In a shareholder update covering 10 months of trading1 , ANZ today reported a solid underlying business performance despite ongoing challenges associated with the global economic environment.
Unaudited Underlying Profit after tax is tracking slightly above comparable period in 2008, although lower on an Earnings per Share basis due to additional shares issued during the year², while cash profit is tracking broadly in line with 2008³.
Strong revenue trends have continued driven largely by the performance of the Institutional Division particularly Global Markets and Asia.
Lending growth in the Retail and Commercial segments has been offset by a reduction in Institutional.
Positive revenue/expense jaws are being maintained, notwithstanding continued investment in the super regional strategy and Institutional remediation.
Provision growth has moderated for all divisions and geographies other than New Zealand. The total provision charge is tracking slightly better than expectations; however the FY09 charge remains difficult to predict and we reiterate the guidance provided in May.
Given reductions in global credit spreads, the Credit Risk on Derivatives post-tax charge related to credit intermediation trades of $664 million in the first half of 2009 has substantially reversed and for the 10 months is around $125 million. This charge continues to be volatile. The impact of the improved credit intermediation trades position is substantially neutralised in the statutory earnings by a reversal of previously reported mark to market gains on economic hedging.
Impaired loans/facilities and derivatives were up 7%, for the June quarter, which is a slower rate of increase than that experienced in each of the previous two quarters.
Group Net Interest Margin (NIM) trends remain positive primarily reflecting improved asset margins and repricing for risk. New Zealand margins will decline year on year.
Proforma Tier 1 capital ratio of 10.2%4 at June. FY09 funding completed ahead of schedule.