The new chief executive at Australia and New Zealand Banking Group (ASX: ANZ) flagged a higher-than-expected group credit charge this morning due to the bank’s exposure to volatile Asian markets for the three months ending December 31 2015. The bank also flagged “pockets of weakness” associated with low commodity prices within the domestic credit environment.

For the first quarter of the 2016 financial year the bank’s overall cash profit was $1.85 billion, up 5% on the prior corresponding period as income grew faster than expenses thanks largely to cost-cutting implementations that resulted in a 2.5% reduction in staff numbers.

Other senior staff members from the bank’s trading desks were also sacked recently for allegedly treating the Wolf of Wall Street movie as more handbook than cautionary tale, and the bank will be eager to draw a line under this bad publicity.

In today’s update the new CEO also flagged the need to “simplify and reposition” the business suggesting the group’s ambitious Asian expansion strategy is up for revision as Asian capital markets remain volatile on the back of faltering Chinese growth and capital outflows.

The bank also noted that its retail banking and lending businesses in Australia and New Zealand performed strongly, with market share gains in home loan lending, and small business banking performing well.

The group’s net interest margin held steady in a competitive environment and the bank’s Tier I capital adaquecy ratio was 9.4% at quarter end, up 45 basis points on the prior period in part thanks to the recent sale of the Esanda motor vehicle finance group to Macquarie Group Ltd (ASX: MQG).

The big-4 Australian banks like ANZ and Commonwealth Bank of Australia (ASX: CBA) still trade on high price-to-book ratios relative to their North American or European peers, which reflects their market dominance and the relative strength of the local economy.

For local bank investors the yields remain attractive and given share prices have plunged recently they look worth holding at least.

Where share prices travel from here is unknown, but much will depend on the overall health of the Australian economy. If it surprises to the upside and the cash rate is lifted the banks are likely to outperform, however, a global downturn and softening local economy is likely to see the banks’ shares come under more selling pressure.

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Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited.

You can find Tom on Twitter @tommyr345

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.