Cash profit for the six months to March 31 dropped to its lowest level since 2010 as the bank took a $717 million hit from writedowns and restructuring charges it says are necessary for a more challenging period.
ANZ also reported a $918 million provision for bad and doubtful debts, which was slightly higher than the $900 million it had warned the market to expect when it revised its forecast in March.
It cut its dividend six cents to 80 cents.
“ANZ has continued to see pockets of weakness associated with low commodity prices in the resources sector and in related industries,” the bank said in a statement on Tuesday.
“Increased provision charges in the first half include charges related to a small number of Australian and multi-national resources related exposures.”
Writing ahead of Tuesday’s results, UBS analysts estimated ANZ’s exposure to resource-related impaired assets at $688 million.
While cash profit was down from $3.676 billion a year ago, net profit dropped 21.9 per cent to $2.738 billion. That’s the lowest since it made $1.93 billion in the first half of the 2010 financial year.
Cash return on equity slumped from 14.7 per cent to 9.7 per cent, and IG market analyst Angus Nicholson said there could be more bad news to come for ANZ.
“We probably have seen the worst of it with regards to the resources sector selloff,” Mr Nicholson said.
“The worst of the resources crash is over but with regards to their Asian assets, I don’t think that is totally sorted out just yet.”
ANZ chief executive Shayne Elliott, reporting his first results since taking over from Mike Smith in January, said the $717 million cost of restructuring and consolidating would position the bank for stronger future profit growth.
“This result reflects a challenging period for banking and we have taken the opportunity to move decisively and adapt,” Elliott said.
“For the immediate future, we are in a period of consolidation, simplification and transition.”
ANZ’S FIRST-HALF SLUMP
* Cash profit down 24.3pct to $2.782bn
* Net profit down 21.9pct to $2.738bn
* Interim dividend down six cents to 80 cents, fully franked
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