ANZ’s NZ says cash profit up 1% to $2.3b after a ‘tough’ year

ANZ New Zealand chief executive Antonia Watson said a brighter economic outlook was emerging after a spell of stubborn inflation and restrictive official cash rates. Photo / Mark Mitchell

ANZ New Zealand lifted its cash profit by 1% to $2.286 billion despite what it called a tough year for the country’s biggest bank.

ANZ’s net profit – which includes gains and losses from economic hedges – was $2.091b, down 2%.

Chief executive Antonia Watson said it was a solid result in a tough year for the New Zealand economy.

“Banks are a reflection of the economies they operate in.

“Like many of our customers, our costs grew faster than our income in the year.

“But our business demonstrated resilience and strength as we worked hard to support customers through a period of high interest rates and cost-of-living pressures.

“While the results of stubborn inflation, an official cash rate at restrictive levels and a lack of economic growth are still feeding through the system, we’re starting to see a brighter picture emerge.”

Watson said there was sense of “cautious optimism” surrounding New Zealand’s economic future.

As a result, ANZ NZ reduced the total credit impairment provision charge to $44m, $139m lower.

Revenue for the year was $5.046b, up 1%.

Expenses for the year were $1.760b, an increase of 6%, driven by inflationary pressures on staff and vendor costs.

Despite the quieter housing market and strong competition, home lending was up 4%, maintaining market share for the year.

Customer deposits were up 3%.

Net interest margin – the difference between the interest the bank earns mostly on lending and the interest it pays primarily on deposits – dropped by 7 basis points for the New Zealand division.

“This was driven by customers’ preference for higher earning term deposits together with continued sharp price competition in the market,” Watson said.

Across the Tasman, parent ANZ Group reported a net profit of A$6.535b ($7.25b), down 8%.

The full-year numbers were complicated because of ANZ’s acquisition of Suncorp’s banking division, which required a number of one-off adjustments.

ANZ announced a final dividend for the September year or A83c, franked at 70%.

Yesterday, BNZ reported a net profit of $1.51b in the year to September, a result broadly the same as the previous year.

And on Monday, Westpac’s New Zealand division reported a net profit of $1.06b in the year to September, up about 10% on the year before.

Last month, ANZ’s Watson told a parliamentary inquiry into banking that ANZ needed to provide its shareholders with a fair return.

Watson defended ANZ NZ’s profitability, saying it was at the level required to get shareholders to invest in the bank.

“Our return on equity ... is at or mostly above our cost of capital,” she said then.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.