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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Monday, 25 May 2015

ANZ half year results

ANZ half year results

ANZ reported its half year results to March 2015 earlier in the month (where does that time go, eh?).

Operating income was up 7 per cent for the half to $10,230 million.

Statutory profit attributable to shareholders was up by 3 per cent to $3,506 million, while the preferred cash profit measure was up by 5 per cent to $3,676 million.

The reconciliation of 1H14 to 1H15 cash profit by division revealed solid growth in both Australia - where profits were up by 8 per cent - and New Zealand.

ANZ declared a fully franked dividend of 86 cents per share. 

We may well be entering a period of "slower growth", particularly for banks, yet reported return on equity (ROE) still came in at a tub-thumping 14.7 per cent.

Credit quality and provisioning

Provisions charges were down 3 per cent or $510 million for the half.

Overall asset quality was reported as having improved compared to the March 2014 half, with gross impaired assets down $912 million or a material 25 per cent to $2,708 million as at Q1 2015. 

Total credit impairment provisions were $4,028 million as at Q1 2015, with a reported decrease of $285 million (7 per cent) compared to the prior comparative period.

This reduction was driven primarily by individual provisions from an improvement in portfolio credit quality. 

The total credit impairment charge of $510 million decreased by $18 million or 3 per cent compared to the March 2014 half.

Slower growth environment

ANZ acknowledges a likely outlook of slower growth ahead, but expects low interest rates to support a benign credit quality environment, despite the possibility of external shocks.

With curbs on lending expected and increased capital requirements, ROE looks likely to slow, and we might expect to see the market pricing in lower growth rates in due course.

Indeed, this has already been happening in the sector to some extent.

The bank has a market cap of around $89 billion at these prices.