ANZ reports more than $1 billion in net profit for the first half of the year

The country’s largest bank posted a stable first-half result, reflecting a challenging economic environment that is expected to continue for the rest of the year.

ANZ Bank reported a 4% increase in net profit and 1% revenue growth.

Bank chief executive Antonia Watson said the bank’s performance slowed in the second half of last year, hit by persistently high inflation, a restrictive official cash rate, rising unemployment and a decline in business and consumer confidence.

She said economic pressures are likely to persist throughout the year, with unemployment expected to rise further and more households and businesses hit by the downturn.

Despite subdued customer activity in the housing market, she said home lending market share grew with $10.1 billion in new home loans. Most customers have switched to a higher mortgage interest rate, while approximately 17% still have a mortgage interest rate lower than 5%.

“Given the more challenging environment we find ourselves in, we must remain cautious. The number of customers in arrears is increasing,” she said.

Customer deposits increased by 2% in the period, with more and more customers moving money into term deposits.

Watson said business and agricultural clients are being cautious about taking on new debt, although there was a strong response from regional companies seeking to reinvest after last year’s devastating extreme weather events.

In addition, business and agricultural customers have taken out $15 million in loans to finance assets or projects that demonstrate environmental benefits through the ANZ Business Green Loan, bringing total lending since launch to $42 million.

“Climate change remains a priority for ANZ NZ, particularly supporting our customers to reduce their climate impact and improve resilience,” she said.

Watson said the bank also continued to invest in technology and fight cybercrime, alongside the rest of the banking sector.

She said the Commerce Commission’s report on personal banking competition indicates the market structure and profitability of the five largest New Zealand banks are consistent with banking sectors in other countries, with markets of similar size.

The bank’s owner, Australia’s ANZ Group, reported flat first-half revenues of A$10.15 billion and a 4% decline in net profit to AU$3.41 billion.

Key figures for the six months ended March compared to a year ago:

By Nona Pelletier van rnz.co.nz