ANZ reported a net profit of A$3.5 billion for the six months to March 2023 – unchanged from the previous corresponding period. On a cash basis, after adjusting for economic and revenue hedges, earnings rose 23 per cent to $3.8 billion. A big increase in earnings from the institutional division was largely responsible for the improved result.
Income: Net interest income rose 20 per cent to $8.5 billion, compared with the previous corresponding period. Other operating income fell 33 per cent to $1.6 billion. Total operating income rose 6 per cent to $10.1 billion.
Expenses and cost to income: Operating expenses rose 4 per cent to $4.9 billion. The ratio of operating expenses to operating income was 49.3 per cent, compared with 50.5 per cent in the previous corresponding period.
Impairment expense: The credit impairment charge was $133 million – up from a charge of $52 million in the September half and a release of $284 million in the March half last year. The charge was made up of a collectively assessed charge of $163 million and individually assessed release of $30 million. The impairment charge as a proportion of average gross loans and advances was 4 basis points.
Credit quality: Net loans and advances past due but not impaired rose by 20 per cent (or $1.9 billion). The bank said the increase was primarily in the home loan portfolio. Gross impaired assets fell 29 per cent year-on-year to $1.2 billion, representing 17 bps of gross loans and advances. Individually assessed provisions were reduced by 34 per cent to $421 million.
Margin: The bank’s net interest margin was 1.75 per cent, rising from 1.68 per cent in the September half and 1.58 per cent in the March half last year. The Australian retail margin was up 18 basis points year-on-year to 2.39 per cent. Deposit pricing and wholesale funding were the big contributors to the higher margin.
Return on equity: ROE fell from 11.3 per cent in the March half last year to 10.6 per cent in the latest half. On a cash basis, ROE rose from 10 per cent to 11.4 per cent year-on-year.
Earnings per share: EPS fell 5 per cent year-on-year to 118.5 cents per share. On a cash basis, EPS rose 16 per cent to 127.6 cents.
Dividend: The bank declared an interim dividend of 81 cents a share, fully franked – up from last year’s interim dividend of 72 cents and final dividend of 74 cents. The dividend payout ratio was 63.7 per cent, compared with 64.6 per cent in the previous corresponding period.
The divisions: The bank’s biggest division, institutional, made a cash profit of $1.6 billion – an increase of 97 per cent over the previous corresponding period. The Australian retail division’s profit rose 9 per cent to $1 billion. Australian commercial was down 16 per cent to $739 million. New Zealand was up 10 per cent to $774 million. The Pacific division made a profit of $34 million, after losing $6 million in the previous corresponding period.
Market share: Australian home loan market share remained steady at 13.2 per cent over the 12 months to March, while household deposit share fell from 12.4 per cent to 11.8 per cent. New Zealand home loan market share was 30.1 per cent and business lending share 21.8 per cent.
Capital: The bank’s common equity tier 1 capital ratio was 13.2 per cent – up from 12.3 per cent in the September half and 11.5 per cent in the March half last year.
Funding and liquidity: The bank has gross loans and receivables of $693.7 billion and customer deposits of $648.6 billion (up 6 per cent on the previous corresponding period). During the March half, the group issued $23.9 billion of term wholesale funding, excluding additional tier 1 capital, and $1.5 billion of additional tier 1 capital. The net stable funding ratio is 119 per cent and the liquidity ratio 128 per cent.
Customer remediation: The cost of remediation during the half was $60 million. Since 2018, remediation costs have been just under $2 billion. At March 31, the bank recognised a provision of $549 million, which includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims, penalties and litigation costs.
Staffing and branches: The number of full-time equivalent employees working in continuous operations fell 1 per cent year-on-year to 39,589.