ANZ CFO Farhan Faruqui
ANZ reported a net profit of A$7.1 billion for the 12 months to September – in line with earnings in the previous corresponding period. On a cash basis, adjusted for gains on economic and revenue hedges, profit rose 14 per cent to $7.4 billion.
Like NAB and Westpac, ANZ’s second half was weaker than the first half, with cash profit down 6 per cent.
Income: Net interest income rose 11 per cent to $16.6 billion. Other operating income fell 15 per cent to $3.9 billion. Operating income rose 5 per cent to $20.4 billion. On a cash basis, operating income rose 13 per cent to $20.9 billion.
Expenses and cost to income: Operating expenses rose 6 per cent to $10.3 billion. The cost-to-income ratio was 49.6 per cent – a small improvement on CTI of 49.7 per cent in 2021/22.
Impairment expense: The credit impairment charge was $245 million, compared with a release of $232 million in 2021/22. The charge was made up of a $152 million increase in the collective provision and a $476 million increase in individually assessed provisions, offset by $216 million of write-backs and $167 million of recoveries.
Credit quality: Gross impaired assets rose 5 per cent year-on-year to $1.5 billion. They were up 26 per cent half-on-half. Impaired assets as a percentage of gross loans and advances rose from 17 bps in the March half to 21 bps in the September half.
Margin: The bank’s net interest margin rose from 1.63 per cent to 1.7 per cent year-on-year. Half-on-half, the margin fell from 1.75 per cent to 1.65 per cent. Asset pricing, asset and funding mix changes and markets activities contributed to the decline in the second half.
Return on equity: ROE was 10.5 per cent – down from 11.4 per cent in 2021/22. Cash ROE rose from 10.4 per cent to 10.9 per cent year-on-year. Return on assets fell from 69 basis points to 64 bps.
Earnings per share: EPS fell from $2.50 a share in 2021/22 to $2.36. in the year to September.
Dividend: The bank took the unusual step of declaring a dividend of 81 cents a share franked at 65 per cent and an additional unfranked dividend of 13 cents a share for the September half. Total dividend payout of $1.75 a share for the year was up from a payout of $1.46 a share in the previous year. The bank said the level of franking reflects the geographically diverse nature of its business, as well as the timing of the proposed acquisition of Suncorp Bank.
The divisions: ANZ’s biggest division, institutional, reported cash profit of $2.9 billion – an increase of 53 per cent year-on-year. The Australian retail division’s profit fell 7 per cent to $1.9 billion. Australian commercial was down 7 per cent to $1.4 billion. New Zealand was up 7 per cent to $1.5 billion.
Market share: Australian home loan share rose from 13 per cent in 2021/22 to 13.4 per cent in the year to September. New Zealand home loan share was steady at 30.4 per cent.
Capital: The bank’s common equity tier 1 capital ratio was 123.3 per cent – up from 12.3 per cent the previous year.
Funding and liquidity: Net loans and advances rose 5 per cent to $707 billion. Customer deposits rose 4 per cent to $647.1 billion. During the year, the bank issued $39.9 billion of term wholesale funding and $1.5 billion of additional tier 1 capital. The liquidity coverage ratio was 132 per cent and the net stable funding ratio was 116 per cent.
Customer remediation: Remediation expenses had a $93 million impact on cash profit, compared with $166 million the previous year.
Staffing and branches: At September 2023 ANZ had 40,342 staff (full time equivalents) – up from 39,381 in September last year. The bank did not disclose its branch numbers.