ANZ posts record $7.4b full-year cash profit

afr.com:

ANZ reported a record full-year cash profit of $7.4 billion, 14 per cent higher than a year earlier, boosted by its diversification into institutional banking for large companies amid competitive pressure in Australian housing.

ANZ lifted its full-year dividend reflecting its strong capital position while it bumped up provisions to protect the bank from future credit losses as economic conditions get more challenging under higher interest rates.

The cash profit came in just below analyst expectations and the share price fell as the market opened on Monday morning, with deterioration in retail banking margins worse than expected, as ANZ prioritised lending growth over pricing to win housing loan market share from its major bank rivals.

ANZ CEO Shayne Elliott on Monday morning, as the bank reported a 14pc increase in cash profit to a record level. Arsineh Houspian

Chief executive Shayne Elliott said ANZ had taken a credit provision of $245 million for the year and credit losses were likely to increase next year given higher interest rates and volatility in markets. The number of impaired loans was higher.

“We continued to strengthen our balance sheet and closed the year with provisions for potential credit losses higher than prior to the pandemic, and with more capital than ever before,” he said. “This is critical as we enter a period of continued high-interest rates, rising costs and geopolitical tensions.”

The net interest margin rose in the first half but then contracted in the second, due to ongoing competition in retail banking. ANZ has been one of the most aggressive lenders on mortgage pricing this year to win back market share.

Over the six months to September 30, ANZ’s NIM declined by 10 basis points to 1.65 per