Dear Shareholders
Enclosed with this edition of Shareholder Contact is the advice of your 2009 Interim Dividend of 46 cents per share fully franked.
Our net profit after tax of $1,417 million for the half year ended 31 March 2009, was up 4% on the preceding half, although down 28% compared to the first half of last year. Reflecting the continuation of difficult conditions in global financial markets and the world economy, provisions for credit costs were significant and cash earnings per share for the half year were down 35% compared to the first half of last year.
We kept shareholders informed of ANZ’s trading performance during the half. This included a decision by the Board to adopt a more appropriate dividend policy for the current conditions which saw the Interim Dividend reduced by 26%. We know reducing dividends impacts all shareholders particularly individuals however the decision to move to a more sustainable dividend pay-out ratio is in the best long term interests of all our shareholders.
The economic environment continued to deteriorate in the first half of 2009 as reduced confidence weighed on activity around the world. The New Zealand economy is in recession and in Australia the economy is suffering a significant weakening. Economies in Asia, particularly China, continue to perform more strongly than the rest of the world.
In addition we are managing a number of issues which are specific to ANZ such as our exposure to structured credit intermediation trades.
ANZ is continuing to make progress in systematically reducing risk particularly in our Institutional Division.
Looking at our divisional and geographic performance, there were reasonable results from our Australian region with underlying profit after tax growth of 1% on the preceding half.
Our New Zealand businesses worked hard in a difficult economic environment. There were good revenue performances from the Markets and Rural businesses offset by a large increase in the provisions and a NZ$116 million post-tax charge for the ING NZ settlement. This saw underlying profit after tax fall 3% on the preceding half.
The result in the Asia Pacific, Europe and America regions was a highlight – with underlying profit after tax up 115% – demonstrating strong progress in our super regional strategy.
In the Institutional Division, the core business is performing well with underlying profit after tax up significantly on the preceding half. However, the headline result was down $83m post tax, impacted by a sharp increase in provisions, a further increase in credit risk charges required for credit intermediation trades and impairment losses in the non continuing private equity and alternative asset portfolios.
We made a number of senior appointments that further strengthened our banking experience and supported our strategy. Shayne Elliott was appointed as Group Managing Director Institutional, joining ANZ following an international banking career with EFG-Hermes and Citigroup.
David Hisco was promoted to the role of Group Managing Director Commercial. It was announced that Graham Hodges would take up the role of Deputy Chief Executive and he was succeeded as Chief Executive of ANZ National Bank in New Zealand by Jenny Fagg.
ANZ’s capital planning has anticipated the difficult economic conditions we are currently experiencing. From the end of 2007, the Group has moved to increase provisioning, liquidity and capital to levels appropriate for the new economic and market circumstances. ANZ’s Tier 1 capital ratio was 8.2% at the end of March 2009, up from 6.9% a year ago which continues to compare favourably globally and against domestic peer banks.
While we anticipate the current difficult economic conditions will be with us in the second half of 2009 and early 2010, ANZ has the financial strength and in our opinion the right strategy to continue to deliver acceptable returns for shareholders.
