ANZ New Zealand, owner of both the ANZ and National banks and the country's biggest bank, has posted both record annual net profit after tax and record annual underlying profit, helped by a big fall in provisions for bad and doubtful debts.
ANZ said today statutory profit, or net profit after tax, rose NZ$218 million, or 25%, year-on-year to NZ$1.085 billion for the 12 months to September 30 and underlying profit, which excludes non-cash and significant items, jumped NZ$361 million, or 41%, to NZ$1.243 billion.
ANZ NZ CEO David Hisco said the profit growth reflected the "slow improvement" of the New Zealand economy and was "substantially driven" by a significant fall in provisions for bad and doubtful debts, with this tumbling 59% to NZ$187 million. Margin growth also helped. ANZ's net interest margins rose 11 basis points over the course of the year to 2.38% and were up 5 basis points to 2.40% in the second half-year.
Annual net interest income climbed 4% to NZ$2.598 billion.
Both the net profit and underlying profit figures beat the bank's previous record annual figures of NZ$1.039 billion and NZ$975 million, respectively, which ANZ recorded in the boom year to June 2007.
This year's profit rise was helped by a 6% rise in operating income to NZ$3.435 billion and a 3% fall in operating expenses to NZ$1.498 billion. The fall in costs came despite the NZ$111 million, after tax, cost of shifting both ANZ and National Bank staff onto one core banking system. This project is expected to be completed, with migration to the single platform, in late 2012. Meanwhile, ANZ's staff numbers fell by 142 to 9,270 over the course of the year.
The profit rise came as net loans and advances contracted 3% to NZ$93.613 billion. Customer deposits rose 4% to NZ$61.994 billion.
"The New Zealand economy has continued to re-balance with households and businesses repaying debt and strengthening their financial position,"Hisco said. "Strong financial discipline, including tight management of costs and risk, has played an important part in ensuring our financial performance has held up well despite the moderating effect of this de-leveraging on revenue growth."
ANZ, which also owns fund manager OnePath and finance company UDC Finance, paid NZ$507 million in income tax.
ANZ's major rivals have also had a strong year. Westpac New Zealand yesterday posted a 41% rise in annual cash earnings to NZ$454 million. BNZ last week reported a NZ$69 million, or 11.5%, rise in annual net profit after tax to NZ$671 million and an NZ$88 million, or 17%, rise in cash earnings to NZ$612 million.
And in August ASB, which has a June balance date, also posted record annual net profit of NZ$568 million and a 42% rise in cash earnings to NZ$504 million.
Meanwhile, ANZ said its net impaired assets fell 11% to NZ$1.307 billion with these as a percentage of net advances dropping to 1.40% from 1.52%.
For the second half of its 2011 year versus the first half, ANZ recorded a 3% rise in operating income, 3% fall in operating expenses, 5% rise in underlying profit and 27% jump in statutory profit to NZ$607 million. However, the bank's second half provision for credit impairment rose 20% to NZ$102 million.
Australian parent ANZ Banking Group posted a 12% rise in underlying profit to A$5.65 billion and a 19% rise in statutory profit to A$5.35 billion. It'll pay an A76 cents per share final dividend bringing annual dividends to A$1.40, up 11%.
See the ANZ Group's full results announcement here.
(Update adds further details & attachment).
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