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Anz boss shayne elliott defends the banks dramatic 24 per cent profit slump




ANZ has cut its dividend for the first time since the global financial crisis after its first-half profit slumped by nearly a quarter.

Cash profit for the six months to March 31 dropped 24.3 per cent to $2.782 billion its lowest since 2010 largely due to a $717 million hit from writedowns and restructuring charges, which the bank deemed necessary in the face of a more challenging business environment.

ANZ cut its dividend by six cents to 80 cents for a payout ratio of 67 per cent, and reiterated its determination to pull the ratio back from the increased returns of recent years to between 60 and 65 per cent.

Chief executive Shayne Elliott, announcing his first set of results for the bank since taking over from Mike Smith in January, said the cost of restructuring would leave the bank well placed to return to profit growth.

This result reflects a challenging period for banking and we have taken the opportunity to move decisively and adapt, Mr Elliott said.

For the immediate future, we are in a period of consolidation, simplification and transition.

The $717 million hit included $441 million related to accounting changes designed to accelerate amortisation and a $260 million impairment on its investment in Malaysias AmBank.

This is not about clearing the decks ... it is about recognising the world has changed, Mr Elliott told analysts. This is not slash, burn and repair: that is not what weve done today.

UBS analysts said the results represented the rebase weve been waiting for in a sector facing significant headwinds.

We believe ANZ is making the right decisions, addressing many of the markets concerns, UBS analyst John Mott said.

However, as has been seen numerous times in bank restructurings since the crisis, these processes are never easy and invariably lead to additional earnings volatility.

ANZ also reported a $918 million provision for bad and doubtful debts, blaming lower commodity prices that have weighed on the resources sector and related industries.

The provision was slightly higher than the roughly $900 million it had warned the market to expect when it revised its forecast in March.

We probably have seen the worst of it with regards to the resources sector sell-off, IG market analyst Angus Nicholson said.

The worst of the resources crash is over but, with regards to their Asian assets, I dont think that is totally sorted out just yet.

Net profit dropped 21.9 per cent to $2.738 billion, the lowest since $1.93 billion in the first half of 2010, and cash return on equity slumped from 14.7 per cent to 9.7 per cent.

ANZ shares dropped as much as 4.0 per cent at the start of trade before rallying strongly.

They closed up $1.32, or 5.56 per cent, at $25.05.

ANZS FIRST-HALF SLUMP

* Cash profit down 24.3 per cent to $2.782 billion

* Net profit down 21.9 per cent to $2.738 billion

* Interim dividend down six cents to 80 cents, fully franked

Australians are at risk of losing hundreds of millions of dollars of superannuation to the ato




HUNDREDS of thousands of Australians risk having $480 million in retirement savings handed over to the tax office if they don’t take immediate action.

The huge pool of idle savings will see an average of $2400 held in 200,000 accounts move into the hands of the Australian Taxation Office until owners claim it back.

MORE: Find the best superannuation fund

New legislative changes made last month will increase the lost superannuation threshold from $2000 to $4000 from December 31, meaning anyone with lost accounts of up to $4000 will be moved across to the ATO.

Lost super is retirement savings kept in a fund which does not have updated information to contact a member.

It is also lost if the fund has not received a contribution or rollover for the member within the last five years.

MORE: What you need to know to find the best superannuation fund

The Australian Institute of Superannuation Trustees chief executive officer Tom Garcia said increased threshold to lost accounts was a result of the ATO mopping up idle retirement accounts.

We have got nearly 30 million superannuation accounts for around 12 million working Australians so theres too many accounts,’ he said.

You can get the money back (from the ATO) but you do lose any insurance and your money is not invested in the market.’

Instead of getting decent returns on the savings balanced funds returned an average of 9.8 per cent per cent in the 2014/15 financial year the ATO calculates interest in the lost accounts at the rate of inflation, tracking at 1.5 per cent.

But an ATO spokesman said the funds can easily be claimed back at any time once they are held with the ATO.

Individuals are able to claim back their superannuation at any time,’ he said.

Fees are not charged on these accounts while with the ATO.

Mr Garcia said it is easy to claim back by simply clicking a button on the ATO website which pushes users to the mygov site.

Money can also be scaled back through the SuperSeeker website.