ANZ cash profit up 11% to $6.5 billion

The bank is continuing to impress the market with profit growth whilst expenses and impaired assets fall.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ANZ (ASX: ANZ) bank released its FY13 results this morning and has beaten the market's expectations by recording 11% cash profit growth to $6.5 billion.

In the year to September the bank notched up an impressive statutory net profit of $6.27 billion, up from $5.66 billion a year earlier. The company's aggressive push into Asia and the Australian mortgage market helped it grow revenues substantially.

ANZ CEO Mike Smith said, "This is a strong performance, the result of a distinctive long-term strategy focused on growth in our domestic franchises and targeted expansion in Asia." Highlights from the year are as follows:

  • Statutory net profit after tax of $6.3 billion, up 11%
  • Cash profit (the preferred measure) after tax of $6.5 billion, up 11%
  • Return on equity up 20 basis points to 15.3%
  • Earnings per share up 9% to 238.5 cents
  • Fully franked final dividend of 91 cents per share taking the total dividend 13% higher to 164 cents per share
  • Customer deposits grew 12%
  • Loans and advances up 10%
  • Credit quality improved further with gross impaired assets down 18% and the provision charge down 5%

ANZ experienced the strongest overall growth of any of the big four banks, including the Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC), across home loans, deposits and credit cards, growing profits by 11%.

Division performance

The company's International and Institutional Banking arm grew profit 15%, while expenses dropped 3%. ANZ's ability to leverage growth in Asia from its market leading positions in Australia and New Zealand helped its result. Of IIB's revenue, 48% came from the Asia Pacific Europe and Americas division in 2013. In addition Asian commercial businesses continue to grow quickly, with compound annual growth of 29% over the past three years, providing "a valuable source of markets and trade finance revenue". Asia pacific revenue grew 24% to $12.9 billion.

In New Zealand, profit grew by 29%, expenses decreased by 15% and the provision charge reduced 76%. Improved brand coverage was a focus in New Zealand and has increased 7% since 2010. Small business banking volumes grew strongly and the bank recognised a 13% increase in new to bank customers.

The banks' Global Wealth Division grew profit 36%. A simplification of the business and leveraging regional capabilities resulted in improved returns — the cost to income ratio declined 470 basis points. Retail life insurance in-force premiums grew 10% and FUM increased 13%.


The company's FY14 outlook remains positive and includes 4% to 5% revenue growth, expense growth of 2% whilst priorities include above peer EPS and improved ROE (pushing towards 16% by 2016). The company will be hoping to improve revenue growth from APEA as it seeks to generate 25%-30% of earnings from the region by 2017. Group operating income from Asia represents only 17%, which shows the bank still has a long way to go before its meets its target.

The board is expecting to pay out between 65% and 70% of cash profit in the medium term with a bias towards the upper end of the range in the near term. The increased dividend reflects strong earnings with a desire to improve shareholder returns.

Foolish takeaway

ANZ remains the bank most leveraged to growth out of the big four yet trades on the lowest earnings multiples, after the National Australia Bank (ASX: NAB). Although none the banks are 'buys' at current prices, ANZ is one stock that has good management, pays a strong dividend and an exciting future ahead of it. If this Fool had to choose between banks, ANZ is where I'd put my money.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.  

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »