In a market update today ANZ announced an unaudited statutory profit after tax for the three months to 31 December 2011 of $1.7 billion. Adjusting for non-core items1 , unaudited underlying profit for the first quarter of $1.48 billion increased 4.6% QOQ (6.3% FX adjusted) and 4.1% PCP (5% FX adjusted).
ANZ Chief Executive Officer Mike Smith said: “Our performance in the first quarter has been solid with good results in Asia Pacific, Europe and America (APEA), in Institutional and in New Zealand offset by continued margin pressure in Australia. The Global Markets business is recovering after a very difficult trading environment in the fourth quarter of 2011.
“Although our business in Australia is tracking reasonably at present, we have to continue adapting our business model to changes in the domestic and international environment, particularly in Retail and Wealth.
“The environment for banking internationally has become significantly more challenging following the first phase of the global financial crisis. Bank funding costs are continuing to rise as the deepening economic and financial crisis in Europe causes dislocation and volatility in global markets although prospects are brighter in the United States.
“There will not be a return to the level of credit growth that banks experienced pre-crisis for the foreseeable future, particularly in our major domestic markets in Australia and in New Zealand, as consumers reduce their gearing and businesses pace investments. New regulation is also increasing costs for banks globally including the new Basel III rules.
“At the same time, while the resources sector is underpinning the macro-economy in Australia, other sectors in the economy are under continued pressure as a result of the strong dollar, and pull-back in discretionary spending by consumers and business.
“We recognised the need to adapt to this more challenging environment early and as a result ANZ is in a strong financial position with a strategy to take advantage of the continuing strong growth in Asia. To meet the emerging challenges in the Australian and New Zealand economies while continuing to support our customers, we are creating a more efficient and more innovative business while still investing in growth segments.
“There is no question that adapting to this environment creates real challenges. Our recent decisions on interest rates for customers in Australia and on how many people we employ at ANZ reflects a need to transform our business in new and often painful ways.
“It’s important to reflect that our customers, our staff and the broader community benefit from safe, well-run commercial banks - banks that also generate profits that underpin investor and superannuation returns and that can be re-invested to expand lending.