All eyes will be on the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price this morning following the release of its full year results.
How did ANZ Bank perform in FY 2020?
For the 12 months ended 30 September, ANZ reported an unaudited statutory profit after tax of $3.58 billion. This was down 40% on the prior corresponding period.
The bank's cash profit from continuing operations fell by a similar margin during the 12 months. It delivered cash earnings of $3.76 billion, down 42% year on year.
This profit decline was driven primarily by full year credit impairment charges of $2.74 billion, which increased almost $2 billion year on year. This was due largely to the impact of COVID-19 and a first half impairment of Asian associates of $815 million, also related to the pandemic.
At the end of the period, ANZ's Common Equity Tier 1 Capital Ratio remained strong at 11.3% and its return on equity decreased 471 basis points to 6.2%.
The ANZ board has proposed a final fully franked dividend of 35 cents per share, bringing its full year dividend to 60 cents per share. This is down from 160 cents per share a year earlier.
Management commentary.
ANZ's Chief Executive, Shayne Elliott, commented: "We could never have forecast 2020, a year that started with devastating bushfires in Australia and unwound with the waves of a pandemic that continues today. While we still cannot predict its course, we remain confident we can deal with its impacts."
Mr Elliott was pleased with the bank's performance during the year, noting its strong growth in home loans.
He said: "In Australia, we achieved strong growth in our targeted home loan segments with above system growth in the owner-occupier market. Deposits remained strong as customers took a sensible approach to managing their household balance sheets. We also saw an accelerated shift away from the use of cash and we introduced new processes to help many customers move to online banking."
The chief executive was also pleased with the performance of its Institutional and Markets businesses.
"Institutional performed well in a market defined by high levels of liquidity, low interest rates and geopolitical tensions. Increased volatility led to strong activity in Markets demonstrating the benefits of a diversified business. As Australia's leading international bank, we remain well positioned to assist customers as the global economy improves," he noted.
Outlook.
Mr Elliott remains cautiously optimistic on the future.
He explained: "Events of the last 12 months make it difficult to predict the course of the next year. What I do know however is we are in excellent shape to navigate whatever challenges emerge."
"While we are not managing the business expecting things to return to the way they were before the pandemic, nor are we sitting idle waiting for the next event to happen to us, ANZ is well placed to respond to the opportunities that are emerging as a result of accelerated structural shifts in the economy."
He concluded: "We have invested in future growth opportunities, we have reshaped how we serve customers and we are using our data capability to guide our decisions."
