I suppose it was to be expected, but the sell off in ANZ shares yesterday in the wake of what was mostly a positive interim profit is a bit cynical.
And even though world iron ore prices fell, pulling down mining stocks, a reasonable report from Chinese manufacturing meant that overall, China was a negative factor for our market.
But thanks to the usual games around the ANZ post its profit report, down went the market, with the ASX 200 falling 40 points, or more than 0.7%.
The NAB fell 1.7% to $34.71 (probably because it is still seen as the weakest of the big four), Westpac lost 1.2% to $34.70, and the ANZ shed 1.1%, ending at $34.07. The Commonwealth was only down 0.3% to $78.64 because it is still two weeks away from its update.
It happens every reporting season, and no doubt we will see it repeated next week when Westpac and the NAB reveal their interims, but hopefully the selling today might take the sting out of that silliness.
But what makes it more galling is that investors know this post result sell off is almost certain to happen (because of past form) and yet they bid the share prices of the banks higher.
This time the enthusiasts pushed the price of the ANZ (and Westpac and the Commonwealth) to new highs in the past week. But that mattered not a jot once the ANZ reported yesterday.
Some investors found fault (and there were some points that raised eyebrows) and down the shares went, losing close to 2% at one stage, and helping take the sector and the wider market lower.
We will see it when the Commonwealth produces its March quarter update in the middle of the month, and its full year figures in August.
The bank’s Australian geographic division produced a 5% fall in earnings to just over $2 billion (it’s the core profit centre), but according to another table in the report "Australia" produced an 11% profit rise.
The rise in bad debts in Australia in the second quarter (to $528 million from $191 million in the first quarter) is understood to have resulted from the collapse of Forge, the mining services contractor. Bad and doubtful debts still fell for the half year by 12% and the bank stuck to its forecast of a 10% fall over the full year.
Brokers liked the higher dividend, which will see the payouts equalised over time between thew two halves, which should appeal to shareholders.
The stand out result was in NZ where the cash profit jumped 27% to $887 million, while the statutory profit was up 31% at $853 million.
In Australian dollar terms, the result was $809 million, up 46%.
By any measure that was an impressive result and underlines the extent of the recovery in NZ.
NZ’s profit was 40% of the ANZ’s Australian earnings of $2.025 billion (which fell 5%, by the way). A year ago the share was just 26%.
The ANZ said its NZ lending jumped 23% to more than $A92 billion in the half year, compared with the more sedate 7% growth in Australia to $336 billion.
Again the effort in NZ was impressive.
