ANZ lifts dividend as profit doubles from Covid-19 slump

[BENGALURU] Australia and New Zealand Banking Group on Wednesday said its first-half cash profit more than doubled as it released funds previously set aside to cover potential loan losses, joining rival Westpac in reporting a surge in earnings.

Record-low interest rates, high government spending and the country's success in controlling the pandemic have fueled an economic recovery and lifted the housing market, helping Australian banks recover from last year's slump.

Cash profit from continuing operations rose to A$2.99 billion (S$3.1 billion) for the six months ended March 31, from A$1.41 billion a year ago, but missed a Reuters poll estimate of A$3.19 billion.

Earlier this week, bigger rival Westpac Banking Corp's first-half cash earnings more than tripled from a year ago.

Westpac, which hadn't given out a dividend last year, declared a 58 Australian cents per share dividend this year. ANZ on Wednesday raised its interim dividend to 70 Australian cents per share, up from 25 Australian cents last year.

ANZ, the country's fourth-largest bank, released A$491 million over the half year, a sharp rebound from the A$1.67 billion charge it took last year.

The bank's common equity tier 1 (CET1) ratio, a key measure of spare cash, rose to 12.4 per cent at the end of March from 11.3 per cent at Sept 30.

On an adjusted basis, it was 12.5 per cent, which chief executive officer Shayne Elliott said was about A$7 billion more than would normally be required to be "unquestionably strong."

"That money serves us no purpose other than it is a sense of safety and prudence in a time of uncertainty ... we would explore options either to invest in the business for growth, or to return (capital) into the pockets of our shareholders," he said.

Last month, the bank had warned that its cash profit would take an A$817 million hit, largely from losses on its investment in a Malaysian bank that was involved in the 1MDB scandal.

REUTERS