May 2, 2012

ANZ 2012 Half Year Result

ANZ today announced a statutory profit after tax of $2.92 billion for the half year ended 31 March 2012. Adjusting for non-core items1 underlying profit of $2.97 billion increased 5% compared to the previous half (HOH) and 6% against the prior comparable period (PCP).

The proposed interim dividend of 66 cents per share fully franked is 3% higher than 2011. ANZ has historically applied a lower payout ratio to the interim dividend.

Group Balance Sheet & Financial Highlights (all comparators Underlying and HOH)
Profit before provisions (PBP) increased 4% driven by good results in Asia, Pacific, Europe and America (APEA) and in Institutional and New Zealand offset by subdued results in Australia impacted by continued margin pressure. Jaws were positive with income up 4% and costs up 3%. The Group net interest margin excluding Global Markets, declined 5 basis points (bps). Including Global Markets Group margins declined 6 bps. Margin improvement in New Zealand and stabilisation in APEA was offset by the impact of funding costs and deposit pricing pressure on the Australia division (down 13 bps) and Institutional (down 6 bps). Lending grew 4% and deposits 5% on an FX adjusted basis. The Group has steadily improved the diversity of its funding base and has the smallest absolute structural funding requirement of its domestic peers. Customer funding comprises 60% of total funding. Around 80% of the FY12 wholesale term funding task is now complete. ANZ is strongly capitalised with Tier 1 capital at 11.3% and Common Equity Tier 1 of 8.9%. Return on Equity increased from 15.7% to 15.9%. Growth in individual provisions was largely offset by the release of corresponding collective provisions. Gross impaired assets declined 4%.

Group Balance Sheet & Financial Highlights (all comparators Underlying and HOH)

Profit before provisions (PBP) increased 4% driven by good results in Asia, Pacific, Europe and America (APEA) and in Institutional and New Zealand offset by subdued results in Australia impacted by continued margin pressure.
Jaws were positive with income up 4% and costs up 3%.
The Group net interest margin excluding Global Markets, declined 5 basis points (bps). Including Global Markets Group margins declined 6 bps. Margin improvement in New Zealand and stabilisation in APEA was offset by the impact of funding costs and deposit pricing pressure on the Australia division (down 13 bps) and Institutional (down 6 bps).
Lending grew 4% and deposits 5% on an FX adjusted basis.
The Group has steadily improved the diversity of its funding base and has the smallest absolute structural funding requirement of its domestic peers. Customer funding comprises 60% of total funding. Around 80% of the FY12 wholesale term funding task is now complete.
ANZ is strongly capitalised with Tier 1 capital at 11.3% and Common Equity Tier 1 of 8.9%.
Return on Equity increased from 15.7% to 15.9%.
Growth in individual provisions was largely offset by the release of corresponding collective provisions. Gross impaired assets declined 4%.

ANZ Chief Executive Officer Mike Smith said: “In an increasingly challenging environment, ANZ has produced a solid financial result in the first half that continues progress in executing our super regional strategy.

“In line with the key trends outlined at our February trading update, there were good results from outside Australia - in APEA and in New Zealand, and in the performance of Institutional with its international focus. Global Markets recovered strongly reflecting an improved trading environment, further growth in customer sales revenue and the benefits of the super regional strategy.

“In Australia, we made market share gains and customer satisfaction remained strong. Our financial performance however was subdued, significantly impacted by declining margins and the structural shift that’s occurred since the financial crisis with persistently lower demand for credit. These challenges are now an ongoing part of the Australian banking landscape and we are making progress with the decisions needed to reshape our largest business for the future.

“We continued to create opportunities across the Group based on greater diversification of revenue by customer, geography and by product. Having identified and systematically invested in capabilities, products and our presence in the region, a number of our APEA and Institutional businesses produced strong double-digit revenue growth in the half.

“These results and the other milestones we are delivering, reflect a clear and differentiated strategy. It is a strategy that is creating a strong foundation for current and future growth by responding to the more constrained environment for banking in Australia and in New Zealand, and to the significant opportunities that are available to us beyond a domestic-only focus.

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ANZ 2012 Half Year Result

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