Australian lender ANZ’s annual profit misses expectations on ‘intense’ competition
6:14 pm Thursday, November 07th, 2024
By Sameer Manekar
(Reuters) -Australian lender ANZ Group reported lower-than-expected annual cash earnings and slashed its dividends on Friday as a “challenging” period of intense deposit and lending competition and high costs crimped its margins.
“Competition in the (core banking) sector has continued to be intense, particularly in home lending and deposits,” ANZ Chief Executive Shayne Elliott said.
Australian banks have been struggling to grow their profits because of stubbornly high expenses and a fierce price war between lenders as customers look for better deals on loans and their deposits.
The country’s fourth-largest lender by market value reported a cash profit of A$6.73 billion ($4.49 billion) for the year ended Sept. 30, missing the Visible Alpha consensus of A$6.82 billion and below last year’s A$7.41 billion.
ANZ proposed a final dividend of 83 Australian cents apiece, below 94 Australian cents apiece handed out last year. It was, however, in line with market expectations.
Net interest margin, a key measure of profitability, fell 13 basis points from last year to 1.57%. Common equity tier 1 ratio, a measure of spare cash, slipped more than a percentage point to 12.2% as of the end of the financial year.
“Higher interest rates are impacting customers and we saw an increase in those requiring hardship support,” Elliott said.
Loan payments overdue for more than 90 days but not yet impaired grew by 47% to A$4.17 billion. Customer deposits grew by 11% to A$715.21 billion, although the Institutional division saw a marginal drop in its deposits.
Earlier in the week, larger rivals Westpac and National Australia Bank also reported slight fall in their annual cash profits due to fierce competition as well as a slight uptick in late loan payments.
($1 = 1.4972 Australian dollars)
(Reporting by Sameer Manekar and Rishav Chatterjee in Bengaluru; Editing by Matthew Lewis and Maju Samuel)
