ANZ 2009 Interim Results

Wednesday, 29 April 2009, 11:26 am
Press Release: ANZ Bank

MEDIA RELEASE Wednesday 29 April 2009

ANZ 2009 Interim Results

Solid underlying performance in New Zealand, impacted by slowing economy and higher provisions Wellington: Australia and New Zealand Banking Group Limited (ANZ), of which ANZ National Bank is a wholly owned subsidiary, today announced its 2009 Interim Results.

Commenting on the contribution of the New Zealand business to the Interim Result, CEO Mr Graham Hodges said: “The Bank performed solidly in underlying terms in the first half of the financial year given the challenging economic conditions evident in the domestic and international economy.”

The New Zealand underlying profit performance (including NZ Institutional) was up 24% on the preceding half, to NZ$494 million; the result was negatively impacted by higher credit provisions.

“The New Zealand economy has been in recession since the start of 2008 and the deteriorating domestic environment has been aggravated by a sharp slowing in the global growth and the flow-on effects of the global crisis in credit and equity markets.

“Considering these issues, the Bank continues to be solidly profitable, have strong liquidity and funding, and is well capitalised” Mr Hodges said.

The first half performance was assisted by the scale and diversity of the Bank. An exceptional performance from the Markets businesses reflects that business’s ability to position the Bank and its customers to take advantage of the unusually high levels of market volatility (interest and exchange rate) over the half. The Institutional division’s underlying profit rose 67% in the half and 82% over the prior comparable period (pcp).

The effect of the domestic recession has been felt most significantly in the Retail business where profit fell 6% on the preceding half (down 17%, pcp) on a pre-provisions basis. The Commercial business achieved a reasonable result with profit up 5% on the preceding half (up 9% pcp) on a pre-provisions basis with the main contribution coming from the Rural business where the Bank has a very strong market presence. Provisioning and margin compression have impacted both the Retail and Commercial portfolios with higher wholesale funding costs and competition for deposits, as well as mortgage break costs contributing to a decrease of 9 basis points in margins in the half (24 basis points pcp). Costs are being well managed.

ANZ National Bank Limited Credit provisions rose to $291 million compared to $207 million for the preceding half. Provisions for the full year 2009 are expected to be more than double those of 2008. Individual provision increases have been spread across the unsecured Retail portfolio and the Mortgage portfolio, although the number of mortgagee sales remains low. The Commercial sector has seen increased provisioning on a relatively small number of names reflecting the impact of the weakness in household spending flowing through to business activity and performance.

In response to the increasing pressures on household budgets through 2008, the Bank introduced a customer assistance programme specifically to help our customers manage unexpected decreases in household incomes.

“We’re seeing some very positive results with our customer assistance programme with customers appreciating the measures we’re able to put into place” Mr Hodges said.
Ends

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