ANZ CFO Farhan Faruqui
ANZ reported net profit of A$6.2 billion for the 12 months to September – an increase of 72 per cent over the previous year.
Cash profit of $6.2 billion was up 65 per cent. The increase was due almost entirely to a release of impairment charges; profit before impairment and income tax was up just 1 per cent.
Income: Net interest income rose 1 per cent over the previous year to $14.2 billion. Other operating income fell 9 per cent to $3.2 billion. Total operating income of $17.4 billion was down 1 per cent from the previous year.
Expenses and cost to income: Operating expenses fell 4 per cent to $9 billion. The ratio of operating expenses to operating income fell from 54.5 per cent to 52.3 per cent. The bank said it achieved $308 million of productivity savings.
Impairment expense: After booking an impairment expense of $2.7 billion in 2019/20, the bank released $823 of collectively assessed credit impairment charges and reported an impairment gain of $567 million. Individually assessed credit impairment charges fell from $1.02 billion to $256 million.
Credit quality: Net impaired assets fell 18 per cent to $1.3 billion. Arrears (past due by 90 days or more) fell in Australian home loans, New Zealand home loans and Australian personal loans. Commercial arrears were flat.
Margin: The net interest margin rose 1 basis point from 1.63 per cent in 2019/20 to 1.64 per cent in the year to September. The increase was due to a shift in retail deposits from term deposits to at-call, lower interest rates on savings accounts and a reduction in wholesale issuance.
Return on equity and assets: ROE jumped from 5.9 per cent in 2019/20 to 9.9 per cent in the year to September. ROA rose from 34 bps to 59 bps.
Earnings per share: EPS rose 72 per cent to 217.1 cents a share.
Dividend: The bank declared a final dividend of 72 cents a share, taking the total dividend payout for the year to $1.42 a share, compared with total dividends of 60 cents a share in 2019/20. The dividend payout ratio for 2020/21 is 65.3 per cent. The bank’s target payout range is 60 to 65 per cent.
The divisions: The biggest of the group’s divisions, Australian retail and commercial, made a cash profit of $3.6 billion – an increase of 55 per cent over the previous year. The institutional division’s profit rose 2 per cent to $1.9 billion. New Zealand profit rose 48 per cent to $1.5 billion. The Pacific division lost $3 million.
Market share: The bank’s Australian home loan share continued to decline, falling from 14.5 per cent in September last year to 13.9 per cent currently. The Australian home loan book fell 1 per cent to $277.7 billion in the September half. Credit card share picked up from 18.2 per cent to 18.4 per cent year-on-year. Australian household deposit share was steady at 12.5 per cent.
Capital: ANZ’s common equity tier 1 capital ratio rose from 11.3 per cent in September last year to 12.3 per cent at the end of the 2020/21 financial year.
Liquidity and funding: Total net loans and advances rose 2 per cent to $629.7 billion, while customer deposit rose 7 per cent to $593.6 billion. The bank has $20 billion of Term Funding Facility debt. The liquidity coverage ratio was 136 per cent at the end of September and the net stable funding ratio was 124 per cent.
Customer remediation: The bank spent $327 million on customer remediation over the year – down from $383 million in 2019/20. The total remediation expense since 2017 stands at $1.8 billion.