SYDNEY: Australia and New Zealand Banking Group mirrored its bigger rivals by cautioning over slowing margin growth as funding costs rise, after posting a 37 percent jump in quarterly profit that put it on track for record annual earnings.
Australian banks have emerged from the global financial crisis stronger than their peers overseas but face a challenge to grow profits in a climate of weak loan demand and falling fees.
Earlier this month, National Australia Bank and Commonwealth Bank of Australia issued subdued forecasts.
ANZ, Australia's fourth-largest bank, is trying to differentiate itself from peers by focussing on Asia. It expects the fast-growing region to contribute a fifth of its profit by 2012 from 14 percent now.
ANZ said earlier in the week it would start inspecting the books of Korea Exchange Bank <004940.KS> with a view to buying a 57 percent stake in the South Korea's fifth-largest bank, with a market value of about $4 billion.
But that plan faces uncertainty. The Seoul Economic Daily reported mid-week that U.S. private equity firm Lone Star [LS.UL], which is selling a bulk of the stake that ANZ could buy, had decided to not go ahead with the stake sale plan because of weak demand from potential investors.
ANZ did not give any more details on Korea Exchange Bank due diligence in its statement on Friday.
"The global outlook remains 'unusually uncertain'," ANZ chief executive Michael Smith, the former head of HSBC's Asian business, said in the statement on Friday, Aug 20.
"Although Australia and to a lesser extent New Zealand are benefiting from Asia's strong growth, it's clear domestic credit growth will continue to be softer than we saw pre-crisis."
Analysts say the bank has more than A$6 billion in surplus capital and will need to usefully deploy it.
Besides Korea Exchange Bank, Smith has said he expects European and U.S. lenders to put up their Asian assets for sale as they look to free up capital.
ANZ said its tier I capital, a measure of a bank's ability to absorb losses, stood at 10.3 percent, the highest among Australia's top four banks.
PROFITS
ANZ reported its third-quarter underlying profit grew 37 percent to A$1.3 billion ($1.16 billion), meeting expectations on lower bad debts. Provisions were 38 percent lower than the first-half average, it said,
Seven analysts on average expected ANZ to report an underlying profit of A$1.3 billion.
Bank earnings globally have rebounded from lower bad-debt charges but impending regulatory changes on capital and liquidity may bite. Well-capitalised Australian banks are expected to cope with the changes better than others.
ANZ shares have been flat so far this year, although outperforming peers in a period when the benchmark index <.AXJO> has slid 8 percent. - Reuters
Australian banks have emerged from the global financial crisis stronger than their peers overseas but face a challenge to grow profits in a climate of weak loan demand and falling fees.
Earlier this month, National Australia Bank
ANZ, Australia's fourth-largest bank, is trying to differentiate itself from peers by focussing on Asia. It expects the fast-growing region to contribute a fifth of its profit by 2012 from 14 percent now.
ANZ said earlier in the week it would start inspecting the books of Korea Exchange Bank <004940.KS> with a view to buying a 57 percent stake in the South Korea's fifth-largest bank, with a market value of about $4 billion.
But that plan faces uncertainty. The Seoul Economic Daily reported mid-week that U.S. private equity firm Lone Star [LS.UL], which is selling a bulk of the stake that ANZ could buy, had decided to not go ahead with the stake sale plan because of weak demand from potential investors.
ANZ did not give any more details on Korea Exchange Bank due diligence in its statement on Friday.
"The global outlook remains 'unusually uncertain'," ANZ chief executive Michael Smith, the former head of HSBC's
"Although Australia and to a lesser extent New Zealand are benefiting from Asia's strong growth, it's clear domestic credit growth will continue to be softer than we saw pre-crisis."
Analysts say the bank has more than A$6 billion in surplus capital and will need to usefully deploy it.
Besides Korea Exchange Bank, Smith has said he expects European and U.S. lenders to put up their Asian assets for sale as they look to free up capital.
ANZ said its tier I capital, a measure of a bank's ability to absorb losses, stood at 10.3 percent, the highest among Australia's top four banks.
PROFITS
ANZ reported its third-quarter underlying profit grew 37 percent to A$1.3 billion ($1.16 billion), meeting expectations on lower bad debts. Provisions were 38 percent lower than the first-half average, it said,
Seven analysts on average expected ANZ to report an underlying profit of A$1.3 billion.
Bank earnings globally have rebounded from lower bad-debt charges but impending regulatory changes on capital and liquidity may bite. Well-capitalised Australian banks are expected to cope with the changes better than others.
ANZ shares have been flat so far this year, although outperforming peers in a period when the benchmark index <.AXJO> has slid 8 percent. - Reuters
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