SYDNEY - ANZ Bank Tuesday posted an interim net profit slump of 22 percent on the back of impairment and restructuring charges that the lender said would reposition it for the future.
ANZ Bank posts an interim net profit slump of 22 percent on May 2, 2016, on the back of impairment and restructuring charges that the lender said would reposition it for the future
The Australia and New Zealand Banking Group's result for the six months to March 31 came in at Aus$2.73 billion (2.0 billion US), while cash profit, which strips out one-off and other items, was Aus$2.78 billion.
The unexpected drop was largely down to Aus$717 million in one-off net charges, including an accounting change to its software capitalisation policy, a writedown related to the value of its investment in Malaysia’s AmBank, and restructuring.
In a surprise move, ANZ slashed its interim dividend seven percent to 80 cents.
With banks juggling new rules that demand they hold more reserves as a buffer against mortgages, and fears over rising bad loans, chief executive Shayne Elliott said the one-off charges meant "stronger profit before provisions growth in the future".
"This result reflects a challenging period for banking and we have taken the opportunity to move decisively and adapt to the changing environment by building a simpler, better capitalised and more balanced bank," he said.
"We have strong underlying drivers in our Australia and New Zealand consumer and small business franchise and we have seen good early progress in transforming Institutional Banking.
"This has been supported by prudent capital management and tight control of costs with total expenses, excluding the impact of specified items, being lower for the first time in seven halves."
Elliott added that banking was experiencing rapid shifts in technology and regulation against a backdrop of low economic growth, volatile financial markets and rising credit costs.
"Our priority is to take bold action to ensure ANZ is fit and ready for this future," he said.
"This means for the immediate future we are in a period of consolidation, simplification and transition."
The soft numbers follow Westpac posting a three percent rise in interim net profit to Aus$3.70 billion on Monday, disappointing investors who savaged the share price.
National Australia Bank reports its half-yearly results on Thursday.
The Commonwealth Bank, the country's biggest lender, follows a different cycle. In February it posted a modest two percent rise in first-half net profit to Aus$4.62 billion.