ANZ posts half-year profit of more than $1 billion, up 14%

Friday, 5 May 2023

ANZ is owned by an Australian bank of the same name.

ANZ has recorded a 14% increase in half-year profits compared to the same time a year earlier.

Chief executive Antonia Watson said the bank had made an after-tax cash profit of $1.107 billion in the six months ending March 31, compared to $968 million in the same period last year.

It was up 1% comapred to the profit made in the six months to September.

It follows BNZ’s announcement on Thursday of a 13.5% rise in profit for the same six-month period.

The massive leap in BNZ profit was noticed in the Beehive, but Commerce and Consumer Affairs Minister Duncan Webb has so far not decided whether to order the Commerce Commission to investigate the state of competition in the banking industry.

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BNZ chief executive Dan Huggins denied that the bank’s shock result as households and other businesses are struggling as the country moves towards recession was an indication that competition was weak in the sector.

Watson acknowledged a $1b half-year profit was large, but said: “It needs to be put into the context of the size of our business and the role banks like ANZ NZ play in supporting economic activity in New Zealand, particularly during periods of uncertainty.

Antonia Watson, chief executive of ANZ New Zealand, says households have had a tough start to the year.

“This was a good result where all parts of our business performed well and one that prepares us for the uncertain economic environment ahead.”

ANZ recorded no significant growth or decline in its loan or deposit books.

Its main profit “driver” was that the bank was able to increase its margins, earning more from every dollar it lent to households and businesses.

High employment levels had also meant ANZ did not see a large jump in borrowers being unable to make loan repayments, but the proportion of home loan borrowers behind on their homes loans has been rising.

ANZ NZ recognised a credit impairment charge of $121m, and total credit impairment provisions increased to $860m.

Watson acknowledged the challenges facing households and businesses.

“The New Zealand economy has remained remarkably resilient, however the impact of a softening housing market, stubbornly high inflation and the impact of a rising official cash rate is starting to have a material impact on businesses and households,” she said.

“While a rising interest rate environment contributed to the result, this was offset by intense competition in home lending, which we expect to remain a feature of the market for some time into the future,” she said.

“With the flooding in Auckland in January and Cyclone Gabrielle in February, this has been a tough six months for many New Zealanders,” she said.

“As the country’s largest bank, we are acutely aware of the role we play in supporting customers through tough times and have a team dedicated to working directly with impacted customers and communities.”

On Monday, the Reserve Bank Te Pūtea Matua said homeowners with a mortgage could expect to be paying 22% of their disposable income in interest payments on their home loan on average by the end of the year.

That would be up from a low of 9% in 2021, and the increase will be much higher for many recent home-buyers with hefty mortgages.

The ANZ and BNZ profit announcement follows KPMG’s prediction last month that factors like the weakening economy, falling house prices, and rising bad debts may put an end to the run of record bank profits.

Westpac will reveal its half-year profit on Monday.