ANZ Bank net profit rises 10% but domestic margins fall
- 2 May 2012
- From the section Business
ANZ Bank profits have risen 10% in the six months to the end of March, as a jump in international and institutional business offset a decline in domestic earnings.
Net profit was A$2.92bn ($3bn; £1.8bn), up from A$2.66bn a year earlier.
However, profits at its Australian unit fell 7% from the previous six months.
The bank said that slowing credit demand and declining margins had hurt domestic earnings.
"These challenges are now an ongoing part of the Australian banking landscape," said Mike Smith, chief executive of ANZ Bank.
However, Mr Smith added that the bank was taking adequate measures to boost its business.
'Reshape our business'
Australian banks have seen a slowdown in growth recently after years of robust expansion.
A combination of rising costs, a slump in demand and increased competition have all impacted profit margins.
As a result, various firms, including ANZ Bank, have been forced to restructure their operations.
Earlier this year, ANZ announced that it will cut 1,000 jobs in Australia and maintain a pay freeze for most of its senior executives.
Last month, the bank raised interest rates on its variable home loans and for small business borrowers.
The firm said it had taken these decisions to ensure that the bank can sustain its growth in the current business environment.
"Our recent decisions on interest rates for customers in Australia and on employment within the group reflect the need to reshape our business," said Chief Executive, Mike Smith.
Faced with a slowing domestic market, ANZ has been pushing to increase its international presence.
The move has paid off, with profits from its international operations up by 8% during the period, from a year earlier.
Compared with the previous six months, profits at the division surged by 19%.
Analysts said the bank had especially benefited by its expansion into the fast-growing Asian markets.
"Their Asian strategy is probably one of the highlights," said Peter Vann a senior analyst at Constellation Capital.
"I think for the first time they can show the proof in their strategy, which is a very strong positive because that's only going to get better as time goes on."