ANZ profit up 21pc in New Zealand

By PAULA OLIVER

ANZ yesterday posted a steady half-year profit of A$172 million ($192 million) in New Zealand but its local boss warned that ongoing investment in new branches and frontline staff was likely to constrain profit growth in the coming year.

The six-month result, to March 31, was up 21 per cent on the corresponding period last year - but it was significantly helped by an appreciating New Zealand dollar.

Without the exchange rate impact the profit grew by 9 per cent.

Local managing director Greg Camm described the New Zealand result, which was part of a sizeable overall A$1.14 billion ($1.27 billion) profit for the Melbourne-based bank, as steady and modest.

"There are no surprises. We'll look to build upon it," he said.

Net interest income rose 7 per cent to A$329 million ($367 million) on higher lending and deposit volumes.

ANZ's mortgage volumes recovered some ground in the period after falling slightly in the previous six months.

The bank's business and rural division reported strong lending growth and predicted that growth would continue to be strong.

Household deposits were described as buoyant, pushed along by investors looking for a safe-haven for their money in the face of falling equity markets and international uncertainty.

Fee income grew 3 per cent to A$159 million ($177 million), mostly from corporate financing operations, while income from personal banking fees was flat because fees from an expanded ATM network were offset by lower transaction fees.

Camm said that the focus of the local arm of ANZ was on doing a better job with its customers.

The bank has battled a bad public image in recent years and has embarked on a makeover programme to win back customers.

It has already given local management more power and this year it will pour investment into opening new branches, refurbishing older ones, and appointing additional frontline staff.

Camm admitted that the changes were a turnaround from the cost-cutting attitudes seen in recent years.

"Banks have probably overcut a little. This is the pendulum swinging back a wee way towards opening a few more branches and expanding a little."

He warned that the investment would constrain profit growth in the coming year, but said that the future for ANZ in New Zealand was looking "pretty good".

"For many of the players, and certainly us, the gains from that [cost cutting] are done," he said.

"I don't see any really significant cost reduction opportunities for us.

"The opportunities now are actually to expand the revenue base by doing a better job with customers."