Housing Slump and Misconduct Charges Crunch ANZ’s Profit
(Bloomberg) -- The cost of cleaning up from years of bad behavior and a slowing housing market have crunched earnings at Australia & New Zealand Banking Group Ltd.
- Cash profit at Australia’s third-biggest lender by market value fell 16 percent to A$5.81 billion ($4.1 billion) in the 12 months ended Sept. 30.
- With the big-four banks suffering the spreading fallout from an inquiry into misconduct in the financial industry and the end of the property boom, ANZ Bank’s subdued results set a gloomy tone for the rest of earnings season. Chief Executive Officer Shayne Elliott said he expects the tough environment to continue for “the foreseeable future.”
- ANZ is getting out of the riskier end of home lending, with 70 percent of new mortgages now going to owner-occupiers rather than property investors. This means the bank “sacrificed short-term revenue growth and higher margins in Australia, particularly in the investor and interest-only segments,” Elliott said. “It was the right thing to do.”
- In a sign the golden years of easy money for Australia’s banks are over, ANZ’s return on equity, a key measure of profitability, plunged 67 basis points to 11 percent
- The Melbourne-based lender’s retreat from Asia and sale of its life unit has made it a much smaller, more domestic-focused bank. Earnings from continuing operations fell 5 percent to A$6.49 billion from the previous year.
- For more details on the results, click here
- While shares of the big-four banks have been hammered this year, ANZ has fallen the least, as A$1.9 billion of buybacks from a A$3 billion program helped limit the damage. The stock has fallen 11 percent this year, while shares of its three main rivals are down about 15 percent.