The bank also disclosed a cash profit for the same period of $4.8 billion, representing an 11 per cent increase.
“Overall, ANZ’s performance remains in line with the expectations we had at the end of 2012, with full-year revenue growth slower than last year and ongoing productivity improvements providing positive revenue cost,” Mr Smith stated in a company update.
ANZ is confident that low interest rates and a falling Australian dollar will help drive the bank’s profitability.
“Overall, I’m pleased with our progress, given the challenges posed with the lower growth environment...I’m also optimistic that we are going to see strong consumer confidence and stronger economic activity in the medium term due to the effect of the lower interest rates, a more competitive currency and the removal of pre-election uncertainty,” Mr Smith stated.
ANZ believes concerns about slowing growth in China have been exaggerated.
“Although there is a rebalancing taking place in China and there may be volatility associated with this, we need to remember that the world’s second largest economy is still growing at around 7 to 7.5 per cent,” Mr Smith said.
Mr Smith’s comments were well received by the market.
“ANZ produced another solid quarterly performance... In our opinion, CEO Mike Smith's more optimistic economic outlook is very important and we agree wholeheartedly,” Morningstar analyst David Ellis stated.
However, the company’s net interest margin - a key measure of profitability on its loans - declined by two basis points during the June quarter, due to lower interest rates.
ANZ and market commentators expect a further small drop in margins.
“Margins are being pressured due to the lower interest rate environment and less favourable product mix changes... [The] group margin is likely to decline several more basis points by the end of the financial year,” Mr Ellis said.
