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ANZ Bank Profit Slumps 42% as Bad Debts Surge; Dividend Cut

ANZ Bank Profit Slumps 42% as Bad Debts Surge; Dividend Cut

Australia & New Zealand Banking Group Ltd. full-year profit fell the most in more than a decade as the coronavirus-induced recession swelled bad-debt charges.

Cash earnings from continuing operations fell 42% to A$3.76 billion ($2.7 billion) in the 12 months ended Sept. 30, the Melbourne-based bank said Thursday. That was broadly in line with analyst estimates of A$3.79 billion.

The drop was primarily driven by a bad-debt provision of A$2.74 billion as the recession smashes consumers and businesses. The result includes a previously disclosed A$528 million charge to refund customers and writedown the value of software and its Pacific division.

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“We could never have forecast 2020, a year that started with devastating bushfires in Australia and unwound with the waves of a pandemic that continues today,” Chief Executive Officer Shayne Elliott said in a statement. “While we still cannot predict its course, we remain confident we can deal with its impacts.”

It’s the first look at what’s shaping to be an ugly earnings season for Australia’s banks, which are bearing the brunt of the nation’s first recession in 30 years, and mounting costs to clean up years of misconduct, such as selling junk insurance and providing poor financial advice. Westpac Banking Corp., which reports Nov. 2, earlier this week took a A$1.2 billion charge to help cover a record money-laundering fine. National Australia Bank Ltd., which reports Nov. 5, last week set aside set aside A$450 million for customer compensation and other impairments.

ANZ Bank Profit Slumps 42% as Bad Debts Surge; Dividend Cut

ANZ shares fell 2.8% in early Sydney trading, leading a decline among major bank stocks and helping drag the benchmark S&P/ASX200 Index lower.

The bank will pay a A$0.35 per-share final dividend. That takes the full-year payout to A$0.60, compared to A$1.60 last year. The nation’s three other big banks have also reduced or suspended dividends, and the skinnier payouts are a blow for Australia’s legion of mom and pop shareholders. Around half of the big-four banks’ shares are held by retail investors, many of them retirees, who have grown to depend on the regular stream of payments.

©2020 Bloomberg L.P.