ANZ Bank Posts $1.48 Billion Profit for December Quarter Due to Growth in Asian Business

Australia and New Zealand (ANZ) Bank reported on Friday unaudited December quarter profit of $1.48 billion. It is up 4.1 per cent from $1.4 billion profit for the same quarter a year ago. Unaudited net profit reached $1.7 billion.

ANZ Chief Executive Mike Smith attributed the lender's performance to good results in its Asian, European and American business, institutional clients and New Zealand operations which offset continued margin pressure in the bank's Australian operations.

ANZ's margins in Australia in the December quarter declined 9 basis points compared to the last six months.

He said that although the global markets business is recovering after a very difficult trading environment in the last quarter of 2011, bank funding cost would continue to go up as the economic and financial crisis in Europe deepens, causing further dislocation and volatility in global markets.

At the same time, Mr Smith defended ANZ and the big four from politicians' criticisms over their decision to raise interest rates amid the Reserve Bank of Australia's (RBA) decision last week to retain the overnight cash rate at 4.25 per cent. He also defended ANZ's plan to shed 1,000 jobs as necessary to meet the rising cost of funding.

"The Reserve Bank cash rate is not an accurate reflection of the bank's true cost," The Herald Sun quoted Mr Smith.

He said the twin decisions reflect a need to transform the bank's business in new and often painful ways. Mr Smith added that politicians are not helping the situation by speaking against the out-of-cycle interest rate increase and job cuts.

"We need to bring more focus to the long-term opportunities and challenges facing Australia, rather than short-term point scoring," he said.

Mr Smith said Australian banks would not return in the foreseeable future to the level of credit growths that the lenders experienced prior to the 2008 global financial crisis, particularly in its major domestic markets in Australia and New Zealand. He explained his less optimistic outlook to consumers' reduction of their gearing and businesses slowdown in their pace of investments.

On news of ANZ's December quarter performance, the bank's shares went up 1.8 per cent to $21.59 at 10:08 a.m. in Sydney. Over the past 12 months, ANZ shares had declined 18 per cent. For the same period, Commonwealth Bank shares went down 7.4 per cent, Westpac tumbled down 17 per cent and National Australia Bank lost 14 per cent.