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UPDATE 1-ANZ's 9-month cash profit up 8 pct, lender expects to meet FY forecasts
August 14, 2014 / 11:47 PM / in 3 years

UPDATE 1-ANZ's 9-month cash profit up 8 pct, lender expects to meet FY forecasts

* Sees FY revenue rise at lower end of 4-5 pct f‘cast range

* Provision charge for bad debt to fall 12 pct in FY

* Asia growth, cost control and lower bad debt provision help (Adds outlook, details from results)

SYDNEY, Aug 15 (Reuters) - Australia and New Zealand Banking Group Ltd, Australia’s No. 3 bank by market value, reported its unaudited cash profit for the nine months to June grew 8 percent and said it was well placed to meet full-year financial forecasts.

In a brief trading update on Friday, ANZ said cash profit for the period was A$5.2 billion ($4.84 billion), led by strong loan growth and growing momentum in its Asia business. The bank didn’t provide year-ago comparisons, nor details on profit for the April-June quarter, but previously said cash profit for the six months to March was A$3.5 billion.

Melbourne-based ANZ is the only one of Australia’s highly profitable big four lenders to have set its sights on developing a large business in Asia, steadily building infrastructure and profits in a region experiencing rapid economic and loan growth.

ANZ said a tight rein on costs, lower bad debt provisions and the strong results in Asia mean it expects full-year revenue at the lower end of the 4 percent to 5 percent growth range it previously indicated.

The bank didn’t put a figure on expected full-year cash earnings, but said provisions for bad debts in the period are now expected to fall 12 percent - compared to 10 percent on previous guidance - from A$1.197 billion a year earlier.

ANZ is accelerating its push into Asia by rejigging key teams and cutting costs - hoping to meet its current goal to garner 25-30 percent of its profit from outside Australia by 2017. As part of that strategy, it hired star Citigroup Inc banker Farhan Faruqui in May to head up international banking.

Among the few details provided for April-June, the bank cautioned that third-quarter revenue trends were a little softer than in the first half. Group net interest margin, a key gauge of bank profitability, was slightly lower due to pricing pressures.

“Strong growth in Asia and in businesses linked to Asia continues to be a highlight,” chief executive Mike Smith said in a statement. “After a period of subdued demand we are seeing signs of pick-up in corporate sector borrowing appetite.”

Earlier this week, Commonwealth Bank of Australia (CBA) , the country’s top lender by market value, posted a 12 percent rise in full-year cash profit, marking its fifth straight year of record annual profits.

Australian banks’ strong focus on mortgage lending, tight cost controls and very low levels of bad debt, as well as hefty dividend payouts, have made the sector a favourite of investors, commanding much higher valuations compared to peers.

ANZ is scheduled to report full-year results in November.

$1 = 1.0738 Australian dollar Reporting by Swati Pandey; Editing by Chris Reese and Kenneth Maxwell

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