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ANZ's full-year cash profit drops to six-year low

ANZ today reported an 18 per cent decline in cash profit to A$5.889 billion. Photo / Richard Robinson
ANZ today reported an 18 per cent decline in cash profit to A$5.889 billion. Photo / Richard Robinson

ANZ's full-year cash profit has dropped to a six-year low as the bank copped the cost of its major restructure, and there could be more hits to come as chief executive Shayne Elliott looks to further streamline the business.

The lender today reported an 18 per cent decline in cash profit to A$5.889 billion, largely due to A$1.077 billion of previously announced impairments related to its restructure.

That reorganisation continued this week with an agreement to sell retail and wealth management businesses in five Asian countries, and ANZ said its Australian life insurance, advice and superannuation businesses could be next on the block.

The bank said it doesn't need to make the life and investment products it provides.

"We will continue to simplify the business and that will come at a cost," Elliott told analysts.

"In terms of getting things done, I think we've made a decent start but if there's any frustration it's just about how quickly we can move on what is a large agenda."

That agenda has so far included a scaling back of the expansion into Asia undertaken by predecessor Mike Smith, and a plan to focus only on areas in which it enjoyed a long-term competitive advantage.

Those areas include its Australian bank, which lifted cash profit for the 12 months to September 30 by five per cent to A$3.573 billion.

"We are focused on making the right decisions for long-term value creation rather than focusing only on quarterly results," Elliott said.

"We will not shy away from making tough decisions and we know we must act with pace."

ANZ's cash profit compared to A$7.216 billion in 2015 and is the lowest it's been since 2010, when it was A$5.025 billion.

Cash profit at ANZ's Australian wealth division, which includes the insurance, super and advice businesses, dropped 46 per cent to A$1.057 billion.

Shayne Elliott, ANZ chief executive. Photo / Supplied
Shayne Elliott, ANZ chief executive. Photo / Supplied

ANZ's review of the division follows last month's sale by rival National Australia Bank of 80 per cent of its life insurance business in a deal it expects to result in a loss of at least $1.2 billion.

Elliott said there would likely be no news on the potential divestment before the bank's interim results in six months' time.

ANZ increased total provision charges 62 per cent to A$1.956 billion, which included the settlement of the Oswal legal dispute.

It acknowledged what it called "pockets of weakness" in the resources sector, and expects both provisions and funding costs to increase in FY17.

Investors welcomed the announcement, lifting ANZ shares 17 cents, or 0.63 per cent, to A$27.35 and making them the best performing among the big four banks.

ANZ declared a final dividend of 80 cents, fully franked. That is flat on the half-year payout but down from 95 cents 12 months ago.

ANZ'S FULL-YEAR FIGURES
• Cash profit down 18pct to $5.889b
• Statutory net profit down 24pct to $5.709b
• Final dividend down 15 cents to 80 cents, fully franked

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