ANZ profits stable, but times tough in NZ

Photo / Martin Sykes.

ANZ Banking Group says cash profit for the 10 months to July is tracking broadly in line with the prior year, as the bank's bad debt growth slowed in the third quarter.

The bank's strong revenue trends had continued, driven largely by the performance of the institutional division, Melbourne-based ANZ said in a statement.

"In Australia and in Asia, the economies are showing early positive signs of recovery and although the cycle is still playing out, there are reasons for cautious optimism," chief executive Mike Smith said in the statement.

"In New Zealand, economic conditions remain difficult with the economic recovery likely to be much slower."

ANZ reiterated its May forecast that the total credit impairment charge for the second half to September was likely to be about 20 per cent higher than the first half charge of A$1.435 ($1.78) billion. That would take the second half figure to about A$1.72 billion.

At the end of July, the total provision coverage ratio had increased to about 1.73 per cent, from 1.58 per cent as of March 31.

The increase in provisions had been driven entirely by the New Zealand business. The fiscal 2009 provision charge for New Zealand was likely to be about $900 million, three times the previous year's charge of $302 million.

Over 40 per cent of the New Zealand provisions are commercial and institutional related, with one name making up eight per cent of the total.

-AAP