ANZ Bank's NZ unit posts 1% increase in first half earnings as impairment charges weigh

Australia & New Zealand Banking Group's New Zealand [NZX:ANZ] division reported a 1% increase in cash profit as impairment charges on its commercial lending book offset wider margins from an expanded home loan portfolio.

Cash profit in New Zealand increased to $605 million in the six months ended March 31, from $601 million a year earlier, the Melbourne-based parent said in a statement. Of that, the lender's residential business reported a 4% gain in cash earnings to $238 million while its commercial division posted a 2% decline to $368 million. Net interest income advanced 6% to $1.24 billion. The bank recognised a $20 million impairment charge on bad debts, compared to a $37 million gain a year earlier.

"The individual credit impairment charge increased 53%, reflecting a slowing in the level of write-backs particularly in the CommAgri portfolio, partly offset by lower levels of new and top-up provisions," New Zealand chief executive David Hisco said in his review. "The release from collective provisions was $49 million lower due to portfolio growth and reduced rate of improvement in credit quality compared to the March 2014 half."

The Australian parent reported a 5% gain in cash profit to $A3.67 billion, with a 6% increase in net interest income to $A7.14 billion. The bank posted a 3% gain in statutory net profit to $A3.51 billion, and its board declared an interim dividend of 86Ac , up from 83Ac a year earlier.

The bank's New Zealand unit built its loan book by 6% to $99.52 billion as at March 31 from a year earlier, while customer deposits rose 11% to $61.43 billion. Its net interest margin rose to 2.52% from 2.49% a year earlier, and above the group's 2.04% margin.

ANZ's New Zealand residential loan book increased 1% to $37.37 billion, lagging behind the 6% gain in its CommAgri loan book to $37.6 billion and a 12% rise in its small business banking to $24.54 billion.

The bank's New Zealand business is in talks with the First Union, which represents about a quarter of its workforce of pay and entitlements. The New Zealand unit shrank its fulltime equivalent staff by 2% to 5090 in the half from a year earlier, while the wider group increased its FTEs 3% to 51,243.

ANZ's global wealth unit, which incorporates the bank's funds management businesses, reported a 13% decline in cash profit from New Zealand to $A62 million, which included a $A26 million cross-border settlement on an insurance claim in March last year. The bank's funds under management in New Zealand grew 32% to $A17.04 billion, while its in-force insurance premiums advanced 13% to $A199 million in New Zealand.

The dual-listed shares rose 0.4% to $34.85 on the NZX, and have increased 3.6% this year.

(BusinessDesk)