SYDNEY • ANZ, Australia's No. 4 lender, yesterday posted its biggest half-yearly decline in cash profit since 2008 and slashed dividends for the first time in seven years on rising corporate defaults triggered by a mining downturn.
The result marks the end of six years of record profits for ANZ and comes a day after No. 3 lender Westpac missed earnings forecasts, confirming the negative trend for Australian banks as they battle the commodities downturn and tougher capital requirements.
The big earnings drop at ANZ, the only major Australian bank with a large presence in Asia, also comes in an election year when banking sector misconduct is a hot issue.
Still, ANZ shares jumped nearly 4 per cent yesterday as investors welcomed the bank's move to invest in technology, cut dividends to protect capital and focus on growth at home.
"ANZ is making the right decisions," UBS analyst Jonathan Mott said in a note to clients. "When combined with asset sales and a run-off of low-yielding Asian institutional business, (the dividend cut) should further strengthen ANZ's capital position."
ANZ sold its vehicle finance business late last year and is now seeking a buyer for its plant and equipment finance business. It is also considering the sale of its minority stakes in Asia.
On the technology front, ANZ last month became the first Australian bank to launch the mobile payment service Apple Pay.
The moves are part of new CEO Shayne Elliott's efforts to restructure the bank's Asian business and shift focus to areas where growth is faster.
Cash profit for the six months to March 31 slipped to A$2.78 billion (S$2.83 billion) compared with A$3.68 billion a year ago. ANZ slashed its interim dividend by 7 per cent to 80 Australian cents.