ANZ Profit Rises 10% on Market-Share Gains, Overseas Income

Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest bank by market value, said nine-month profit rose 10 percent after the lender increased market share at home and earned more from overseas units.

Net income in the nine months ended June 30 climbed to A$4.4 billion ($4.6 billion), Melbourne-based ANZ Bank said in a statement today. Underlying profit, which excludes some one-time costs, rose 5.5 percent to A$4.5 billion.

Australian banks are working to protect profitability as competition pushes up the cost of winning customer deposits, and Europe’s debt crisis weighs on funding costs. ANZ Bank said today margins at home had “recovered slightly” since the end of March and the bank is on course to meet a target of 20 percent of earnings from Asia and overseas this fiscal year.

“It looks good,” Peter Esho, the Sydney-based chief market analyst at City Index Ltd., a London-based provider of trading services in bonds, stocks and commodities, said in an interview. “They’ve maintained margins and the lending growth looks strong.”

Shares of ANZ Bank climbed 3 percent to A$24.61 at the close in Sydney, the most since Dec. 1 and extending this year’s gain to 20 percent. The benchmark S&P/ASX 200 index rose 0.9 percent.

Commonwealth Bank of Australia (CBA), the nation’s biggest bank by market value, this week forecast mounting costs to win customer deposits and a period of low credit growth. National Australia Bank Ltd. (NAB) on Aug. 14 said third-quarter profit was unchanged as lower revenue was offset by a decline in bad debts.

Economic ‘Headwinds’

ANZ Bank’s group profitability was “stable,” while the bank’s overseas businesses expanded with “positive second-half revenue trends,” it said. Still, the lender said it was facing “headwinds from softer economic conditions.”

“We’re not running the business on an expectation that the subdued lending environment will end any time soon,” Chief Executive Officer Michael Smith, who pledged to freeze his salary for another year in 2013, said on a call with investors today. “The low credit-growth environment is one we have to accept as the new norm.”

The bank’s focus on Asia, where it operates in 16 regional markets, offers potential for growth as competition for deposits increases in Australia, Smith said. The Australian business won market share in household deposits, lending and commercial banking, ANZ Bank said in the statement.

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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