ANZ's New Zealand chief executive Antonia Watson said many borrowers had paid back loans ahead of schedule but about 40 percent of its customers had yet to refix their mortgages. Photo: AFP
The country's biggest bank has posted a steady first-half profit amid rising revenue and margins despite slowing demand and a rise in possible bad debts.
Key numbers for the six months ended March compared with a year ago:
- Net statutory profit $1.002b vs $1.096b
- Net cash profit (excluding one offs) $1.107b vs $968m
- Revenue $2.49b vs $2.14b
- Net interest income $2.13b vs $1.76b
- Impairments $121m vs $20m gain
- Net interest margin 2.67% vs 2.33%
ANZ's net profit fell 9 percent on the year earlier to $1.0 billion, which included losses on financial instruments used to manage risk.
However, excluding those losses the cash profit was up 14 percent on the year before.
New Zealand chief executive Antonia Watson said the result was good and all parts of the business were performing well, with the rise in interest rates boosting its margins and its net interest income - the difference between what banks charge for loans and pay for deposits.
"The New Zealand economy has remained remarkably resilient, however the impact of a softening housing market, stubbornly high inflation and the impact of a rising official cash rate is starting to have a material impact on businesses and households."
"While a rising interest rate environment contributed to the result, this was offset by intense competition in home lending, which we expect to remain a feature of the market for some time into the future."
Its loan book increased $3b to $128b, while deposit growth was marginally higher at $105b.
Watson said many borrowers had paid back loans ahead of schedule but about 40 percent of its customers had yet to refix their mortgages at higher rates, which would affect their spending.
She said the bank was seeing a slowdown in credit demand, and in anticipation of tougher economic conditions had set aside $121m for bad loans from a writeback of $20m a year ago.
A big profit for a big bank
Watson acknowledged the size of the profit but said it had to be seen in the context of how big ANZ was and the position it and other banks played in the economy.
"The actual profitability of ANZ NZ, which measures our returns versus the amount of capital committed by shareholders, is middle-of-the-pack when compared to large companies listed on the New Zealand stock exchange."
She said that size and profitability would be needed to support customers facing tougher times, as well as those hit by cyclones and floods.
According to the latest quarterly bank review by KPMG, ANZ has assets of $193b.
ANZ had waived $1.3m in fees for cyclone-affected customers as well as made $11m available in interest free loans.
"Recent events in global banking also remind us of the importance of strong, safe, and well-capitalised banks," Watson said.
"Given the ongoing uncertain environment, we need to remain cautious, which is reflected in the increase in credit provisions."