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ANZ National profit rises 51% as bad debt provisions fall, costs remain flat
ANZ has released its New Zealand branch General Disclosure statement for the three months to December 31, reporting a 52% increase in net profit to NZ$253 million from the same period a year ago. ANZ, which also owns National Bank in New Zealand, reported a fall in provisions for bad debt and flat costs over the quarter.
ANZ New Zealand Chief Executive Jenny Fagg said the New Zealand economy had stabilised and would slowly gather pace over the next year or two, which would help drive a significant improvement in ANZ's business performance.
"We are encouraged by the lift in profit in the December 2009 quarter compared with the September quarter, in line with signs of recovery in the broader economy following the recession," Fagg said.
"Provision trends are moderating. A key improvement in the December 2009 quarter is the pronounced reduction in provisioning for credit impairment which has decreased from $351 million (September quarter) to $151 million."
Here is the full ANZ release below.
The Australia and New Zealand Banking Group Limited (ANZ) NZ Branch General Disclosure Statement for three months to 31 December 2009 1was released today, coinciding with ANZ Group's trading update in Melbourne.
ANZ New Zealand Chief Executive Officer, Jenny Fagg, said: "Despite challenging business conditions, ANZ New Zealand is continuing to support its customers and is delivering a resilient financial performance.
"There is now evidence that the New Zealand economy has stabilised. As the economic recovery slowly gathers pace, it does offer the prospect of a significant improvement in ANZ's business performance over the next year or two," Ms Fagg said.
The General Disclosure Statement compares the December 2008 and December 2009 quarters. However comparing the December 2009 quarter with the September 2009 quarter, signs of recovery are particularly apparent.
"We are encouraged by the lift in profit in the December 2009 quarter compared with the September quarter, in line with signs of recovery in the broader economy following the recession," Ms Fagg said.
"Provision trends are moderating. A key improvement in the December 2009 quarter is the pronounced reduction in provisioning for credit impairment which has decreased from $351 million (September quarter) to $151 million."GDS December quarter 2009 vs December quarter 2008
Commenting on the formal GDS December 2008 comparison, Ms Fagg said: "The significant economic downturn saw a 19 per cent decline in the underlying profit to $202 million for the December 2009 quarter compared to the December 2008 quarter, influenced by provisioning for credit impairment (bad debt) and subdued lending volumes.Related Topics
"Nevertheless, our results in the December quarter show that ANZ New Zealand remains strongly capitalised and profitable, with costs well-managed. ANZ is well positioned to continue to support personal and business customers and to assist them as consumer and business confidence recovers.
"For example, in the December quarter we lent $2.5 billion in new home loans across both ANZ and National Bank. Although funding continues to come at a higher cost, we are working hard to manage this by offering our customers some of the most competitive rates through the ANZ and The National Bank brands.
"We have also made significant moves to offer our customers more simple and convenient banking through the most comprehensive review of bank fees in the New Zealand banking sector. This resulted in the removal of 21 fees and reductions in eight fees across our two retail banks, saving customers an estimated $55 million on an annualised basis.
"In addition, we have focussed on helping our customers manage their finances, and get through the recession. Since we launched our Financial Wellbeing programme in August 2008, our staff have proactively assisted more than 5700 customers who were under financial stress, representing lending of $1.3 billion," Ms Fagg said.
Key Points: December quarter 2009 vs December quarter 2008
"¢ GDS underlying profit declined by 19% to $202 million (Dec 09).
"¢ Provisioning for credit impairment (bad debt) increased 59% to $151 million (Dec 09).
"¢ Lending volumes subdued. Gross loans and advances decreased to $96.65 billion (Dec 09) from $99.12 billion (Dec 08).
"¢ $2.5 billion given in new home loans during the December 2009 quarter across ANZ and The National Banks.
"¢ Well capitalised: Tier One 9.62% (Dec 09) compared to 8.19% (Dec 08); Total capital of 13.31% (Dec 09) compared to 11.68% (Dec 08).
"¢ Strong liquidity:Total liquidity portfolio of $11.08 billion at 31 December 2009 compared with $9.20 billion at 31 December 2008 (GDS, Note 22, Page 27)
4 Comments
Jenny Fagg, said: “Despite challenging
Jenny Fagg, said: "Despite challenging business conditions, ANZ New Zealand is continuing to support its customers and is delivering a resilient financial performance.
Translation= Provided we have keys to everything you own we will get some more cash out of you.
"There is now evidence that the New Zealand economy has stabilised. As the economic recovery slowly gathers pace, it does offer the prospect of a significant improvement in ANZ's business performance over the next year or two," Ms Fagg said.
Translation= Comatosed but with vital signs..provided we can achieve consiousness we should be able to continue bleeding the patient.
We have also made significant moves to offer our customers more simple and convenient banking through the most comprehensive review of bank fees in the New Zealand banking sector. This resulted in the removal of 21 fees and reductions in eight fees across our two retail banks, saving customers an estimated $55 million on an annualised basis.
Translation = Due to a competition we decided to stop ripping our customers off and get rid of surplus staff wasting time chatting to old geysers at the counter.
In addition, we have focussed on helping our customers manage their finances, and get through the recession. Since we launched our Financial Wellbeing programme in August 2008, our staff have proactively assisted more than 5700 customers who were under financial stress, representing lending of $1.3 billion," Ms Fagg said.
Translation= yes we could have gone tits up on a few of these risky ventures but we figured you can't get blood out of a corpse..(ongoing I mean) and so recognised the need to keep the host alive.
Bernard, I hate to say
Bernard, I hate to say I told you so again (June 2009):
http://www.interest.co.nz/ratesblog/index.php/2009/06/10/opinion-why-par...
It was clear that the banks were not making significantly less money in 2009 than in previous years, and that their increase in impairment provisions was the main reason for the reduction in profits.
Another interesting point is that most five year fixed mortgage rates are about 350bps above the swaps rate today, a year ago they were less than 250bps above it. Why has almost nothing of the 70bps drop in the 5 year swap rate over the past 3 months flowed through to the retail market? Padding profits again? Or just too desperate to secure term deposits?
....reduction in provisioning for credit
....reduction in provisioning for credit impairment which has decreased from $351 million (September quarter) to $151 million.
They should have to restate the financials to reflect the reality that had occurred i.e provisioning allows profits to manipulated i.e. when everyone expected things to be bad, they can meet expectations and when things are better well there you go. Whereas in fact it was probably business as usual while everyone were losing their shirts but du to provisioning that then reversed it was made to look like the banks were affected as well.
<blockquote> A key improvement in
My reading sees total impaired assets of $1,336 million at December 2009 compared with $383 million at the same time in 2008.
I can't see much reason for the ANZ's positive spin. Assets are down, they are making a higher margin on interest so profit is up, but tax on that is down.
I note also that M3 to the end of January is down 4.5% on a year ago, 2.3% M on M. So this is suspect: