ANZ growth tipped lowest in 12 years

SYDNEY - ANZ Banking Group, Asia-Pacific's third-largest lender by market value excluding Japan, may say first-half profit rose 4 per cent, the lowest growth in 12 years, as increased competition cut earnings.

Net income rose to A$1.46 billion ($1.56 billion) in the six months to March 31, from A$1.4 billion a year earlier, says the median estimate of seven analysts surveyed by Bloomberg News.

The Melbourne-based bank reports today.

ANZ Bank and domestic rivals are battling for customers as central banks in Australia and New Zealand raise interest rates, curbing demand for credit.

That has cut the profitability of lending and may crimp earnings at National Australia Bank and Westpac, which report in the next two weeks.

"The issue for ANZ is the performance of their New Zealand operations," said Alex Muromcew, who manages US$1 billion of Asian equities, including ANZ shares, at TIAA-CREF Investment Management in San Francisco.

"There have been concerns about the competitive environment negatively impacting earnings."

Profit in New Zealand, where ANZ is the largest lender and makes more than a fifth of its earnings, was unchanged in the three months to December 31, from the previous quarter, at $180 million.

Chief executive John McFarlane, 57, has blamed "severe price competition in the mortgage market".

The bank's interest income was little changed, even as loans rose 15 per cent in the quarter.

New Zealand lenders cut two-year fixed-rate mortgages in November and December as they fought for market share.

"It's been a bit of a blood bath in New Zealand's mortgage market," said Shawn Burns, who helps manage the equivalent of $5.5 billion of Australian stocks at Deutsche Asset Management in Sydney, which holds ANZ shares.

"It may not look pretty."

- BLOOMBERG