Melbourne, Nov 3: Australia and New Zealand Banking Group Ltd reported solid profit growth in 1998-99 and said it was well on track to meet its targets to boost efficiency and shareholder returns after shifting out of high risk markets. The smallest of Australia's big four banks achieved a 26 per cent rise in annual net profit before abnormals and preference dividends to A$1.48 billion (US$950 million), in line with market forecasts. The strong growth came as the group cut costs and grew lending and fee-revenue as it reduced its risk exposure, focusing more on Australian and New Zealand consumer markets after taking big losses on Russian bonds in 1997-98. "There is a strong foundation for ANZ to continue to perform and deliver value for shareholders," chairman Charles Goode said.The lower risk exposure, earnings growth and a lack of acquisitions on the horizon led ANZ to decide to return up to A$500 million to shareholders through a share buyback over the next year.
"We have examined a number of acquisition opportunities in SE Asia. With the exception of Panin Bank, these have not met our hurdle criteria and the likelihood of our making a major international acquisition this year is low," chief executive John McFarlane said.
Analysts said the buyback, due to begin on November 18, came a little sooner than expected, although the group had flagged over the past year that it would return capital to shareholders if it did not make any big acquisitions.
The market clearly liked the buyback plan and the solid results, with investors pushing ANZ's shares up to a high of A$10.95. By mid-afternoon, ANZ was trading up 32 cents at A$10.88, outpacing the overall market.
"There were no mishaps this time to disappoint the market. The market overall will see that as a positive," said a Melbourne-based analyst with a major broker.
ANZ watchers highlighted the group had deliberately left out Australia in its statement that it was unlikely to make any major international acquisitions in 1999-2000, and said ANZ should be looking to expand in its home market.
"I think they need acquisitions in Australia. They don't have the largest franchise here. They could add value by enhancing it," said Stuart Turner, banking analyst with fund manager Macquarie Investment Management. Australia remained the biggest source of the group's earnings, at A$1.04 billion, up 27 per cent from 1997-98, with profit from New Zealand up 20 per cent to A$200 million.
Corporate financial services posted a 17 per cent rise in profit to A$550 million, which ANZ said reflected growth in commercial bill lending and lower costs.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.