ANZ Bank’s NZ unit more than doubles third-quarter earnings as impairments tumble
Aug.19 (BusinessDesk) – Australia & New Zealand Banking Group more than doubled third-quarter underlying profit from New Zealand, where it is the biggest lender, after slashing its impairment charge for bad loans and boosting interest income.
Underlying profit, which excludes one-time items, jumped to $311 million in the three months ended June 30 from $120 million in the same period a year earlier, based on the bank’s nine-month figures, released today. Interest income climbed 15% to $647 million, while operating expanses rose 22% to $389 million.
The owner of the ANZ and National Bank brands cut its impairment charge to $47 million from $277 million in the third quarter of 2010.
“Credit quality in the rural sector in particular has improved steadily as the benefits of strong commodity prices flow through,” said David Hisco, the bank’s New Zealand chief executive. “We are also now seeing improvements in key indicators such as retail delinquency rates.”
The decline in impairments echoes the results for the Melbourne-based parent, which recorded a provision of A$328 million in the latest quarter, bringing the charge for the first nine months of the year to A$989 million, almost a third lower than in the year-earlier period.
Third-quarter underlying profit for the parent rose 7.7% to A$1.4 billion as its lending margins widened.
Shares of ANZ Bank dropped 5.1% to A$19.36 on the ASX and have slid 12% so far this year. The share decline outpaced a 2.5% drop in the S&P/ASX 200 Index, which joined a global rout triggered by speculation the U.S. economy is heading back into recession.
The shares are rated ‘outperform’ based on the consensus of 17 recommendations compiled by Reuters.
Mike Smith, CEO of the Australian parent company, said there is “good reason for optimism in our key markets in Australia and New Zealand.”
“The turbulence in the global economy confirms our long-held view that there is a changed reality post GFC and we have worked hard to actively position ANZ ahead of this by refocusing the group on the growth economies in the Asia Pacific and by building a very strong balance sheet,” Smith said.