ANZ defers dividend as profit dives 60pc

ANZ will delay its decision on an interim dividend until the economy improves after its half-year cash profit crashed 60 per cent.

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ANZ has deferred the decision on whether to pay an interim dividend until at least August, saying it will wait until there is greater clarity on the economic impact of the COVID-19 crisis as it posted a 60 per cent plunge in first-half cash profit.

Cash profit sank to $1.41bn in the six months through March, while its statutory profit tumbled 51 per cent to $1.55bn as it took credit impairment charges of $1.674bn including a bad debt charge of $1.031bn for COVID-19-related losses.

The pandemic has also taken a toll on its Asian associates, forcing it to take an impairment charge of $815m on those operations for the half.

ANZ chief executive Shayne Elliott said the result was “reasonable” given the tough trading conditions it was experiencing even before the crisis hit.

“COVID-19 has clearly impacted our performance, however the work done over many years to simplify our business, strengthen our balance sheet as well as developing a more agile and resilient workforce meant we were well-prepared to support customers through the crisis and I’m confident we will emerge even stronger,” Mr Elliott said.

“These are extraordinary times and in fact they are probably the most extraordinary times in a generation,” Mr Elliott said in a video posted on ANZ’s website..

Loan losses heading into March were at historically low-levels, he said, as he reassured shareholders the bank was well positioned to manage the COVID-19-related higher credit charges.

ANZ’s COVID-19-related provision sits in between NAB's $807m and Westpac's $1.2bn, both of which were announced earlier this week.

The lender sought to reassure investors of its “strong capital position”, with its Common Equity Tier 1 capital ratio sitting at 10.8 per cent at March 31.

Commenting on the dividend, ANZ chairman David Gonski said the deferral was not made due to concerns about the bank’s current financial position.

“ANZ has not received any concerns from APRA regarding our level of capital. The board agrees with the regulator’s guidance that deferring a decision on the 2020 interim dividend is prudent given the present economic uncertainty and that making a decision at this time would not have been appropriate,” he said.

`These are extraordinary times and in fact they are probably the most extraordinary times in a generation’ - Shayne Elliott

“This was a very difficult decision and the board considered all options available as we understand the impact this will have on those shareholders who rely on dividends.”

The board will continue to assess the evolving situation in the coming months, including the severity of community lockdowns, before determining a final position on the interim dividend, he said. The lender will update shareholders in its August trading update.

The Australian flagged earlier this week that ANZ was leaning toward deferring its first-half dividend.

The move to defer the dividend comes after National Australia Bank on Monday opted to pay out a reduced dividend of 30c per share while tapping shareholders for $3.5bn. Westpac is due to report its first-half numbers and dividend announcement Monday.

Commenting on the outlook ahead, Mr Elliott said the coming months would be difficult but that it was hard to predict how deep the economic crisis will be or how long the recovery will take.

The bank has already received more than 100,000 requests for assistance on $36bn worth of home loans — about 14 per cent of the portfolio — since it introduced its mortgage repayment holiday in March.

It has also granted deferrals of repayments on $7.5bn worth of business loans, it said.