ANZ net profit surges on credit provisioning reversals
02:39, 28 October 2021
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.
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ANZ shares up
Following the announcement, ANZ’s shares were up 0.81% on the ASX at AUD28.62.
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