Invest
ANZ full-year profits take a dive
The big four bank’s profits plummeted as the COVID-19 pandemic ramped up the number of borrowers struggling to repay their debt, the bank has stated.
ANZ full-year profits take a dive
The big four bank’s profits plummeted as the COVID-19 pandemic ramped up the number of borrowers struggling to repay their debt, the bank has stated.
ANZ Bank said cash profits have plunged 42 per cent to $3.76 billion for the year to 30 September with credit impairment charges of $2.74 billion and a first half impairment of Asian associates of $815 million, also related to the pandemic.
“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,” said CEO Shane Elliott.
“While we still cannot predict its course, we remain confident we can deal with its impacts.”
The bank will pay a final dividend of 35 cents per share fully franked.
“We have focused on supporting our customers while also building the strength of our balance sheet,” said outgoing chairman David Gonski.
“This gradual increase in our dividend from the deferred half-year dividend paid in September will also help support our shareholders who we know rely on dividends, while remaining in line with APRA’s guidance on dividends.”
Plato Investment Management portfolio manager Dr Peter Gardner said that compared with what many were expecting only a few months ago, there is some upside to this result for shareholders.
“Overall, the result is reflective of an extraordinarily challenging period for the big banks; however, ANZ should be praised for maintaining a strong capital position which has enabled it to return shareholders around as much as possible under the guidance set out by APRA.
“Significantly for the broader market, bad debt has come in lower than expected, signalling government stimulus is working.”
He pointed out that the outlook is slowly improving for bank dividends from where we were at the height of COVID, but he also reminded investors to remain diversified.
“The returns on cash-like products, term deposits and even government bonds had fallen to below 1 per cent even before the pandemic set in, meaning that the real rate of return of these so-called safe investments has fallen into negative territory when taking inflation into account. So, despite what we’ve seen recently in some sectors, a diversified portfolio on ASX stocks remains a compelling solution for income-seeking investors.”
Following the announcement, the price of ANZ shares fell from $18.68 to $18.57 at the time of writing.
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