UPDATE 2-Australia’s ANZ posts record capital levels as profits rise due to the housing boom
* Cash earnings in Q1 9% higher than in the previous year
* “Have to think about dividends” – CEO
* Core capital at a record level of 11.7%
* Higher loan sales in Australia, record volume in New Zealand (rewritten to add details on capital, dividend, analyst comment)
SYDNEY, Feb. 18 (Reuters) – The Australian and New Zealand banking group reported higher first-quarter earnings Thursday and said it was well positioned to consider some of the record levels of cash it is holding after the pandemic to return to investors.
Unlike global counterparts, the big four banks in Australia and New Zealand are coming out of the pandemic able to roll back some of the heavy bad debt provisions they put aside in 2020 to cover potential loan defaults.
Australia’s fourth largest lender said its earnings for the quarter came from reversing 10% of a bad debt provision of A $ 1.7 billion.
All units performed better in the quarter, “with market share gains in our main home loan market in Australia and record home loan volumes in New Zealand,” said Chief Executive Officer Shayne Elliott in a statement.
Its core capital ratio, a closely watched measure of its free cash, has risen to a record 11.7%, the Melbourne-based lender said.
“We have never had that much capital in terms of ratios or absolute amounts,” said Elliott. “We have to think about the dividends and … there are other ways of managing capital and of course … our ability to reallocate some, maybe not all of the capital.”
Cash income from continuing operations for the three months ended December 31 was A $ 1.81 billion, an increase of 54% from the average for the last two quarters and 9% more than a year ago.
Credit Suisse analysts described the result as “positive”, which indicates better than expected returns.
ANZ shares rose 3.37% while the broader market fell 0.10%.
Antipodes’ economies are recovering faster than expected after tight lockdown measures to contain the spread of COVID-19, while particularly cheap interest rates and high government spending are fueling demand for home loans.
Westpac Banking Corp. also announced a rebound in first-quarter earnings on Wednesday, benefiting from a large provision of a provision made during the pandemic due to a positive outlook.
$ 1 = 1.2902 Australian dollars $ 1 = 1.2900 Australian dollars Reporting by Paulina Duran in Sydney and Shriya Ramakrishnan in Bengaluru; Editing by Shailesh Kuber and Sam Holmes