ANZ NZ annual profit rises 21% boosted by hedging gains, impairment write-backs and a higher net interest margin

ANZ New Zealand's annual profit surged 21% to a record high, boosted by hedging gains, loan impairment write-backs and a higher net interest margin.

ANZ NZ's September-year net profit after tax jumped $441 million, or 21%, to $2.532 billion from $2.091 billion in its September 2024 year.* The bank's previous record annual profit was $2.299 billion in 2022.

Operating income rose 2% to $5.151 billion with net interest income up 4% to $4.473 billion. Operating expenses rose 3% to $1.812 billion.

ANZ NZ's net interest margin rose three basis points to 2.60%, the highest of any business unit within its Australian parent the ANZ Banking Group. The net interest margin is the difference between what the bank borrows money at through the likes of deposits and what it lends it out at. The ANZ Banking Group's net interest margin fell two basis points to 1.55%, with the next highest among its business unit's the 2.54% at ANZ's Australian commercial unit.

ANZ NZ booked a credit impairment release - or write-back - of $25 million versus a charge of $44 million last year. Gains from economic hedges, used to manage interest rate and foreign exchange risk, rose to $163 million versus a loss of $195 million last year.

ANZ NZ said net lending rose 4% to $139.9 billion, and customer deposits increased 5% to $115.6 billion. Funds under management rose 6% to $41.9 billion.

ANZ NZ's cost-to-income ratio, a measure of its operational efficiency, calculated by dividing its operating expenses by its operating income, was flat at 38.8%.

'The stage is set'

ANZ NZ CEO Antonia Watson says with households and businesses strengthening their balance sheets, house prices stabilising, and interest rates significantly lower than they were, the "stage is set" for a cyclical economic recovery to complement the country's strong agriculture sector performance.

"If we don't have any significant events, we expect the economy - driven by rural New Zealand - to be heading back to pre-Covid levels late in 2026, with the uplift when it comes likely to be broad-based," Watson says.

Over the past three months she says almost a quarter of ANZ NZ customers refixing home loans at lower rates have kept repayments steady or increased them. Of ANZ NZ's total lending, 73% is home loans. Its the country's biggest housing lender with 30% market share at September 30, down from 30.4% a year earlier.

"More than 40% of home loan customers are now ahead on payments by six months or more, and over 45% have savings buffers of $5,000 or more. Farms in strong agricultural sectors are also paying down debt and building resilience," Watson says.

New core banking system by 2028

Watson says ANZ NZ’s total technology and investment costs represent 30% of its annual cost base, or around $550 million a year. Over the past three years spending on systems and technology was about $1.6 billion.

"We’re about midway through the largest and most complex programme of work we have undertaken. This includes shifting our core banking system to a new cloud-based platform which will give us the industry-leading technology we need to grow our business and stay ahead. Most of this project - which is so far on time and budget - is expected to be completed by 2028," she says.

Here's ANZ NZ's press release.

Details of the ANZ Banking Group's annual results are available via the links below. It said NZ geography staff numbers fell 245 year-on-year to 6758.

Here's ANZ's press release, its major results announcement, and its investor presentation.

*ANZ NZ's general disclosure statement, also released on Monday, had annual profit at $2.714 billion versus $2.208 last year. ANZ NZ's ordinary share dividends paid were $1.650 billion.