Australia's ANZ Banking Group, parent of New Zealand's biggest bank ANZ NZ, has posted a 13% rise in first quarter unaudited cash profit with CEO Mike Smith saying the group's on track to deliver a "solid" 2014.
ANZ's cash profit for the three months to December 31 rose A$200 million, or 13%, to A$1.73 billion (about NZ$1.87 billion) from the December quarter in the previous year. The 13% profit growth, roughly in line with analysts' expectations, is well ahead of the 6.2% rise recorded in the same period of last year.
Unaudited statutory net profit rose further, up A$280 million, or by 21%, to A$1.64 billion. The profit rise was helped by a A$120 million, or 39%, drop to A$191 million in ANZ's provision charge for bad loans.
"In the New Zealand division we have continued to grow our home loan book strongly through both business banking and retail channels with strong performance in the under 80% loan to value segment," ANZ said.
The group's only further comment on New Zealand was to say ANZ had consolidated its market leading position here, while producing further benefits from its simplification programme.
This programme has seen ANZ NZ combine both the ANZ and National banks onto one IT platform and successfully cull the popular National Bank brand. The "simplification strategy" has cost about $382 million and seen the bank's total number of retail and business banking products reduced from 160 in 2010 to 75 by late last year. In its annual results release last October ANZ NZ posted record annual profit of NZ$1.372 billion, and said its cost to income ratio had fallen to 43.1% from 50.6%.
Smith said trading conditions had been largely consistent with the second-half of the group's 2013 financial year, with modest system credit growth but some volatility in financial markets driving increased customer volumes in the global markets business particularly in foreign exchange.
Assuming no change in foreign exchange rates, annual revenue growth for the year to September 30 would be between 4% and 5%, expense growth around 2%, and the risk profile stable. Smith said, however, that group net interest margin was "slightly" lower. Customer deposits increased 4% and net loans and advances are up 3% from September 30.
"The bottom line is that we've made a good start to 2014. There remain a number of challenging issues in the global economic environment however these are now largely more predictable. Our performance in the first quarter means we are on track to deliver a solid 2014," said Smith.
See ANZ's full trading update here, and slides the group provided here.
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