ANZ records 6.2pc rise in 1Q profit
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Nicholas Grove is a Morningstar journalist.
Australian and New Zealand Banking Group (ANZ) on Friday announced a 6.2 per cent year-on-year rise in cash profit from ongoing activities to $1.53 billion for the first quarter ended 31 December 2012.
Unaudited statutory profit after tax for the quarter was $1.36 billion, the bank said.
Morningstar head of financial services Asia Pacific, David Ellis, said the result was in line with expectations and that the bank is on track to deliver solid full-year earnings.
"Our positive view is intact, but constrained revenue growth and flat margins demonstrate challenges of soft economic conditions in Australia and New Zealand in calendar 2012," he said.
"Asset quality improved significantly - this is a big positive, with impaired assets down 6 per cent and loans past due declining 4 per cent.
"Funding pressure remains, but we expect solid margins and improved revenue growth to deliver a full-year profit around $6.4 billion and we maintain our number-one ranking for this narrow-moat bank."
During the quarter under review, the bank said "reasonable" volume growth, particularly in Asia, was offset by margin pressure in New Zealand and in the International and Institutional Banking Division.
Momentum from productivity programs commenced last year continued, ANZ said, with expenses slightly down. The bank said it is on track to deliver positive "jaws" for the half, with the rate of income growth exceeding growth in costs.
Group net interest margin (NIM) was flat relative to the end of September, ANZ said in a statement. While NIM was not quantified by the bank, Morningstar's Ellis estimated it to be around 2.27 per cent, in line with his full-year expectations.
ANZ said a solid performance from the Australia Retail division was offset by lower returns on retained capital due to the lower interest-rate environment, along with continued deposit mix impacts and asset pricing pressure elsewhere in the group.
Income from the Global Markets division grew 26 per cent to $544 million, it said. Customer sales income increased 4 per cent on the quarterly average for 2012, with the Australian business performing well and the Asian business having its strongest ever customer sales result, ANZ said.
ANZ said credit quality trends are in line with expectations. The bank recorded a first-quarter bad debt charge of $311 million, which Morningstar's Ellis said was better than expected as a result of seasonal differences.
Average customer deposits increased 12.3 per cent year on year in the quarter, with average loans up 7.6 per cent, the bank said.