ANZ to kick off solid reporting season

SYDNEY - Four of Australia's top five commercial banks are due to post annual results and should report higher fiscal 2006 earnings on buoyant lending.

But growth may slow in fiscal 2007 amid slowing credit demand and increasing competition.

ANZ Banking Group opens the reporting season tomorrow, with analysts expecting its second-half cash profit, before one-off items, to rise more than 14 per cent to A$1.81 billion ($2.1 billion).

Investors will closely examine banks' accounts for credit quality after the central bank raised rates in May and August and amid speculation it will raise rates by a further 25 basis points to 6.25 per cent next month.

"We are certainly seeing indications of a pick-up of the default charges for unsecured lending," said Peter Vann, head of investment research at Constellation Capital Management, adding, however, that the overall level of bad debts remained very low, particularly with unemployment at a 30-year low.

Business lending was expected to underpin growth in banks' earnings, analysts said. Business credit growth soared 16.2 per cent in the year to August, Reserve Bank figures showed.

Housing credit growth was higher than a year ago, helped by the booming mining states of Western Australia and Queensland, but personal lending has slowed as consumers tighten their belts.

The appetite for credit, particularly among consumers, is expected to ease because of higher borrowing costs.

National Australia Bank (NAB), the country's biggest lender by assets, Westpac Banking Corp, the number-four lender, and fifth-ranked St George Bank report their September year-end results next week.

NAB is expected to post about a 23 per cent rise in second-half cash profit to A$1.98 billion, according to the average forecast from a Reuters poll of nine analysts.

Westpac is the sector laggard. It said last month that annual earnings would be at the lower end of market forecasts.

* Commonwealth Bank posted a 16.7 per cent rise in second-half cash earnings in August, and has forecast its fiscal 2007 cash earnings will at least equal the average of its main rivals.

- REUTERS