ANZ surges to record $3.8b profit on back of rising interest rates

ANZ Bank’s profits surged by 23 per cent to $3.8 billion in its latest half, as the bank’s bottom line benefited from rising interest rates and a strong performance in its institutional banking unit.

The Melbourne-based banking giant on Friday raised its dividend as it delivered record half-year results that were underpinned by sharply higher net interest income, which jumped 20 per cent in the half.

With operating expenses rising 4 per cent, and bad debt charges remaining relatively low, the bank reported cash profit from continuing operations jumped 23 per cent compared with the March half last year, and 12 per cent higher than the September half.

“The record result was driven by solid revenue growth across the board and the benefits of having a well-diversified business,” chief executive Shayne Elliott said. “It was also a direct outcome of our deliberate strategy to simplify, reshape and de-risk the bank, which has allowed us to replace revenue following the disposal of non-core assets.”

ANZ took a credit impairment charge of $133 million in the half, up from $52 million in the same period last year.

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Speaking on the economic outlook, Elliott underlined the stiff competition in retail banking and growing challenges for customers facing higher costs and rising interest rates.

“The next six months will be more difficult than the last. Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand. We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy,” Elliott said.

The cash earnings result is close to market consensus figures cited by analysts at Citi. ANZ will pay a fully franked dividend of 81c a share, up from 74c last year, and the payment will be made on July 3.