ANZ New Zealand full-year cash profit rises 0.3%, net interest margin falls

See also: ANZ insists its mortgage business is profitable – as profit growth wanes

ANZ Bank New Zealand, the nation's biggest lender, recorded a 0.3% gain in full-year cash profit, as growth in lending made up for a decline in net interest margin.

Cash profit was $1.69 billion in the year ended September 30, from $1.68 billion a year earlier, the bank said in a statement. Net interest income rose to $2.88 billion from $2.77 billion.

ANZ New Zealand, the local unit of Melbourne-based Australia & New Zealand Banking Group, lifted annual lending by 8%, driven by home and business loan growth, leaving it as the biggest mortgage lender in the nation's largest cities.

Figures provided in the parent company's results for the local banking division show net loans and advances in New Zealand rose to $104.8 billion from $96.6 billion, while deposits and other borrowings rose to $70.7 billion from $63.7 billion. Its net interest margin slipped to 2.48% from 2.49%. Its credit impairment charge for the New Zealand division was $76 million, compared to a release of $9 million a year earlier.

The New Zealand business achieved a return on assets of 1.17%, down from 1.2% in 2014.

"We maintained our momentum from the first half and have continued to build our market share in key products including home loans, business lending, KiwiSaver membership, credit cards and deposits," chief executive David Hisco said.

ANZ New Zealand's results show a 9% gain in earnings from retail operations to $734 million and a 5% decline in commercial to $478 million. However, the numbers have been adjusted to account for the business banking segments being moved to retail from commercial.

Net profit, which includes changes in the value of hedges and insurance policy assets, rose 4% to $1.77 billion.

The net interest margin for the parent fell nine basis points in the latest year, reflecting competition for home loans in Australia and New Zealand, and switching to fixed-rate from variable rate mortgages in New Zealand. Lower interest rates also dented earnings on capital from its markets and treasury operations, while competition to attract deposits forced up deposit rates, the bank said.

Parent cash profit rose 1% to a record $A7.2 billion as net interest income climbed 6% to A$14.6 billion, although its credit impairment charge also rose, to $A1.18 billion from $A986 million. It declared a final dividend of 95Ac a share, making $A1.81 for the year, a 2% increase on payments in 2014.

ANZ shares last traded on the ASX at $A28.75 and have declined 10% this year, while the S&P/ASX 200 Index fell 1.4%. The stock is rated a 'buy' based on the consensus of 19 analysts surveyed by Reuters.

(BusinessDesk)