ANZ profit slumps 40pc to $3.6 billion, in the wake of the COVID-19 pandemic
ANZ has reported its unaudited full-year net profit dropped 40 per cent to $3.58 billion.
However, its preferred measure of cash profit, from continuing operations, fell by a steeper 42 per cent to $3.76 billion.
Despite its sinking profitability, ANZ plans to pay shareholders a final dividend of 35 cents per share on December 16, fully-franked.
It was a major downgrade from last year’s dividend of 80 cents.
The bank said its results were dragged down by $2.74 billion worth of “credit impairment charges” due to the impact of COVID-19 in the 2019-20 financial year.
It was a massive spike compared to the previous year’s impairment of $795 million.
ANZ said that figure also includes first-half impairments from its Asian associates, including Malaysia’s AmBank and Indonesia’s PT Panin, in which it owns a major stake.
Earlier this week, ANZ flagged that its profit would be hurt by a sharp rise in “customer remediation” costs.
Australia’s banks have been forced to compensate customers who received poor financial advice, or had been charged “fees for no service” — for which they were heavily criticised during the 2018 banking royal commission.
Over the past week, NAB and Westpac also flagged that their second-half profits would be hurt by “significant items” — worth $450 million and $1.2 billion respectively — due to compensation and other expenses.
Westpac’s profit hit was especially large, as it has to a pay a record $1.3 billion for breaching Australia’s anti-money laundering laws.
Westpac will report its full-year results on Monday, followed by NAB on Thursday.
Fewer customers deferring their loans
“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,” said ANZ chief executive Shayne Elliott.
“While we still cannot predict its course, we remain confident we can deal with its impacts.”
In a statement, the bank said it had deferred repayments for around 95,000 out of more than 1 million mortgages during the pandemic.
More than half of those home loan borrowers — 55,000 — have either ended their deferral arrangements or told ANZ what they intend to do when the loan repayment holiday ends.
It said 79 per cent of them would return to full repayments, 20 per cent asked for another extension, and the remaining 1 per cent have restructured their loan or sought additional support.
ANZ also looked at the transactions in its customers’ accounts, and said 80 per cent of them have “stable or improved income”.
Mr Elliott said his bank’s home loans business performed strongly, with “above system growth” in the owner-occupier market.
“Deposits remained strong as customers took a sensible approach to managing their household balance sheet.
“We also saw an accelerated shift away from the use of cash and we introduced new processes to help many customers move to online banking.”