By Gareth Vaughan
ANZ New Zealand has posted a 25% surge in annual profit, attributing it to ongoing benefits from the 2012 merger of the ANZ and National Bank brands and IT systems, and an improved economy.
ANZ NZ's net profit for the year to September 30 rose $343 million to $1.711 billion from $1.368 billion in the year to September 2013.
"The (NZ) division is now better able to capture scale advantages with increased brand recognition, lower costs and better customer service delivery through improved products, processes and distribution footprint. Revenue grew 2% while expenses reduced 3%. At 41.1% the division's cost to income is now 730 basis points lower than in 2010," ANZ Group CEO Mike Smith said.
It's the fourth consecutive year ANZ NZ has posted record annual profit. Profit at all ANZ's key business units rose with retail profit up 16%, commercial (including rural) up 5%, wealth more than doubling helped by an A$85 million one-off insurance settlement, and institutional up a third.
The 2012 merger saw the National Bank brand phased out, both banks moved to one core banking platform, one management structure established, and moves made to a single set of policies, processes and products.
Marketshare gains
ANZ NZ CEO David Hisco said the bank had grown marketshare in home loans, credit cards, KiwiSaver and commercial lending.
"We have lifted brand consideration to No 1 among New Zealand's major banks, meaning we are top of mind among consumers as we build New Zealand's best bank. This has been driven off the back of a highly engaged workforce with staff engagement to a record high," said Hisco.
Despite this ANZ is currently embroiled in an industrial relations dispute with bank workers' union First Union.
Annual net interest income rose $124 million, or 5%, to $2.765 billion. Total operating income rose $253 million, or 7%, to $3.762 billion, and operating expenses fell $33 million, or 2%, to $1.464 billion. ANZ booked a $9 million write-back versus an impairment for credit impairment of $65 million last year.
Net loans rose 5% to $105.485 billion year-on-year, with customer deposits up 8% to $76.355 billion. Net impaired assets fell 27% to $483 million, and dropped to 0.46% as a percentage of net loans from 0.66%.
| ANZ NZ | 2014 | 2013 |
| Net interest margin | 2.30% | 2.29% |
| Operating expenses to operating income | 38.9% | 42.7% |
| Operating expenses to average assets | 1.10% | 1.15% |
Second-half weakens; Branch numbers down
Despite the strong annual results, ANZ's second half-year performance was weaker than the first half-year. In the six months to September 30 operating expenses increased increased 2% to $739 million, and operating income fell 2% to $1.858 billion. The bank also booked a $30 million provision for credit impairment in the second-half, versus a write-back of $39 million in the first-half. Second-half profit rose $5 million, or 1%, from the first-half year.
ANZ's net interest margin in the second half dropped three basis points to 2.29% from the first half-year. And its second half cost to income ratio rose 170 basis points to 39.8%. The bank's second half return on assets was unchanged from the first half at 1.10%.
Year-on-year, ANZ NZ's total full time equivalent staff numbers dropped 179, or 2%, to 8,225. Branch numbers stood at 233 at September 30, down 16 since March, and 47 below the 280 pledged at the time of the ANZ-National merger. However, ANZ says its "branch coverage," or the areas it's represented relative to where New Zealanders do business, has risen to 85% from 81% two years ago. At the time of the merger the bank said it was targeting 90%.
Earlier in the year ANZ told interest.co.nz more branches had been combined than planned at the time of the merger after reviews showed staff from two branches could be accommodated in one. Seismic issues had also driven further consolidation.
The ANZ Group, meanwhile, posted a 15% rise in annual net profit after tax to A$7.3 billion. Annual dividends rose 9% to A$1.78 per share or A$4.9 billion in total, and the group's return on equity increased 10 basis points to 15.4%.
Here's ANZ NZ's press release, the ANZ Group press release, and here's ANZ's presentation, and a second presentation.
12 Comments
Lets hope the help doesn't over help themselves to the profits before the owners get their share. It is always best when the staff understand their subordinated role in the return hierarchy.
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... agree entirely , the staff ( or the " help " as you refer to them ) deserve only their wages and salaries ...
They're taking no risk in the success or otherwise of the business as a going concern , why should they expect any more than the renumeration they have willingly accepted ...
... if they want more , work their way up the higher rarky ... or better yet , quit , and start their own business elsewhere ...
Yes , life is good me old darling , and getting gooder by the day !
... if they want more , work their way up the higher rarky ... or better yet , quit , and start their own business elsewhere ...
Yes, indeed. Returns should always accrue to those taking the risks. Maybe, the RBNZ could enforce such an outcome as part of its macro prudential policy?
... 'fess up , you'd only waste it buying more overpriced doer-uppers in Auckland !
The ultimate winners from the great Kiwi housing bubble will be the Aussie banks , and by de-facto , their shareholders ...
... they've got alotta folks in Godzone tied to mega-mortgages for many years to come ....
Even if the bubble bursts , they'll still extract their pound of flesh out of their mortage holders ... ... a grand business to be in ... you win / they win ... you lose / they still win ...
No need to worry about OBR. If you are looking for a mortgage hit your bank up for a hefty discount on their published rates - just ask and you will be offered at least 0.5% off and threaten to change bank and they may even give you 0.75 off either floating or fixed rates. These banks can afford to trade at a much lower margin than the record margins they have been enjoying since the GFC.
These massive earnings by foreign owned entities are going to hit the current account that's already headed south in a big way.
We could be looking at - 7 to - 8 % in the not so distant future. Eventually the NZ $ will respond and remember we have seen less than US $ 0.50 twice in the last 15 years when the C/A blew out.
Watch this space as they say !
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