Now many investors won’t be happy to see this trading update from the ANZ because it indicates the variable strength in the banking sector, especially for banks with significant international operations as the ANZ has.
The ANZ’s first quarter trading update, issued this morning, shows the bank’s profit momentum slowed noticeably.
Cash profits rose a whole $60 million, to $1.79 billion from $1.73 billion in the first quarter of 2013-14.
And the bank’s statutory profit was steady on $1.65 billion.
Indicating that it was aware of the weakness of the report, the ANZ’s press release this morning didn’t give any comparisons (by way of percentage increase or comparative figures) in its opening paragraphs.
Management did cite a tougher environment globally had impacted the bank.
The trading update said its Australian banking businesses had performed strongly, but global conditions were challenging its trading and institutional banking arms.
The ANZ said revenue had grown more quickly than the average pace a year ago, but at the same time its group net interest margin decline by 6 basis points compared with the previous half (both the NAB and the Commonwealth also reported falls in their net interest margins in their first quarter and first half reports last week).
In fact, compared to the 4th quarter of the 2013-14 year, cash profit in the December quarter were lower.
"As we anticipated, 2015 is proving to be a slightly tougher, more volatile environment," chief executive Mike Smith said in a statement.
"We have seen some tailwinds associated with the lower Australian dollar in the first quarter however these have been partially offset as a result of global economic conditions including lower commodity prices."
"Market conditions have also created a challenging environment for the global markets business although we expect this to improve throughout the year."
Interestingly, the ANZ’s bad debt provisions rose $41 million (or around 18%) in the quarter to $231 million from $191 million a year ago. That was also higher than the $215 million in the final quarter of 2013-14.
The ANZ’s shares hit a record $35.87 yesterday.
ANZ 1Y – ANZ lifts earnings 3%
