ANZ Trading Update
In a shareholder update today after four months of trading, ANZ said its underlying business was continuing to perform well with Full Year 2009 cash earnings* expected to be around 2008 levels despite the challenges posed by the deterioration in both the global and domestic economic environments.
Key Points
- Year-to-date underlying business performance remains resilient, with strong revenue trends in a number of businesses.
- Asia Pacific profit after tax up circa 125%
- Institutional performing well, particularly in Global Markets
- Australian income and margin trends positive with profit before provisions growth around14%.
- Cash earnings for the first four months, excluding provisions and credit intermediation trades, were up 18% compared to the same period in 2008.
- Volatility in global credit markets continues to impact the credit intermediation trades with a further mark to market charge of $370 million after tax taken year-to-date.
- Provisions for the full year are expected to be higher than 2008 but more evenly spread across the year, in line with current market consensus of between $2.4 billion to $2.5 billion.
- ANZ’s proforma tier one capital ratio at the end of January 2009 was 8.4%.** Organic capital generation will be further strengthened through the adoption of a more appropriate dividend policy for the current conditions with the dividend for 2009 expected to be reduced by around 25% and to be fully franked.
- ANZ continues to maintain a strong balance sheet including liquidity positioning, deposit growth and term funding.
ANZ Chief Executive Officer Mike Smith said: “Given the challenges ANZ faced from the global economic downturn and volatility in financial markets, our strategy and the actions taken last year to prepare ourselves for the new economic reality are paying off.
“While Australia is better positioned than most other countries and has been remarkably resilient so far, it has not given us immunity – nor will it this year. We are also facing difficult conditions in New Zealand.
“In this environment, our underlying business is travelling well. We are continuing to deal with legacy issues, managing the impact of the financial crisis and implementing our super regional strategy. The positive results, particularly from Asia Pacific and progress in turning around Institutional, demonstrate we are addressing current critical issues while not neglecting our longer term positioning.
“Importantly, we have strengthened our balance sheet through increased provisioning, significantly increased liquid assets, improved our tier one capital position; recognised the need to move to a more appropriate dividend payout ratio for the current conditions and strengthened our management bench in particular by increasing the number of senior executives with deep banking experience,” Mr Smith said.