ANZ New Zealand, the country's biggest bank, has seen its annual profit top $2 billion for the first time with income rising 10% and expenses up just 2%.
ANZ NZ's annual profit was also bolstered by a $235 million contribution from economic hedges used to manage interest rate and foreign exchange rate risk, up from just $12 million the previous year.
ANZ NZ's September year net profit after tax rose $380 million, or 20%, to $2.299 billion from $1.919 billion in its September 2021 year., The bank's previous record annual profit was $1.986 billion in the September 2018 year.
Total operating income rose $413 million, or 10%, to $4.545 billion with net interest income rising $357 million, also 10%, to $3.761 billion. Other operating income rose 8% to $784 million.
ANZ NZ says the income increase reflects lending volume growth and net interest margin growth. Parent the ANZ Banking Group says its NZ unit's annual net interest margin rose 14 basis points to 2.47%.
Operating expenses increased $39 million, or 2%, to $1.646 million. The small increase was attributed to higher investment spending and inflation.
The bank booked a $39 million credit impairment charge versus a $115 million release the previous year. ANZ NZ also increased its credit impairment provisions to $751 million from $712 million.
ANZ NZ says housing lending increased $5.3 billion, or about 5.5%, to $104 billion in the September year. Business lending rose $1.3 billion to $19.4 billion, and rural lending fell $700 million to $15.4 billion. Net loans increased 4% to $140.445 billion, and customer deposits increased 5% to $107.957 billion.
"Coming into the the 2021-2022 financial year we didn't anticipate the New Zealand economy would hold up as well as it has," CEO Antonia Watson says.
"While inflation and supply chain problems, particularly for importers and exporters, were an issue for many customers throughout the year, the desire to get back to some kind of normal kept consumers spending."
"Banks are a reflection of the economies they operate in, and New Zealand has been far more resilient than expected," Watson says.
However given an uncertain environment with high inflation, higher costs of living, higher interest rates and global geopolitical issues, New Zealanders need to be cautious, Watson says.
"At the moment, the vast majority of customers are in a sound financial position but we know that many will roll off fixed home loans onto higher rates over the coming year. When that happens some will be under financial pressure," Watson says.
Funds under management fell 12% to $34.3 billion, which the bank attributed to the transfer of KiwiSaver default customers to other mangers, Bonus Bonds wind up distributions, and the market downturn.
In Australia the ANZ Banking Group reported annual cash profit from continuing operations of A$6.515 billion, a 5% increase. Return on equity rose 47 basis points to 10.4%, and the group's common equity tier one capital ratio, as a percentage of risk weighted exposures, came in at 12.3%, down five basis points.
The group's paying a final dividend of A74 cents per share versus A72c, taking total annual dividends to A$146 v A$1.42. That's equivalent to 59.3% of cash profit, down from 65.3% the previous year.
The ANZ NZ press release is here.
The ANZ Group presentation is here.
65 Comments
Who's in charge of NZ current account deficit policy? Not the citizens.
Money with Kiwibank, SBS, TSB and to a lesser extent Heartland bank, stays in NZ. KB profits accrue to government entities so your money is just moving from one pocket to another, rather than to the pockets of largely Aussie shareholders as in the case of the big 4.
If we're talking about reducing mortgage balances, I'm all for that too. Cheaper houses and less debt, great.
I'm only proposing a nice simple step we can all take to reduce the average ~$1k and growing profit that the big 4 Aussie banks extract from each man, woman and child in NZ each year. Other more systematic changes are also desirable.
These BIG 4 Citigroup/JP Morgan/ HSBC/National Nominees have a finger in every major trading bank pie of Australia and NZ so yes our profitable $10B per year banks in NZ are majority owned by American banks...
This massive hole in the NZ economy constantly drains the wealth of kiwis offshore, a smart government would address this.
Just think what $10Billion a year staying in the NZ economy compounding over the next decade ALONE would do for the living standards in NZ?
ANZ Australia ownership
Citigroup - 41%
JP Morgan - 14%
HSBC - 18%
National Nominees - 11%
Source: https://finty.com/au/research/big-four-ownership/
It does get tricky to figure out exactly who owns what - the banks and nominees will largely be holding these on behalf of various customers. I think it is safe to assume the majority of dividends paid are not going to be making its way back into the NZ economy in the way that KB, SBS, TSB and Heartland profits likely would.
A more factual analysis of just who owns (& benefits from) ANZ might be handier than just slagging "Aussie shareholders". I suggest most of our kiwisaver & Managed funds are significant shareholders and certainly lots of individual kiwis shareholders in ANZ (NZ).
And if anyone is upset at the supposed migration of Kiwi dollars, they can simply change where they bank. Much the same argument with supermarkets, Countdown v New World or Bunnings v Mitre 10.
Yes, that is precisely the argument I am making. Bank with the NZ banks and profits are more likely to stay in-country.
The situation is somewhat complex as there will be NZ holders of Australian banks as you say, and Australian holders of Heartland bank as they are also a publicly traded company and now trade on the ASX as well as the NZX.
Nice, and then there economist is on radio saying that NZ needs more unemployment to tackle inflation, (and those unemployed people who they lent hundreds of thousands too can go into our mental health system), and then Interest rates can go down and they can lend more money out and make more profit.
How about we just Tax the banks some more and the hard working people can keep their jobs.
It's articles like this which, remind me to finish this book... Thank you Author!! ;o)
Evidence a plenty that mortgage holders are being leeched and hollowed out by banks. House values are rapidly declining against the debt value. At this stage of the interest rate cycle, its obvious whos winning.
It's such early days for this to play out. For many mortgagor - mortgagee relationships, debt will do them part. On the current track, it's not going to end well.
Two Billion dollars mostly from encouraging kiwis to buy and sell each other the same S##t box house at ever increasing prices.
Thye joy of having an increasingly financially illiterate society.
But let's bring in some regs around car finance...
Meanwhile... back at the bank....
To be fair its not their fault a bunch of muppets borrowed billions of dollars to buy overvalued houses....making the banks rich at the expense of.the muppets. The banks play by the rules and make as much money as they can for their shareholders.
not saying i think the situation is ideal.. but if anyone bought a house in the last 4-5 years, risked their future and didnt bother to understand the risk.. well one born every minute. Real money always tends to follow hard work.
I think I'm probably one of the only people who looks at this as "bad." In some ways, symbolic of the peak of broken economic and monetary systems. Coinicidentally, I looked at ANZ's share price y'day and past 1 month / 3 month performance was solid. You can see no cracks in the armour of ANZ and its peers. And counterintuitively I think that should make people very cautious or downright terrified. Arguably, as a business, ANZ is wholly reliant on their business succceeding at the expense of the value of money. Not sure that most people properly understand this as they don't really care to think about where money comes from.
Completely agree - it is a rigged system so I don't know why the executives get paid so well when they are essentially fleecing the tax payer.
Henry Ford quote from 100 years ago comes to mind.
https://quotefancy.com/media/wallpaper/1600x900/4918749-Henry-Ford-Quot…
My son attended their financial conference today.
I sent him some pointy questions to ask if he got the chance. He told me this one was a bit ruthless
"According to an article in today's news, economists including most of you on stage, believe there needs to be higher unemployment to negate inflation. Why do you believe the real workers, fellow humans should suffer hardship, while you lot sitting in your ivory towers who are largely responsible with your faulty economic models shouldn't share the burden? Maybe it's the economists who should be the first to be unemployed?"
https://i.stuff.co.nz/business/300721698/unemployment-must-rise-before-…
It isn't unemployment that is key to reducing inflation, although it is a solid contributor, the main goal is to decrease spending substantially in the economy. The flaw to this need is, of course, human psychology and behaviour. Who would voluntarily decrease their standard of living or spending simply because someone told them to when they are in a comfortable financial position and in a stable job. This idea if egalitarianism is far too great for the average person to adhere to based on a higher ideal of reducing long term pain. As with children, the behaviour change happens when the consequences of their actions impact them tangibly.
These quotes attributed to Jefferson may be more apt;
https://www.whitlockco.com/thomas-jeffersons-top-10-quotes-on-money-and…
So now one of two things happens :=
1. ANZ (and other banks who are also making record profits) gives their senior managers huge bonuses. However, in 2023 and 2024 borrowers begin defaulting on home loans and since the banks have already spent their profits they request government assistance.
2. ANZ retains the profits incase scenario 1 happens.
My money is on banks asking for government assistance within the next 3 years.
It's like going to a casino and betting it all on red knowing that if it comes up black somebody else has to pay.
They're still receiving state assistance via the FLP scheme....
So we are screwing the customers of the banks (by paying too much for debt and receiving too little for savings), enriching the bank executives in the form of remuneration, and giving too much to shareholders in the form of dividends.
They're still receiving state assistance via the FLP scheme....
As the mighty Audaxes points out though, they don't really need FLP as it appears that funding is available at a marginally higher cost. Audaxes understands the moentary system related to banks far better than I do, but you have to ask yourself the relevant questions:
1. Whose interests is Kaumatua Orr really taking care of? The benevolent tree god stuff looks fraudulent.
2. What are the limits of credit creation by the retail banks? And what is the trade off? The destruction of the purchasing power of money?
All road lead to Rome (in this case the Fed)...and as I said a few years ago, I though Powell was the most dangerous man on the plant when he decided to recklessly create the quantity of money he did and then to subsequently deny that inflation might be anything other than transitory.
This policy mistake opened the door for Putin - who I don't think would have acted if he didn't have the economic leverage he now does because of the inflation issues hitting Europe.
Monetary policy is linked to everything - from geopolitics to the welfare of individuals. And in my view, we've got it seriously wrong....but I don't blame Orr as he is just a puppet of the Fed.
It appears to be that the closer nations get to the end of the long debt cycle, the more toxic and lacking in good ethics the banking system becomes (both retail and central banks).
Bank profits rise while simultaneously conditions get worse for the typical man (and women) on the street creating the goods and services that keep the country going.
It is all going to change...mark my words if you must
https://www.fma.govt.nz/business/legislation/conduct-of-financial-insti…
This will change the landscape and at least make customers understand exactly what they are being charged. If they wish to move they can/will but true competition is needed. That will come in the form of Apple, Costco (don't laugh you will see) and other providers of agile technology that better suits customer needs at a much lower price point.
Still waiting for someone in the media to ask the question in a public forum. 'Mr Orr, why when we it costs us 4.5% to borrow 2 year money, 4.5% paid for by NZ taxpayers, are we giving money via the FLP to foreign owned banks at 3.5%. Money that they then charge NZ taxpayers 6% to borrow?''
NZ Treasury issues 2 year Government bonds paying 4.5% interest to ANZ
https://www.interest.co.nz/charts/interest-rates/government-bond-rates
ANZ can borrow through Reserve Banks FLP programme and pay 3.5% interest (ie the OCR)
https://www.interest.co.nz/banking/116767/asb-biggest-user-public-money…
Great way to clip the ticket by 1%
Great arbitrage or am I missing something?
Just read the ANZ Press Release, a whole lot of waffle and we gave a few bucks to charity don't you know. So why didn't they just send a simple press release out as follows...
ANZ gives all NZ nurses $13000 bonus.
ANZ today annouces its financial results including $796m in tax paid. This allows the NZ Government to pay a $13000 bonus to all 58000 registered nurses.
ANZ hopes that the tax paid by other banks will be appropriately apportioned to Teachers, Police and other health care professionals.
deposits are always from the housing resellers......
first home buyers don't get anything more than few cents for their deposits saved to buy house....
mortgage interest for 10% of 750k is nearly 1000$ people have to pay..... mortgage increase will lead to rent increase too....
when a dollar extra is earned by workers, some one will come and tax it..... on the other hand these people are punishing public with 1000s of dollars in the name of some free market...
Robe from public ,,,,to pay yourself....ad your employees
making rich more richer and poor more poorer....
BORROWS from reserve bank which is public money and lends it to make billions of dollar profit.
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