Solid Q3 performance

ANZ chief executive officer Mike Smith says ANZ has continued to perform against its super regional strategy with a solid business performance consistent with the outlook provided at the time of half year results.
“We continue to see growth opportunities in the business from ongoing good performance in international and institutional banking while also focusing on driving greater cost and capital efficiency across the group,” he  said  after the release of ANZ’s third quarter trading update last Friday.
“We have seen continuing market share gains and some recovery in margin in the Australia division and the benefits of productivity initiatives initiated earlier in the year are beginning to show through.
“New Zealand has also seen market share gains particularly in retail and costs continue to be tightly controlled.
“We have managed ongoing funding and competitive pressures well, with group margins stable relative to the end of the first half. 
“While the credit environment reflects the pressures in the broader economy there have been no developments which would lead us to alter our provision outlook.”
Highlights included:
n    Unaudited underlying profit for the nine months to June 30, 2012 increased 5.5% to A$4.5 billion.
Unaudited statutory profit after tax was A$4.4 billion, up 10.3%.
The Australia, New Zealand and International and Institutional Banking (IIB) divisions all recorded income increases, with wealth division income down slightly;
n    Total Global Markets income is tracking up 2% year to date to A$1.4 billion; income composition is changing in line with strategy with customer sales revenues up strongly;
n    ANZ’s productivity programme is on track with an expectation of neutral jaws (differential between income growth rates and cost growth rates) at the full year;
n    Group margins (excluding global markets) have been stable and Australia division margins recovered slightly since the end of the half.
Initiatives to manage asset pricing across the group have been offset by continued funding and deposit pricing pressure and competition particularly in the Institutional book;
n    Credit quality trends are in line with expectations; consequently the group continues to anticipate that the provision charge for FY12 will be similar to FY11; and
n    The June quarter APS330 released last Thursday shows that total impaired assets have declined A$117 million while new impaired assets were also lower.
Provision coverage remains strong with the total provision coverage ratio at 1.87%, nd the collective provision coverage ratio at 1.18%.