ANZ's local mortgage lending helped boost its Australian division's fortunes in the half year to March, despite the bank noting a local market defined by subdued credit growth.
The wider ANZ Group announced an underlying cash profit of $2.97bn for the half-year ended 31 March, an increase of 5% on the previous half and 6% against the same period a year ago. It's net profit for the half was up 10% on a year earlier, at $2.92bn for the half.
However, its Australia division saw profits drop 7% over the half-year period, which the bank blamed on margin pressure from higher deposit pricing, higher long-term funding costs and subdued credit demand.
Lending in Australia still grew 4%, driven mainly by mortgages, which were up 5% half-on-half and have managed an annual growth rate of slightly better than system growth at 8.2%.
ANZ said the credit quality of its mortgage book was improving, with only 4.4% of the portfolio on a dynamic LVR ratio above 90%, compared with 6.6% in September 2008 despite softening property values.
ANZ's net interest margin for the six months to March was 2.38%, down from 2.44% in the six months to the end of September, 2011.
ANZ CEO Mike Smith said Australian results were "subdued", and were "significantly impacted by declining margins and the structural shift that's occurred since the financial crisis with persistently lower demand for credit".
"The environment has changed permanently following the financial crisis - for banks and for all other parts of the economy including for our customers," Smith said in reference to the entire ANZ Group.
"In the near term we are managing in what could be described as a 'work out' phase in the global economy with the situation most acute in Europe and, to be realistic, this will continue to cause volatility in global markets for many years," he said.