ANZ reports profit after rate hikes, job cuts

by Adam Smith17 Feb 2012

ANZ has defended its rate hike and job cuts amid quarterly profits of $1.7bn.

The bank has announced a statutory profit after tax for the December quarter of $1.7bn. Its underlying profit of $1.48bn is up 4.6% quarter-on-quarter.

With the results have come the bank's recent 6bp interest rate hike and announcement that it will axe 1,000 jobs. But ANZ chief executive Mike Smith defended the decisions, saying the bank is operating in a more challenging global environment.

"There will not be a return to the level of credit growth that banks experienced pre-crisis for the foreseeable future, particularly in our major domestic markets in Australia and in New Zealand, as consumers reduce their gearing and businesses pace investments. New regulation is also increasing costs for banks globally including the new Basel III rules," Smith said.

Smith also pointed to higher funding costs and a pull-back in discretionary spending by businesses and consumers. He said the bank's Australian business was "tracking reasonably", but argued that ANZ would have to "continue adapting our business model" to suit domestic and global changes.

"There is no question that adapting to this environment creates real challenges. Our recent decisions on interest rates for customers in Australia and on how many people we employ at ANZ reflects a need to transform our business in new and often painful ways," he said.

ANZ joined its major bank peers in reporting decreasing margins. Australian margins declined 9bps in the second half of 2011, the bank said.

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