$1.96 billion for the same period last year. Net profit was at least up compared to the second half of last year’s results, increasing by 4.0 percent.
Compared to the prior corresponding period, revenue grew 7.0 percent, to A$6.57 billion, though this was outweighed by a 14 percent increase in expenses, to A$3.09 billion.
The big mover, however, was bad debt provisions, more than doubling (a 102 percent increase) to A$1.37 billion from A$681 million. Provisions, however, rose by a lesser 8.0 percent compared to the half year to September 2008.
The majority of provisions came from the Institutional division, although all business units have seen a large increase in provisions from the same time last year.
Underlying profit of A$1.91 billion, which excludes the non-core businesses of the group, was up a healthy 20 percent compared with the last half year and up 4.0 percent compared with the prior corresponding period.
Before adjustments, the firm’s Australian unit contributed A$908 million, while Institutional was next biggest at A$668 million, which represented a decrease of four percent and an increase of 59 percent respectively.
Retail profit was up six percent to A$693 million, while Commercial profit was down one percent to A$320 million. Institutional profit primarily came from its global markets business, up to A$458 million, and transaction banking, up 96 percent to A$266 million.
Regionally, Asia was the biggest growth area for ANZ, with underlying profit more than doubling to A$198 million. This represents around 10 percent of total underlying profit for the bank.
The bank has looked to firm up its balance sheet, with increases in deposits outweighing increases in loans. Deposits increased 16 percent to A$226.4 billion, while loans increased seven percent to A$356.8 billion.
ANZ recorded a 28 percent fall in net profit to A$1.42 billion for the half year to the end of March, compared with A$1.96 billion for the same period last year. Net profit was at least up compared to the second half of last year’s results, increasing by 4.0 percent.
Compared to the prior corresponding period, revenue grew 7.0 percent, to A$6.57 billion, though this was outweighed by a 14 percent increase in expenses, to A$3.09 billion.
The big mover, however, was bad debt provisions, more than doubling (a 102 percent increase) to A$1.37 billion from A$681 million. Provisions, however, rose by a lesser 8.0 percent compared to the half year to September 2008.
The majority of provisions came from the Institutional division, although all business units have seen a large increase in provisions from the same time last year.
Underlying profit of A$1.91 billion, which excludes the non-core businesses of the group, was up a healthy 20 percent compared with the last half year and up 4.0 percent compared with the prior corresponding period.
Before adjustments, the firm’s Australian unit contributed A$908 million, while Institutional was next biggest at A$668 million, which represented a decrease of four percent and an increase of 59 percent respectively.
Retail profit was up six percent to A$693 million, while Commercial profit was down one percent to A$320 million. Institutional profit primarily came from its global markets business, up to A$458 million, and transaction banking, up 96 percent to A$266 million.
Regionally, Asia was the biggest growth area for ANZ, with underlying profit more than doubling to A$198 million. This represents around 10 percent of total underlying profit for the bank.
The bank has looked to firm up its balance sheet, with increases in deposits outweighing increases in loans. Deposits increased 16 percent to A$226.4 billion, while loans increased seven percent to A$356.8 billion.
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