Early this morning, Australia and New Zealand Banking Group (ASX: ANZ) released its first quarter profit result of financial year 2015.
Here are six key takeaways from today's announcement:
- Unaudited cash profit of $1.79 billion
- Profit before provisions grew 5.2%, or just 3.6% on a constant currency basis
- Provision charge was up 8% from last quarter at $232 million, or up 21.4% from a year earlier
- Customer deposits grew 9% with net loans and advances up 8%
- Group net interest margin (the profit spread between what it pays on deposits and what it receives on loans) declined six basis points
- Excluding dividends paid, the bank's common equity tier-1 capital ratio (its buffer against economic setbacks) improved by 20 basis points, or 0.20%
Commenting on the results, Mr Smith joined the chorus of banking CEOs, including Commonwealth Bank of Australia's (ASX: CBA) Ian Narev, in painting a more bearish outlook on the economic environment. "ANZ has made a solid start to 2015 with our customer franchises in Australia, New Zealand and Asia continuing to perform strongly." Although Mr. Smith also said: "As we anticipated, 2015 is providing to be a slightly tougher, more volatile environment."
Just yesterday, CBA's Ian Narev sold around $750,000 worth of shares after issuing a sobering warning about the economy last week: "The volatility of the global economy continues to undermine confidence, particularly the impact of lower commodity prices on national revenue… Weak confidence is a significant economic threat. Businesses need the certainty to invest to create jobs, and households need a greater feeling of security."
Should you buy, hold, or sell ANZ?
Clearly the tone of banking executives' outlooks has changed over the past year and given their tremendous profit performances since the GFC – coupled with ANZ's lacklustre results today – it's important long-term investors read between the lines.
Whilst we've never stated the big four banks – including ANZ or CBA – are bad businesses, far from it, we've repeatedly told readers they are not a good investment at today's, rich, price levels.
Personally, I'd say this morning's results from ANZ were OK for a $99 billion company, but within minutes its high share price is down 3.5%…
…I think that says it all.
