A lift in margins on the deposit side has helped drive ANZ to one of its better earnings in some years.
Deposit pricing and wholesale funding margins increased 12 basis points over the year to September 2022, “driven by improvement in deposit margins from a rising interest rate environment” the bank said, though at a group level the margin fell by one bps, thanks to competition on the asset side.
In New Zealand, the NIM widened by a 14 bps.
While spruiking a turnaround in the once under-performing Australian mortgage business, the bulk of asset growth for ANZ flowed through its institutional business, which was up 24 per cent over the year.
At a group level, the cash profit from continuing operations increased to A$6.62 billion from $6.20 billion. The statutory net profit was up 16 per cent to $7.12 billion.
The cash profit went backwards in Australia retail and, surprisingly – given the asset growth – in institutional, offset by a rise in profit in Australia commercial and New Zealand.
Claiming there was now “momentum in Australia home loans”, the bank put annualised growth in this product, over six months, at seven per cent.
“When we look at the underlying profit before provisions, the second half was the strongest growth we've had since 2009,” ANZ CEO Shayne Elliott said.
“And that tells you a lot about the momentum that's sitting in the business. Now, some of that is environmental because of the rate cycle we're entering into, the generally good health of the economy, but also because of the transformation that we've undertaken at ANZ.”
A key element in that transformation is the new (and much pilloried) ANZ Plus app, which sits on new technology stack.
“We are essentially rebuilding the retail bank,” Elliott said.
“I'm really confident we're building a platform for long term growth and it's exciting to be where we are today. We are in market, we've built a whole new bank.
“The core system’s the same, but everything on top of that, all the backend banking technology is new and it's the world's best technology available today. And it's performing extraordinarily well, both technically, and we can see that in the hundred odd metrics we measure every day, but also from a customer perspective.
“It's really a new business model. And the business model is built around this idea of financial wellbeing.”
Since its launch in March, ANZ said it acquired around 60,000 new customers via the ANZ Plus app.