The country’s largest bank Australia and New Zealand Banking Group saw net profits for all its operations rise 17% to $1.265 billion in the year to September.
The $180 million rise in net profit, up from $1.085 billion a year earlier, net included an after tax charge of $135 million relating to its decision to merge ANZ with its National Bank brand and adopt a single core banking system.
ANZ said last month it would scrap the National Bank brand, shrink the group's network of branches and cut out duplication by bringing the two bank brands together.
Underlying profit for the banks alone, which excludes the lender’s wealth management and institutional operation, rose 11 % or $94 million to $957 million, boosted by benefited from fatter margins and smaller provisions for bad debts.
The underlying net interest margin expanded to 2.62% from 2.52% a year earlier.
ANZ New Zealand chief executive David Hisco says in a statement the ANZ brand has strengthened, as reflected by gains in its mortgage market share, particularly in the commercially important Auckland market.
He warnsthat rising average cost of the bank’s funding portfolio has made an impact on net interest margins.
“This is expected to continue unless offshore conditions change significantly,” he says.
Profit before credit impairment is up 5%, reflecting a gradual improvement in the New Zealand economy, and productivity-driven balance sheet growth.
“Credit quality has strengthened across the book, reflecting the ongoing recovery of the New Zealand economy from the impacts of the global financial crisis. Delinquency rates have declined and there has been an overall reduction in the individual provision charge,” Mr Hisco says.
“However, due to the lower releases of collective provisions, the overall impairment charge has increased slightly.”
ANZ takes an important step towards the National Bank merger this weekend when it moves ANZ and The National Bank on to one technology platform.
“Around half of all New Zealanders choose ANZ New Zealand for their financial needs, either as their bank or through brands including UDC Finance, OnePath, Direct Broking and Eftpos,” Mr Hisco says.
ANZ spent $12 million in sponsorships and charitable donations in the last year, including sponsorship of the New Zealand Olympic team in London.
In Australia, ANZ’s parent the ANZ Group revealed a record full-year profit of $A5.66 billion.
ANZ shares fell 1.4% to $A25.60 today on the Australian Stock Exchange.