ANZ quarterly profits up 6.2% amid “cautious” environment

ANZ has reported a 6.2% rise in cash profit to $1.53 billion for the December quarter amid what it calls “cautious behaviour” from consumers and businesses.

Unaudited statutory profit after tax (which includes one off items) was down 20% to $1.36 billion, the result of banking sectore-wide accounting adjustments.

The results were in line with expectations and also matched the 6% rise in interim profits reported by the Commonwealth Bank earlier in the week.

ANZ’s quarterly performance was marginally better than that of NAB, which reported cash profits for the three month to December up around 4% to $1.45 billion.

However, compared with the Commonwealth Bank’s more or less upbeat assessment of the year ahead and talk of stability and a slow rebuilding of confidence, comments by ANZ CEO Mike Smith were almost gloomy.

Smith said ANZ continued to deliver a “solid business performance” amid “soft economic conditions in Australia and New Zealand and cautious behaviour by consumers and business"

"In Australia and in New Zealand we won share in a number of priority markets including retail deposits and mortgages, " he added, but made no mention of any changes to wholesale funding costs.

ANZ’s group net interest margin – essentially the profit ANZ makes on its financial products including mortgages - was flat relative to the end of September, with a small rise in retail margins for mortgage lending.

ANZ reported a solid performance from Australia Retail (including mortgage lending) offset “by lower returns on retained capital due to the lower interest rate environment along with continued deposit mix impacts and asset pricing pressure elsewhere in the group”.

The bank picked up market share in household mortgages, deposits and traditional and affluent banking segments with “good momentum in commercial lending”.

Credit quality across retail and commercial loans was “sound and within expectations” while average customer deposits increased 12.3%.

Bad loan provisions stand at $311 million, compared with $239 million a year earlier.

Morningstar banking analyst David Ellis described the quarterly result as “solid” with no major surprises, either negative or positive.

“It’s pretty much steady as she goes, keeping the bank on track for solid full-year increase in earnings,’’ said Ellis.

The bank cut 1,000 jobs last year.