The sharp fall in its profit after tax was due to an increase in credit reserves for COVID-19 impacts
Australia and New Zealand Banking Group (ANZ) has announced a 51% decline in its profit after tax to AUD1.55bn ($1.01bn) for the first half of its financial year ending 31 March 2020.
ANZ attributed the decline in the profit to the credit impairment charges of AUD1.674bn ($1.09bn) that also included increased credit reserves for COVID-19 impacts of AUD1.031bn ($670m).
The COVID-19 impact has also resulted in the impairment to the valuation of its investments in Asian associates by AUD815m ($533.1m).
ANZ reported a cash profit for its continuing operations at AUD1.41bn ($920m), which was down by 60% compared to the same period a year earlier. Cash earnings per share also decreased by 60% to AUD0.5 ($0.33).
ANZ CEO Shayne Elliott said: “Firstly, our thoughts are with those who have been directly impacted by COVID-19, particularly those who have suffered from the health impacts, as well as the millions of people who are now facing financial uncertainty.
“This is a terrible time for many and I want our customers, employees and shareholders to know we enter this crisis in very good shape to support our communities given the work completed over the past four years to simplify our business and strengthen our balance sheet.”
ANZ records a total revenue of $6.01bn
The bank reported a total revenue of AUD9.19bn ($6.01bn) from its three divisions, which included AUD4.7bn ($3.07bn) from Australian operations, NZD1.8bn ($1.11bn) from New Zealand operations and AUD2.8bn ($1.83bn) from institutional operations.
Its total expenses for the period were AUD3.86bn ($2.52bn) which included AUD1.9bn ($1.24bn) in Australia, NZD700m ($429m) and AUD1.3bn ($850m) from institutional operations.
ANZ also reported a slight increase in customer deposits which included AUD213bn ($139.3bn) in Australia, in NZD93.6bn ($57.4bn) in New Zealand and AUD258.5bn ($169.1bn) from institutional operations, totaling AUD559.2bn ($365.8bn).
Customer lending for the period in Australia was AUD329.8bn ($215.7bn), NZD128.6bn ($78.8bn) in New Zealand and AUD16bn ($10.5bn) in core lending under institutional operations.
Elliott also said: “This was a reasonable result given the tough trading conditions being experienced before the crisis hit. We maintained our focus on productivity and continued to target balance sheet growth in our preferred segments. Loan losses heading into March were at historically low-levels and we are well positioned to manage the higher credit charges taken as a result of COVID-19.
“COVID-19 has clearly impacted our performance, however the work done over many years to simplify our business, strengthen our balance sheet as well as developing a more agile and resilient workforce meant we were well-prepared to support customers through the crisis and I’m confident we will emerge even stronger.”