World Economy

ANZ Bank Interim Profit Rises

ANZ Bank Interim Profit RisesANZ Bank Interim Profit Rises

The Australia and New Zealand Banking Group posted a 6% rise in interim net profit Tuesday on the back of restructuring its business to shift the emphasis away from Asia and onto its core assets.

ANZ’s result for the six months to March 31 came in at A$2.91 billion ($2.19 billion), while cash profit, which strips out one-off and other items, spiked 23% to A$3.41 billion, AFP reported.

The numbers were slightly below expectations, with the lender holding its dividend payout steady at 80 cents. “We saw significant financial benefits emerging from the strategic and tactical decisions we took in 2016 to simplify the business, improve productivity and increase capital efficiency,” said chief executive Shayne Elliott.

The restructure has seen ANZ move its focus away from Asia, selling stakes in Shanghai Rural Commercial Bank and retail and wealth management arms in six Asian countries.

This has seen more emphasis on Australia and New Zealand as it strives to become “simpler, better capitalized and more balanced”.

“The reshaping of our business over the past year has delivered strong outcomes for customers and shareholders, and has established a foundation for future growth and better returns,” added Elliott.

The bank reported strong customer deposit growth (up 7%), small business lending (up 5%) and home lending (up 5%).

But Elliott cautioned that “the environment for banking remains constrained with intense competition and pressure on margins, subdued lending growth, rapidly changing customer expectations and increasing regulation”.

In a sign of further job cuts to come, the bank on Tuesday said was moving to make its workforce and management ranks more “agile”, which is intended to “reduce waste and bureaucracy”.

Elliott has also unleashed deep cost-cutting across the business, especially its institutional division. In the year to March, the number of full-time equivalent staff employed by the bank fell by 2,850 to 46,046.

All of Australia’s big banks are battling higher funding costs and lower interest margins, with rules now demanding they hold more reserves as a buffer against mortgages and fears over rising bad loans.

National Australia Bank reports its half-yearly results on Thursday with Westpac following suit next week.

The Commonwealth Bank—Australia’s biggest—uses a different reporting schedule and posted a record interim cash profit—the banking industry’s preferred measure—of A$4.91 billion in February.

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