ANZ Bank has reported a 42 per cent drop in full-year cash profit after loan losses increased during the coronavirus pandemic, and has paid a lower dividend.
ANZ on Thursday reported its cash profit from continuing operations was $3.76 billion for the year ended September 30, compared with $6.47 billion a year earlier.
The lender declared a final dividend of 35 cents per share, down from last year’s payout of 80 cents per share.
The lower dividend was in line with a directive by regulators, insisting the payout be less than half the profit for the rest of the year.
The second-half’s payout ratio was 35 per cent of cash profit.
Chief executive Shayne Elliott said shareholders’ interests had been protected by the bank maintaining a strong capital position.
One of the pressure points has been home loan customers asking to pause repayments after losing work from the pandemic.
The customers of about 51,000 home loan accounts still had deferred repayments as of October 15.
This figure has improved from the approximately 95,000 accounts which have had repayments deferred during the pandemic.
For the 51,000 accounts still to resume repayments, about 40,000 were on a six-month deferral.
Customers of about 11,000 accounts with deferred repayments have received a further four months grace.
Commercial lending has fared much better.
Customers of 23,000 accounts received deferral.
The owners of about 15,000 accounts have completed their deferral or advised the bank of other action.
Mr Elliot said the events of the past 12 months made it difficult to predict the course of the next year.
Australia’s fourth-largest bank set aside a further $1.06 billion, 36 per cent less than the amount set aside in the first half, largely to beef up credit reserves in light of the hit from the virus outbreak, taking its full-year provisions to $2.74 billion.
With the Australian economy in its first recession in three decades and wage growth at its weakest pace on record, banks’ growth prospects and margins are under pressure amid record-low interest rates and more debt likely going bad.
Moody’s Investors Service vice-president Frank Mirenzi said the ANZ result highlighted the challenges for banks, with high credit costs, many deferred loans and pressured margins.
“Still, Australia’s better-than-expected economic recovery could provide some relief by reducing pressure on capital,” he said.
Shares were lower by 2.74 per cent to $18.63 at 1304 AEDT amid a wider market downturn.