‘More gas in the tank’ … ANZ chief executive Mike Smith gives an optimistic outlook. Photo: Josh Robenstone
ANZ Bank has lifted cash earnings by 11 per cent to $ 6.49 billion and will pay shareholders a bigger than expected dividend.
In a result that beat analyst forecasts, the bank today said cash profits were $ 6.49 billion in the year to September.
It will pay a fully-franked final dividend of 91 cents a share, taking total distributions for the year to $ 1.64, a 13 per cent increase.
ANZ shares over the past 40 years.
Investor expectations for the run of bank profits are high, with shares in the ANZ, Westpac and the Commonwealth Bank trade all trading at record highs on Monday. NAB also hit a five-year high of $ 36.87 , but remains below its all-time record price of more than $ 44 in 2007.
‘More gas in the tank’
While the bank gave limited profit guidance, chief executive Mike Smith said there was “more gas in the tank” for the lender.
Its bottom line benefited from lower bad debt charges and cost cutting, with gross impaired assets falling by 18 per cent.
Mr Smith argued that the result also showed its push to become a “super regional” bank across Australia and the Asia Pacific was starting to pay off.
“This is a strong domestic performance, the result of a distinctive long-term strategy focused on growth in our domestic franchises and targeted expansion in Asia,” he said.
“Importantly, the long-term nature of what we are building at ANZ means there is still more gas in the tank.”
Return on equity – a key measure of shareholder returns – rose by 20 basis points to 15.3 per cent.
Asia strategy under fire
Mr Smith’s ambitious Asia strategy has come under fire from some broking analysts in recent months due to the weaker returns being generated.
Profits from its international and institutional division rose 15 per cent, a trend Mr Smith said showed the super-regional strategy was paying off.
However, profits sourced in countries outside Australia and New Zealand were up a more moderate 5 per cent.
“Our 2013 results demonstrate that our super regional strategy is not just about the promise of future growth a returns,” he said. “It also shows the hard work of our 47,500 people is delivering strong results for our customers and our shareholders today.”
While the bank’s Asia strategy has been debated in recent months, it has also been investing heavily in the Australian mortgage market, where it is the smallest of the big four.
Profits in its Australian division were up 11 per cent to $ 2.6 billion in the year, as the bank expanded its market share in home loans, deposits and credit cards.
Despite credit growth remaining weak, ANZ’s net loans and advances rose 10 per cent and customer deposits were up 12 per cent in the year.
It has also been aggressive in cutting jobs, with the ratio of costs to income falling by almost 3 percentage points to 44.8. per cent
Analysts had forecast a cash profit of $ 6.45 billion and a dividend of 86 cents a share.
Bank profit season
ANZ’s result kicks off a bank profit season that is expected to show the nation’s big four chalked up collective earnings of $ 27 billion in 2013, despite the slowing economy.
NAB is expected to deliver a profit of about $ 6 billion on Thursday, with Westpac earnings tipped to exceed $ 7 billion when it reports to the market next week.
Brokers said ANZ’s profit was a strong set of results beating consensus in earnings and dividend, setting a positive tone for the sector.
Asset quality was still improving, which was also good for the sector.