ANZ’s weak revenue growth, particularly at its Asian and financial markets businesses, disappointed investors, even as the bank reported a record $5.36 billion profit.
Shares in the bank fell two per cent to a four-week low as Credit Suisse analysts Jarrod Martin and James Ellis told clients that revenue was weaker than expected and costs were slightly higher.
The final dividend, of 76 cents a share, was also slightly below market expectations.
But a 31 per cent drop in the provision for bad debts to $1.24 billion helped full year net profit at Australia’s third biggest bank rise 19 per cent to a record.
The record profit would have been higher had it not been for recent financial markets volatility, which caused income from market trading operations to plummet 28 per cent.
ANZ’s markets trading unit is the biggest of the big four banks and its income was close to zero during the fourth quarter when the US debt ceiling debate triggered heavy falls in global markets, chief financial officer Peter Marriott said.
Chief executive Mike Smith said the markets had normalised and the unit’s income posted a “very good result” in October.
Underlying profit, the bank’s preferred measure, rose 12 per cent to $5.652 billion.
ANZ’s share price finished down 41 cents, or 1.96 per cent, to close at $20.49, the lowest since October 6. The other major banks fell up to one per cent.
ANZ’s costs grew at 11 per cent and the cost growth was fastest in the Asia Pacific Europe and Americas (APEA) division, which received most of ANZ’s investment dollars and contributed four per cent of its revenue.
ANZ recently updated its revenue target for APEA, saying its revenue should make up 25 to 30 per cent of group net profit by 2017.
APEA revenue grew by just two per cent in the second half of fiscal 2011 on a lower margin, while and profit after tax fell 20 per cent compared to the first half.
Its full year profit rose 16 per cent to $721 million on a year earlier.
ANZ will continue to invest in the division which will delay a rise in its return on equity, a measure of profit, which is half that of the Australian division.
“We’re beginning to generate more non-interest revenue at a pretty explosive pace and that will continue to improve the ROEs,” APEA chief executive Alex Thursby said.
Mr Smith said the opportunities available to ANZ in the Asia Pacific were just not available in Australia.
“It’s that simple,” he said.
ANZ increased the size of its loans and advances by eight per cent from the previous year to $397.3 billion, while customer deposits were up by 16 per cent to $298.8 billion, the bank said.
Its Australian division increased full year profit by two per cent to $2.78 billion from a year earlier.
The New Zealand division’s profit rose by 54 per cent to $692 million, as conditions improved and impairments fell.
