The ANZ Bank posted a 18% rise in annual cash profit to $6.94 billion as the bank restructures its business to be more agile, bringing down costs for the first time since 1999.
Statutory profit was $6.4 billion, up 12%. Net interest margins were 8 basis points lower at 1.99%.
“(For the) first time since 1999 we’ve actually had absolute costs come down,” says CEO Shayne Elliott.
Operating expenses fell 9% to $9.45 billion and credit impairment charges dropped 38% to $1.2 billion.
The bank says the 2017 result demonstrates the emerging benefits from ANZ’s strategy to create a simpler, better capitalised and better balanced bank.
“Two years ago it was clear we needed to reshape ANZ’s future,” says Elliott, who became CEO in January 2016.
“Although we had a strong business, the external environment was changing faster than we were and our customers, the community and our shareholders expected much more from us.
“We have made some difficult calls in that time and the new shape of ANZ is now emerging.”
Elliott says the bank is more than halfway the task of resetting the bank’s business, to act more like a startup as a more agile and flexible company.
“We’ve kind of broken the back of it,” he says.
The 2017 result is a sharp contrast to 2016 when the bank posted a cash profit of $5.9 billion, dragged down by the cost of reforms, including $1.077 billion in after tax charges.
This year the bank has sold off its Asia retail network to concentrate on institutional business in the region.
At home in Australia, the ANZ is giving greater emphasis to retail and commercial businesses, which now account for 53% of capital, up from 44% two years ago.
“Today, we are at the mid‐point of executing a multi‐year transformation of ANZ,” says Elliott.
“What’s most pleasing about 2017 is we have not only delivered better outcomes for shareholders, we are also making genuine progress in delivering better outcomes for customers and in rebuilding community trust.”
Elliott expects the revenue growth environment in 2018 to continue to be constrained as a result of intense competition and the effect of regulation including a full year of impact of the Australian bank levy introduced in this year’s federal budget.
“These conditions aren’t new to us and in this environment, our strategy remains to be ahead of the game by focussing on only those areas where we can deliver exceptional customer outcomes, solve real customer needs and in doing so make a decent return for our shareholders,” he says.
A final fully franked dividend of 80 cents a share, a payout ratio of 68% of cash profit, was declared. This brings the full year payout to 160 cents, flat on 2016.