Australia's ANZ posts rise in cash profit, plans new holding structure

© Reuters. FILE PHOTO: The logo of the ANZ Banking Group is displayed in the window of a branch in central Sydney, Australia, Aprl 30, 2016. REUTERS/David Gray

By Sameer Manekar

(Reuters) -Australia and New Zealand Banking Group on Wednesday reported a better-than-expected cash profit for the first half, as it benefited from a pandemic-induced boom in home lending amid record low interest rates, but logged a slight drop in its margins.

The country's no. 4 bank also said it seeks to establish a new listed parent holding company that will control two wholly owned distinct groups of entities: banking and non-banking groups, mirroring organisational structure among global banks.

The bank logged a strong rise in revenue from institutional customers, saw strong home loan momentum in New Zealand resulting in a 4.4% market share growth, all the while keeping a lid on expenses despite inflationary pressures, supporting its bottomline.

ANZ's cash profit on continuing operations basis, a measure that banks focus on, came in at A$3.11 billion ($2.21 billion) for the six months to March 31, compared with A$2.99 billion last year https://yourir.info/resources/4d216b570d08af30/announcements/anz.asx/3A566551/ANZ_News_Release_ANZ_2021_Half_Year_Result_Proposed_Dividend.pdf and beat a Visible Alpha consensus estimate of A$2.99 billion.

"We are on target to grow in line with the Australian major banks by the end of our financial year, but will do so with an eye to our margin performance," Chief Executive Officer Shayne Elliott said.

The Melbourne-based bank's net interest margin, a key measure of profitability that measures the difference between what banks charge for loans and what they pay, was 1.58%, compared with 1.65% in the second half https://yourir.info/resources/4d216b570d08af30/announcements/anz.asx/3A579444/ANZ_ANZ_Full_Year_Results_Dividend_Announcement_Appendi4E.pdf of 2021.

"As I look at the environment in which we had to operate in the half, I actually think it was a very solid result... we managed margins tightly," Chief Financial Officer Farhan Faruqui said.

With respect to the rising interest rate environment in Australia and across major global banks, Faruqui urged caution, saying "while you might grow revenue, you might not necessarily be growing profitable revenue".

ANZ declared an interim dividend of A$0.72 per share, up from A$0.70 a year earlier.

($1 = 1.4096 Australian dollars)