SYDNEY (AFP) - Australia's ANZ Bank has reported a 20 percent jump in annual net profit to a record 2.815 billion Australian dollars (2.106 billion US) and sees the outlook as promising although a series of one-off factors will slow core earnings growth.
Chief executive John McFarlane, whose contract was renewed for another year, said the external environment for the bank looked good for the year ahead and it expects the underlying business performance to remain strong.
However, he also warned that a number of one-off factors would likely have a negative impact overall.
"ANZ has come a long way in 2004 while at the same time delivering another good financial performance," McFarlane said in a statement on the year to September results.
"The benefit to shareholders is reflected in strong total shareholder return of 17 percent despite a significant capital raising during the year.
"We intend to continue with higher expense growth to build our core franchise in Australia, particularly in personal banking, which is now gaining momentum after some years of nurturing."
Cash earnings per share, which exclude significant other items in the bank's earnings, rose 10.1 percent to 1.611 dollars while the final dividend was increased to 54 cents a share compared with 51 cents a year earlier, taking the total dividend for the year to 1.01 dollars.
Despite the strong results at the top end of market forecasts, ANZ shares fell 22 cents or 1.08 percent at 19.26 dollars at 10:15 a.m. (0015 GMT) as investors 'sold on the news' before recovering to close up 10 cents at 19.57 dollars.
Potential negative factors mentioned by McFarlane included loss of earnings from the sale of London-headquartered project finance activities to Standard Chartered Bank, also announced on Tuesday, reduced earnings from Panin Bank in Indonesia and measures in New Zealand to hold customers at ANZ's retail arm.
"For 2005, we have adopted an internal stretch target of eight percent cash earnings per share (growth); however taking into account these one-off factors, a guidance level of seven percent cash earnings per share would be more realistic," McFarlane said.
McFarlane said ANZ has been actively reducing its overall risk profile over the past seven years, resulting in net specific provisions for bad and doubtful debts falling 16 percent in the latest year.
"ANZ is comfortable with its overall risk profile, which is now comparable with other major Australian banks," McFarlane said.
ANZ also announced a share buyback of at least 350 million Australian dollars.
McFarlane's contract was extended for a year until September 30, 2007 with total remuneration of up to 6.5 million Australian dollars.
Chief financial officer Peter Marriott said the squeeze on margins should be less pronounced in fiscal 2005 than the previous year.
"Margins are still likely to go down but we think there will be less compression than 2004," Marriott said at an analysts' briefing.
10/26/2004 - 08:11 GMT - AFP