ANZ profit falls on misconduct charges, housing caution

Sydney • The cost of cleaning up from years of bad behaviour and a slowing housing market have crunched earnings at Australia & New Zealand Banking Group Ltd (ANZ).

Cash profit at Australia’s third-biggest lender by market value fell 16% to A$5.81 billion (RM17.43 billion) in the 12 months ended Sept 30.

With the big-four banks suffering the spreading fallout from an inquiry into misconduct in the financial industry and the end of the property boom, ANZ’s subdued results set a gloomy tone for the rest of earnings season. CEO Shayne Elliott said he expects the tough environment to continue for “the foreseeable future”.

ANZ is getting out of the riskier end of home lending, with 70% of new mortgages now going to owner-occupiers rather than property investors.

This means the bank “sacrificed short-term revenue growth and higher margins in Australia, particularly in the investor and interest-only segments”, Elliott said. “It was the right thing to do.”

In a sign the golden years of easy money for Australia’s banks are over, ANZ’s return on equity, a key mea-sure of profitability, plunged 67 basis points to 11% The Melbourne-based lender’s retreat from Asia and sale of its life unit has made it a much smaller, more domestic-focused bank. Earnings from continuing operations fell 5% to A$6.49 billion from the previous year.

While shares of the big-four banks have been hammered this year, ANZ has fallen the least, as A$1.9 billion of buybacks from a A$3 billion programme helped limit the damage. The stock has fallen 11% this year, while shares of its three main rivals are down about 15%. — Bloomberg