Reversals of Covid-19 credit provisions helped the Australia and New Zealand Banking Group (ANZ) report a 65% surge in its cash profit for the year ended 30 September.
ANZ’s cash profit for the year came in at AUD6.20bn ($4.66bn) as compared with AUD3.76bn in the same quarter last year.
The cash profit was helped by a net release of AUD567m of collective provisions. “In general, our customers continued to manage well through the pandemic, leading to a low individually assessed provision (IP) charge for the full year. Disciplined focus on strategy and customer selection in Institutional has contributed to this strong result, as has the continued impact of government and bank support packages,” ANZ said in a statement on Thursday.
Capital strength increases
The impressive performance helped improve ANZ’s common equity tier 1 capital ratio, the most important measure of a bank’s financial health, to 12.3%, roughly AUD6bn above the Australian Prudential Regulatory Authority’s “Unquestionably Strong” benchmark.
As a result of its healthy financial position and improving conditions, the board announced a final dividend of AUD0.72 per share, taking the total dividend for the year up to AUD1.42 per share. ANZ had also started a AUD1.5bn share buyback programme in August this year.
“This year demonstrated the benefits of our diversified…We managed our business against the backdrop of Covid-19…While we benefitted from a more benign credit environment, indicators such as 90+ days past due and deferrals performed better than expected and reflected our prudent management over many years. We recognise the outlook remains somewhat uncertain and we have more than AUD4bn of credit reserves should conditions deteriorate,” ANZ’s CEO Shayne Elliott.
ANZ shares up
The difference between stocks and CFDs
The main difference between CFD trading and stock trading is that you don’t own the underlying stock when you trade on an individual stock CFD.
With CFDs, you never actually buy or sell the underlying asset that you’ve chosen to trade. You can still benefit if the market moves in your favour or make a loss if it moves against you. However, with traditional stock trading you enter a contract to exchange the legal ownership of the individual shares for money, and you own this equity.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade to open a position. But with traditional stock trading, you buy the shares for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks.
CFDs attract overnight costs to hold the trades, (unless you use 1-1 leverage) which makes them more suited to short-term trading opportunities. Stocks are more normally bought and held for longer. You might also pay a stockbroker commission or fees when buying and selling stocks.