ANZ increases cash profit as net interest margins get squeezed

ANZ's cash profit was up 4 per cent. Photo / Doug Sherring

ANZ New Zealand has reported a 4 per cent increase in its half-yearly profit, despite pressure squeezing its margins.

The Australian-owned bank’s cash profit increased to $1.15 billion in the six months to March, up from $1.1b in the same period last year, but was stable compared to the second half of its 2023 financial year.

Meanwhile, its statutory profit, which includes gains and losses from economic hedges, was just over $1.03b, down 8 per cent over the same period.

Changes in deposit mix and lower term deposit margins dropped the bank’s net interest margin by 11 basis points compared to 12 months ago, to 2.56 per cent.

Compared to the six months to the end of September, the margin, which is the difference between what the bank borrows money at and what it lends it out at, dropped four basis points from 2.6 per cent.

ANZ chief executive Antonia Watson said it was a solid result that reflected a degree of “resilience” across the economy “in the face of economic headwinds and how we have been faring as a nation”.

“These pressures are likely to continue throughout the year, with unemployment expected to rise further and more households and Kiwi businesses feeling the impact of that,” Watson said.

ANZ New Zealand’s revenue for the six months was $2.5b.

Lending

Its home loan lending increased by $10.1b.

Most of its customers had moved on to higher home loan rates, with only around 17 per cent remaining on rates lower than 5 per cent.

“Given the more challenging environment we are in, we do need to remain cautious. The number of customers falling behind on their repayments is rising,” Watson said.

The bank increased its total credit impairment provisions by $13 million to $870m.

“We continue to hold credit impairment provisions as a safeguard against future uncertainty, and our capital position, an important measure of a bank’s financial stability, remains very strong,” Watson said.

ANZ New Zealand’s credit impairment charge for the half was $33m compared to $121m in the year prior.

On Monday, Westpac New Zealand reported an 11 per cent increase in net profit for the past six months. BNZ also reported its half-year results last week, with its net profit down 5.3 per cent as operating expenses pushed higher.

ASB’s Australian parent, Commonwealth Bank, will deliver a third-quarter update on Thursday.

Meanwhile, ANZ’s Australian securities exchange-listed parent reported a cash profit of A$3.5b ($3.8b), down 1 per cent on the previous half.