Patchy progress for ANZ in Asia

ANZ changed how it presented its Asian businesses' earnings in the full-year financial results published yesterday, making indicators of progress in a region of great strategic interest to the bank hard to follow.

Working with the US dollar version of the regional earnings, profit from Asia increased 14 per cent to US$402 million in 2010. In the second half, profit increased 12 per cent to US$212 million.

However, data for the March 2010 half altered materially in the full-year financials from those prepared for the half year.

In the March 2010 profit pack, the March 2010 half-year profit for ANZ in Asia was shown as US$145 million.

In the September 2010 profit pack, the profit from Asia for the March half-year is shown as US$190 million. There are extensive changes in the disclosure of the March 2010 half year profit relating to the whole of the "Asia Pacific, Europe & America region".

This is due to ANZ's choice to present many details of its profit this year in a "pro-forma" manner and on the basis that acquisitions during the year - including the RBS banking businesses in six markets in Asia - were owned for the full year.

Under the pro-forma approach there is a degree of detail about the Asian activities of the bank.

For instance, the Royal Bank of Scotland businesses earned a pro-forma profit of only US$22 million over the full year.

Retail banking in Asia earned a pro-forma profit of only US$19 million.

The "Asia partnerships" segment, which includes all the minority holdings of banks in China, Malaysia and the Philippines (and a few other minor investments) earned US$343 million over the full year.

There is no direct reporting of the actual geographic, or segment, profit in Asia for the September 2010 half, however.

And so there is no way to follow up on one theme of the interim profit, published in April, that reported profit for "Asian partnerships" was slightly more than for the whole of the Asian geographic region.

Or, in other words, that the majority-owned banking businesses of ANZ in Asia at the time (and which preceded the RBS purchase) must, in aggregate, be in the red, if only just.

Mike Smith, ANZ chief executive, pointed out at the investor briefing yesterday that profits from Asia - of A$689 million - were now equal to 14 per cent of group underlying profit.

Smith said he now held an "aspirational" goal of lifting ANZ's profit in Asia to around 30 per cent of group profit by 2017, five years after the present target of a 20 per cent rise by 2012.