30 Apr 2020
ANZ is taking a prudent approach to capital and dividend decisions, according to CFO Michelle Jablko, as the bank posted its half-year results in the midst of the COVID-19 pandemic.
ANZ’s statutory profit after tax was $A1.55 billion in the full year, a 51 per cent decrease. Cash profit decreased to $A1.41 billion.
"We’ve been above ‘unquestionably strong’ for a while now." - Jablko
Speaking to bluenotes via video link, Jablko said the two major impacts on the result this half were an increase in provision charges of around $1.7 billion and an impairment in associated investments of $A815 million. Jablko said despite this, the bank performed reasonably well – the virus impact aside.
“[Growth] was up 1 per cent… we stabilised the balance sheet in our Australian Retail and Commercial business, we had really strong deposit growth… and our Markets business also had a really good half,” she said.
Click here for a transcript of this video
Jablko said the bank is in a really strong capital position and has been for a long time.
“We’ve been above ‘unquestionably strong’ for a while now. We finished the first half at 10.8 per cent for Core Equity Tier 1 Capital,” she said.
“As conditions worsen, we hold more capital for more customers. We downgrade the risk-weight we apply to customers. We haven’t seen much of that in this half but that probably will start to emerge if economic conditions worsen.”
Jablko acknowledged there would be a cost to support measures the bank has provided for customers but emphasised “doing the right thing by customers is doing the right thing by us” in terms of the longer term.
Unlike in the global financial crisis of 2008, liquidity and funding are not issues.
“In any crisis like this, liquidity is absolutely the first thing you look at,” Jablko continued. “Going into this crisis - like I said on capital - for liquidity we were also in a really strong position. We were well above what the regulator required of us and also well above our own management targets, what we thought was acceptable.
“Actually in a way we were over-funded… so from a liquidity perspective… actually we don’t need to access term wholesale markets for quite a while if we don’t want to.”
Touching on other financial metrics such as cost-to-income ratio and return on equity, Jablko said the bank might have short-term fluctuations but they are keeping an eye on the future of capital.
“As I said, we’re taking a really prudent approach [and] just trying to make sure we’ve got the right balance between making sure we support customers but we also maintain a strong balance sheet for our shareholders.”
You can hear more of the conversation in the video above.
Andrew Cornell is Managing Editor of bluenotes
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
30 Apr 2020
30 Apr 2020