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ANZ boosts profit 12pc to 5-3b

Title: ANZ boosts profit 12pc to 5-3b Date: Thu, November 03, 2011 Category: View Source

ANZ has posted a $5.3 billion profit, taking the total cash profit for the four big banks to $24 billion in the face of economic turmoil and slow credit growth.

TICKY FULLERTON, PRESENTER: Another day, another record profit for one of the big four banks, with ANZ posting a $5.3 billion profit today.

Together, the four banks have now posted a cash profit of $24 billion for the full year.

And they've managed this despite economic turmoil and slow credit growth.

Emily Stewart reports.

EMILY STEWART, REPORTER: ANZ certainly does live in this world, and with instability in European and US markets, the bank's institutional division took a hit in the latest financial year.

MIKE SMITH, CEO, ANZ: They were extreme conditions. It's - the volatility, daily volatility we saw during that period was even more extreme than that that we experienced in 2007 and 2008.

JAMES ELLIS, BANK ANALYST, CREDIT SUISSE: ANZ prudently took the view that they were going to take risk off the table during that quarter, so there was a negligible revenue contribution from what otherwise would be a reasonable contributor to the revenue line.

EMILY STEWART: But in the year to September, the bank still managed to post a record net profit of $5.36 billion, up 19 per cent on the same time last year.

And while overall it's a solid result, the bank had a flat second half with an increase in net profit of only one per cent to $2.6 billion. ANZ says economic volatility, cautious consumer behaviour and higher costs of capital all had an impact.

PAUL DOWLING, BANK ANALYST, EAST & PARTNERS: Customers are not borrowing because they don't feel comfortable about where tomorrow's going to be. So, not low sentiment, but very high uncertainty.

EMILY STEWART: Chief executive Mike Smith says the trading environment is now more predictable, but the bank will still scale back its market and trading businesses.

MIKE SMITH: I think we're going to have this sort of volatility for another couple of years. And I think that Europe is going to go from crisis to crisis. It will resolve itself with a few sticking plasters, you know, and bandages, and those will then wear off and things will get exciting again and something will happen which will create uncertainty.

EMILY STEWART: And this means the banking sector is facing increasing costs. Westpac cut around 800 jobs last financial year and yesterday flagged there'll be more to come.

PAUL DOWLING: We're seeing significant numbers of bankers hitting the street over the next three to six months, so there's a lot of knives being sharpened out there.

EMILY STEWART: But ANZ says its move into Asia is growing the business.

MIKE SMITH: We've got a high income, high cost model and we will maintain that because we continue to invest in areas that are growing, ie the ones - Asia Pacific and the institutional business. And if you were to look at our overall staff numbers, they actually increased on the year.

JAMES ELLIS: The Asia strategy is quite differentiated amongst the major banks. I suppose a perennial theme though with that is that it comes with cost growth to invest in the franchise and you need to be tolerant of cost to access that medium-term growth. That's perhaps somewhat more difficult in a more difficult revenue environment, as we're in at the moment.

EMILY STEWART: The bank declared a final dividend of 76 cents, taking the full-year dividend to $1.40.


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