ANZ NZ reports steady half-year result

ANZ Bank New Zealand[1] today reported a statutory[2] net profit after taxation (NPAT) of NZ$929 million for the six months to 31 March 2019 – a 4% decrease on the corresponding half in the 2018 financial year.

Cash NPAT was NZ$1,114 million, up 18%, due to one-off transactions, which included the sale of life insurance company OnePath Life (NZ) Limited and a 25% share in Paymark Limited.

ANZ New Zealand Chief Executive Officer David Hisco said the company’s steady half-year result reflected changes in the economy.

“The housing market has levelled off, particularly in Auckland which has been the growth engine of that sector over the past 10 years,” Mr Hisco said.

“When you combine that with historically low interest rates, intense competition in home lending that has impacted bank net interest margins, and our fee reductions, underlying revenue growth has been muted.

“International uncertainty hasn’t helped exporters, and tourism numbers, particularly from China, have been flat. While we are seeing welcome signs of a pick-up in investment, commercial and agri customers are still being cautious with their borrowings.”

He said ANZ New Zealand had offset revenue pressures through its continued focus on digital innovation and customer service while maintaining strong credit quality and cost discipline.

“Since 2010 we have maintained our leading market share with no change to our cost base, while investing more in digital products and services to make our business more efficient.

“This means we’ve been in a position to pass cost savings on to customers and reduce fees on more than 40 products and services worth about NZ$70 million in annual revenues while strengthening our competitive position.”

While the collective provision charge normalised, Mr Hisco said the low levels of credit losses during the reporting period reflected improvements in credit quality and a benign credit environment.

Despite the economic uncertainty he said that with low unemployment and interest rates and China likely to be the global growth engine for many years to come, New Zealand was in a good position to prosper.

“We need to be careful as a nation not to talk ourselves out of maximising our opportunities. The economy has strong foundations, we have many clever, innovative and hard-working businesses with a bright future, and all indications are that the 30 May Budget will be solid.

“As always, New Zealanders, particularly home owners, need to take advantage of the low interest rate environment to pay off as much debt as possible so they’re in a stronger position should circumstances change.”

[1] ANZ New Zealand represents all of ANZ’s operations in New Zealand (NZ Geography), including ANZ Bank New Zealand Limited, its parent company ANZ Holdings (New Zealand) Limited and the New Zealand branch of ANZ.

[2] Statutory profit has been adjusted to exclude non-core items to arrive at cash profit continuing basis, the result for the ongoing business activities of ANZ New Zealand. Refer to Summary of key financial information for details of reconciling items between cash profit and statutory profit.

Key Points

All comparisons are six months ended 31 March 2019 compared with six months ended 31 march 2018 unless otherwise noted.

• Statutory profit down 4% at NZ$929 million.
• Cash profit up 18% at NZ$1,114 million including impact of one-off items.
• Revenue up 8% including impact of one-off items.
• Expenses decreased 1% due to divestment impact of OnePath Life (NZ) Limited.
• Low levels of credit losses reflect improvements in credit quality and benign credit environment.
• Customer deposits up 7% and gross lending up 4%. 

Mr Hisco said ANZ New Zealand remained the No 1 in brand consideration^[3] for major banks locally, and customer satisfaction[4] was best of all the banks for branches and the contact centre.

Other highlights for the first half of the financial year include the launch of a Healthy Home Loan Package last month which has discounts off standard home loan rates for customers who choose to build or upgrade their homes to sustainable standards, supporting ANZ New Zealand’s NZ$100 million pledge in interest-free loans for home insulation, announced in May last year.

Mr Hisco said this financial year was the first without frontline incentives at ANZ New Zealand. Staff had embraced the cultural change away from sales targets while still ensuring the bank continued to be a high-performing organisation that met customer needs.

[3] McCulley Brand Tracker, McCulley Research, March 2019, six month roll

[4] Retail Market Monitor, Camorra Research, March 2019, six month roll

For media enquiries contact: Siobhan Enright, 021 991 325

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