Return on equity fell from 15.3 per cent to 14.6 per cent. ROE in the September half was 13.7 per cent. The bank said lower ROE was a result of lower interest rates and the higher level of capital the bank was holding.
On an underlying basis, profit rose six per cent, from $5.6 billion to $6 billion. Underlying ROE fell from 16.2 per cent to 15.6 per cent.
Included in the earnings adjustments, to arrive at underlying profit, the bank excluded a $224 million gain on the sale of Visa shares, the $105 million cost of its New Zealand simplification programme, $220 million of capitalised software impairment and a $229 million hedging loss.
ANZ's chief financial officer, Shayne Elliott, said the bank would no longer report underlying earnings as it has since 2009. In future, it will present statutory results and cash results.
Operating income rose five per cent, to $17.7 billion, but operating expenses rose more – up six per cent to $8.5 billion. Operating income rose just one per cent in the second half.
The bank wrote down $220 million, or around one eighth of the value of capitalised software. New capitalised software increased by one fifth, to $768 million, though Elliott said the bank aimed to expense rather than capitalise more IT development work in the future.
The bank's cost-to-income ratio rose from 47.4 per cent in 2010/11 to 48.1 per cent in the year to September. The ratio rose to 49.3 per cent in the second half.
On an underlying basis, cost-to-income fell from 45.9 per cent to 45.6 per cent year-on-year, and fell to 45.1 per cent in the September half.
The provision for credit impairment was down three per cent, from $1.23 billion in 2010/11 to $1.19 billion in the latest result.
However, the provision jumped 23 per cent in the September half, compared with the March half. Total provisions as a percentage of average net assets rose from 27 basis points in the first half to 31 basis points in the second half.
ANZ chief executive Mike Smith said the outlook was for provisions to go slightly higher in the current financial year. "At the moment, the regional and rural portfolio is ticking up and we will see more difficulty in the SME market," he said.
New impaired assets in the Australian division rose 12 per cent half-on-half.
The net interest margin fell 11 basis points, from 2.42 per cent to 2.31 per cent, year-on-year, and fell to 2.28 per cent in the second half.
The bank will pay a final dividend of 79 cents a share – up from a final dividend of 76 cents a share last year. Total dividends for the year are $1.45 a share (fully franked) up 3.6 per cent on the previous year.
Among the divisions, the New Zealand division's underlying profit rose 12 per cent to $743 million. Australian earnings were up four per cent, to $2.5 billion, and international and institutional banking was up three per cent to 2.4 billion.
Profit from Asia Pacific, Europe and the Americas was up 28 per cent to $976 million.
Customer deposits increased 10 per cent to $328 billion, while net loans and advances increased by eight per cent to $427.8 billion.
The bank's common equity tier-one ratio rose from 8.5 per cent to 8.8 per cent (eight per cent on a Basel III basis).
