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Stripped-back ANZ posts $6.4bn profit

27 October 2017

The heightened level of competition in the market continued to put the squeeze on net interest margin which shrank 6 basis points to 2.31 percent in the year, although ANZ's New Zealand lending division increased return on assets 3 basis points to 1.22 percent. The board declared a final dividend of 80 Australian cents per share taking the annual return to A$1.60, unchanged from a year earlier. "So we just need to be cautious and make sure people don't get themselves into difficulty".

"That's why we have been transforming ANZ, getting ready for that. Although we had a strong business, the external environment was changing faster than we were and our customers, the community and our shareholders expected much more from us", said Elliott.

Hisco said one of the highlights of the year was the growth in deposits while its KiwiSaver business also continued to grow with it now having 735,000 members with over $11 billion invested.

But he and the interview skated over the real driver of earnings - the 39% slide in charges for impaired loans.

Fewer products on offer for customers and staff efficiency has helped drive ANZ to a profit of $1.86 billion over the past year. That was a $757 million drop in the provision which in turn allowed the bank to boost earnings. the total provision fell from $1.9 billion a year ago to around $1.2 billion.

ANZ's New Zealand staff shrank to 7,755 as at September 30 from 7,869 a year earlier, although the bulk of that is in the group's Kiwi banking division where full-time equivalent staff was trimmed to 6,207 from 6,317 a year earlier. ANZ reported $278 million in restructuring expenses for the year.

Cash earnings-a measure that strips out revenue hedges, treasury shares and one-time items and is the basis for dividend payouts-were 18% higher at A$6.94 billion, slightly below the A$6.97 billion median of eight analyst forecasts compiled by The Wall Street Journal. The latter factor will be present for all of 2017-18 and will relieve some of the pressures.

Stripped-back ANZ posts $6.4bn profit