Australia’s ANZ sinks as record annual profit falls short of market forecasts


By Rishav Chatterjee

(Reuters) -ANZ Group, Australia’s fourth-largest retail bank on Monday posted a record annual profit that fell short of analyst forecasts due to a thinning home loan market amid soaring interest rates, sending its shares lower.

The country’s No.3 lender posted cash profit of A$7.41 billion ($4.51 billion) for the year ended Sept. 30, compared with A$6.50 billion a year earlier, missing the Visible Alpha consensus estimate of A$7.56 billion compiled by Citi.

The bank’s net interest margin (NIM) for the second half of the year however shrunk by 10 basis points to 1.65% highlighting pressure from the strong growth in Australia home lending.

Shares of the lender fell 3.6% to A$25.55 as of 2318 GMT.

The banking group’s Aussie commercial business recorded 11% revenue growth over the year with lending rising to record high of A$62 billion.

“We expect questions to be raised about margin/volume management in the Australia retail division, particularly due to NIM pressure stemming from ANZ’s relatively aggressive growth in Australia home lending,” said E&P Capital analyst Azib Khan.

ANZ, which is caught up in regulatory scrutiny over its $3.2 billion Suncorp Group’s banking business bid, has been expanding its operations in retail and commercial businesses.

ANZ intends to expand its commercial business with focus on its currency and payment sites while reducing costs, it said.

Australia’s top lenders have been cashing in on their margins in an environment where interest rates have been hiked 13 times in just 18 months, helping them take advantage of the greater spread between the interest they pay to their customers and the profits they earn by investing.

ANZ declared a final dividend of 94 Australian cents apiece, up from 74 Australian cents apiece announced a year ago.

ANZ, however flagged that the external environment will likely remain challenging adding that higher interest rates will impact economic activity as it sees “another year of cost-of-living pressures.”

($1 = 1.5733 Australian dollars)

(Reporting by Rishav Chatterjee and Roushni Nair in Bengaluru; editing by Grant McCool and Lisa Shumaker)

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