ANZ profits plummet for first time in a decade

Source: Agencies  |   2008-10-24  |     NEWSPAPER EDITION

AUSTRALIA and New Zealand Banking Group Ltd reported a 21-percent decline in annual profit yesterday as soaring charges for bad debts linked to the global credit crisis hit Australia's fourth-largest bank hard.

It was the first time in a decade that ANZ profits shrank ?? a measure of the turnaround in banking fortunes since the credit crunch began to bite earlier this year. Net income plunged to A$3.3 billion (US$2.2 billion) in the 12 months through September 30, from A$4.2 billion a year earlier, the bank said.

The bank was hit by a A$1.4 billion increase in credit impairment charges on lending to A$1.9 billion and a A$700 million charge for credit risk on derivatives. The performances of Australian banks are being watched closely by investors for signs of how international market turmoil and the global economic slowdown will affect them.

Earlier this week, rival National Australia Bank Ltd, the country's largest bank by assets, reported a 1-percent drop in annual profit and sharply rising levels of bad debts.

ANZ shares dropped 5.21 percent to close at A$18.01, a fall that exceeded an ugly day on the markets when the leading index fell more than 4 percent.

"I believe we have delivered a reasonable result in difficult circumstances in 2008," said Chief Executive Mike Smith. "2009 is going to be another difficult year as the economy softens, but we are on a better footing than 12 months ago."