Australia's No 4 lender Australia and New Zealand Banking Group Ltd said a booming housing market helped lift third-quarter profit 5.3 percent above the previous two quarters, although it warned a new mortgage levy would squeeze margins.
In a limited trading update on Tuesday, ANZ said cash net profit, which excludes various one-off items, was A$1.79 billion ($1.41 billion) for the three months to June 30. It gave no comparable figure from the same period a year earlier, when it reported results only for the first nine months. ANZ said its A$243 million bad debt provision was "a decline", without elaborating. Excluding provisions, profit grew just 0.3 percent from the average of the prior two quarters, while revenue fell 0.3 percent, signs cost-cutting helped prop up profit growth.
CEO Shayne Elliott said the bank had been cutting its business lending book and trying to build its owner-occupier mortgage book, which grew faster than the industry average. "We've been growing our business in owner-occupied home loans much faster than the market and actually really reweighting our portfolio towards that," Elliott said in a transcript of an in-house interview published by the bank.
The Australian economy had been "muddling through" with weak business confidence, but the credit environment was "benign", he added. The net interest margin, the difference between what a bank pays to borrow money and what it charges customers for loans, grew by a fifth of a percentage point, not counting a weaker contribution from markets. ANZ shares were up 1.3 percent in early trading on Tuesday, while the broader market was up 0.7 percent.
"It's a very, very low loan-loss charge, so pre-provisioning it probably was a slight miss," CLSA analyst Ed Henning said. "The number (including bad debt provisions) will probably slightly beat the consensus expectations for the cash NPAT." ANZ warned that a new mortgage levy on the country's "Big Four" banks - itself, Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank Ltd - plus Macquarie Group will impact that margin in the fourth quarter.
On August 11, NAB posted a 5 percent rise in third-quarter cash profit, thanks to lower bad debt charges and higher interest rates, and on August 9 CBA said growth in home lending and lower expenses had helped it beat forecasts with a A$9.83 billion annual profit.