ANZ Bank cuts dividend as profits fall 24 per cent
Sydney Morning Herald May 3, 2016 - 8:18AM
Clancy Yeates
ANZ Bank has cut its interim dividend as half-year profits dropped sharply, as it took $717 million in a range of charges that it said would put the bank in a stronger position in the future.
The bank on Tuesday said it would pay an interim dividend of 80c a share, down from 86c last year, in response to its dividend payout ratio becoming stretched.
Its cash profit fell 24 per cent to $2.8 billion, including $717 million in charges, or specified items, which it said were aimed to "reposition the group for stronger profit before provisions growth in the future."
"This result reflects a challenging period for banking and we have taken the opportunity to move decisively and adapt to the changing environment by building a simpler, better capitalised and more balanced bank," chief executive Shayne Elliott said.
The $717 million in specified items were part of a push to simplify the business, as Mr Elliott, who started in January, vows to lift returns and focus more on its high-returning Australian business.
The charges included a change to its accounting policies towards software amortisation worth $441 million in charges, a $260 million impairment on its investment in Malaysia's AmBank, and $101 million in restructuring expenses.
ANZ said the decision to cut its dividend was taken in response to bad debt costs returning to more normal levels, and it would also lower the share of profits it paid out to shareholders in the longer term.
Excluding the specified items, ANZ's cash profit was $3.5 billion, down 4 per cent. Market analysts had expected a cash profit of $3.58 billion and an interim dividend of 86c a share.
Its core Australian division posted a 6 per cent lift in profit to $1.75 billion.
Its institutional business posted a 41 per cent plunge in profits to $632 million in the half, earnings also dropped 46 per cent in its Asia retail and Pacific business.
The banks' dividend payout ratio had increased to 84 per cent in the half, including specified items, and ANZ said it would target a lower payout ratio, of 60 to 65 per cent, down from 65 to 70 per cent at present.