Australia and New Zealand Banking Group (ASX: ANZ) this morning reported its half-year results. Here are five things you need to know about ANZ’s six-month period ended 31 March 2016:

  1. Revenue came in flat at $10.26 billion
  2. Cash profit fell 24% to $2.78 billion
  3. An interim dividend of 80 cents per share was declared – down 7%
  4. Return on equity came in at 9.7%, down from 14.5%
  5. Credit impairment charges jumped from $494 million to $904 million

Despite ANZ recently alluding to poor results and an uptick in credit impairment charges for sour loans, the results appear to have caught the market off-guard.

ANZ said the profit drop was primarily a result of incurring $717 million in charges to “reposition the Group for stronger profit before provisions growth in the future.”

The drop in the interim dividend, it said, will also provide a conservative and sustainable range for the future. It said the final dividend is expected to be at least the same as the interim dividend.

“This result reflects a challenging period for banking and we have taken the opportunity to move decisively adapt to the changing environment by building a simpler, better capitalised and more balanced bank,” ANZ CEO, Shayne Elliott, said. “We have strong underlying drivers in our Australia and New Zealand consumer and small business franchise and we have seen good early progress in transforming Institutional Banking.”

Mr Elliott has been in the top role for only a short period of time, but he said the bank recognises the key drivers of growth in the future will include technology and improved customer expectations.

“Banking is however continuing to experience rapid shifts in technology, customer expectations and regulation against a backdrop of low economic growth, volatile financial markets and rising credit costs,” Mr Elliott said.

“Our priority is to take bold action to ensure ANZ is fit and ready for this future. This means for the immediate future we are in a period of consolidation, simplification and transition.”

ANZ Bank’s Institutional division was the clear underperformer with profit falling 41%, while the Australia division saw profit rise 6%.

Foolish takeaway

ANZ’s results will have implications for the broader banking sector and will, therefore, likely see bank shares come under pressure in coming weeks. For example, with $2.9 billion in gross impaired assets, ANZ says it continued to see pockets of weakness in the credit environment, especially in industries associated with the resources sector.

As I’ve said many times before, Foolish investors should continue to watch this one play out from the sidelines.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

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.