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ANZ Bank rallies after interim profit rise
[SYDNEY] Shares in ANZ Bank rallied Tuesday after its first-half net profit rose three percent to A$3.5 billion (S$3.6 billion), spurred by growth in both domestic and international operations.
The Australia and New Zealand Banking Group's cash profit, which strips out one-off and other items and is a measure often preferred by financial institutions, jumped five percent to A$3.7 billion in the six months to March 31.
The better than expected result came a day after fellow banking giant Westpac disappointed with a flat interim net profit of A$3.61 billion, which sent its shares plummeting.
ANZ shares soared as much as 3.75 per cent before a decision by the central bank to cut interest rates to record lows took some wind out of its sails. It closed 2.65 per cent higher at A$34.12.
"ANZ has managed to grow its revenue while keeping its expenses flat, an outcome Westpac wasn't able to do," said CommSec market analyst Steven Daghlian.
CMC Markets chief strategist Michael McCarthy said the ANZ result was "a welcome relief" after Westpac's worse than expected numbers.
"The growth is good for ANZ and also the broader market, as it casts Westpac's result as one hit by its competitors rather than a broader industry slowdown," he said.
"Overseas earnings played a key role in lifting ANZ over its peer, and may become more of a strategic focus for bank boards. Domestic earnings also grew significantly, with NZ the major negative." National Australia Bank reports its interim numbers on Thursday. The nation's biggest company by market capitalisation, Commonwealth Bank, follows a June year-end compared with September for its three competitors.
ANZ chief executive Mike Smith said he was pleased with the direction in which the country's most Asian-focused bank was heading, while lifting the six-monthly dividend to 86 cents.
"This is a good, well-balanced financial performance with solid progress made in reshaping our business in response to the more challenging macro-environment," he said.
"Our domestic markets in Australia and New Zealand have again delivered strong growth and returns." Mr Smith said the Melbourne-based bank was focusing on increasing home lending and loans to commercial businesses in Australia and New Zealand, while also working to enlarge its presence in Asia.
"We are managing expenses carefully. However, we have been prepared to accept a slightly higher run rate on costs in the short term where investment can deliver sustainable growth and returns," he said.
"We have directed those investments toward customer technology platforms, growing our geographic footprint in both Australia and Asia, and more customer-facing bankers." Geographically, ANZ businesses in the Asia-Pacific, Europe and Americas were the standout performer, with profit up 18 per cent.
ANZ's Australian division lifted profit eight percent thanks to continued growth in retail and business loans but its New Zealand operations managed only one percent profit growth.