ANZ profits up 5.7% to $1.48 billion amid ‘challenging’ environment

ANZ, the first lender to raise interest rates this month, has become the last of the big four banks to report profit figures.

The bank reported a 5.7% increase in quarterly cash profits to $1.48 billion for the three months ending December 31.

National Australia Bank reported quarterly profit of $1.4 billion while Westpac reported quarterly profits of $1.5 billion.

Commonwealth Bank, which financial year runs to June, reported six-month profits of $3.57 billion.

Chief executive Mike Smith says the environment for international banking had become significantly more challenging

Smith says funding cost across the Australian business increased by nine basis points over the second half of the year – ANZ raised its interest rates by six basis points last week as part of it independent review, the first of the major banks to lift its rates.

According to RateCity.com.au CEO Damian Smith the rate increase will add an extra $2.36 million in interest revenue per month for ANZ or $28.3 million per year.

The bank has also announced that it will axe 1,000 jobs this year.

“The environment for banking internationally has become significantly more challenging following the first phase of the global financial crisis,” says Smith. 

“Bank funding costs are continuing to rise as the deepening economic and financial crisis in Europe causes dislocation and volatility in global markets although prospects are brighter in the United States”. 

“There will not be a return to the level of credit growth that banks experienced pre-crisis for the foreseeable future, particularly in our major domestic markets in Australia and in New Zealand, as consumers reduce their gearing and businesses pace investments,” he adds.