Releasing the bank’s annual result, Mr Hisco said the agribusiness portfolio had performed well during the downturn in global dairy prices as many farming customers adjusted their cost structures to remain profitable at more modest dairy payout ranges.
Longer term, ANZ New Zealand was also optimistic about the prospects of dairy and believed many of its farming customers were positioning themselves to take advantage of further industry consolidation as well as a back to basic, high-performing, low-cost production model.
ANZ New Zealand reported an operating profit before credit impairments and income tax of $2.24billion for the year ended September, down 7% on the $2.4billion reported in the previous corresponding period (pcp).
The bank increased its credit impairment provision by 96% to $149million and paid $566million in cash, down 12% on the $644million paid in the pcp.
That left a cash profit of $1.53billion, down 9% on the nearly $1.7billion reported in the pcp.
Mr Hisco said net interest income increased 5% to $3billion in the year, primarily reflecting continued lending growth. Interest rates had contracted due to strong lending competition and a customer preference for fixed-rate mortgages.
The fall in other operating income — down 21% to $795million — reflected lower trading income and losses on hedging.
"We had a solid year, and while our net profit after tax wasn’t as strong as the 2015 financial year, the New Zealand business is performing well and reflects the performance of the economy.
"We have continued to grow lending and deposits and we remain the largest mortgage lender across all major cities."
The ANZ KiwiSaver funds under management were at a record high, he said.
One of the challenges for the New Zealand economy now was a slower rate of growth in deposits rather than lending. Banks made up the difference through relatively more expensive offshore funding.
Many New Zealanders saw housing, particularly in the current low interest rate environment, and in cities like Auckland, where there was high demand for accommodation, as the most profitable way to get a return on their money, Mr Hisco said.
That was why ANZ New Zealand supported the Reserve Bank’s tightened restrictions on investor residential lending.
Banking was evolving quicker in New Zealand than in many other countries as Kiwis took to digital technologies. The ANZ had recently introduced Apple Pay and Mr Hisco expected it to have just as big an impact here as it did in Australia earlier in the year.
Parent bank ANZ’s full-year cash profit fell 18% to $A5.9billion ($NZ6.2billion) and the bank said it might sell its Australian life insurance and superannuation business.
At a glance
• Cash profit of $1.53billion, down 9%.
• Total operating income of $3.82billion, down 2%.
• Expenses up 7%, due to software capitalisation change and restructuring costs.
• Provision charge of $149million.
• Lending up 5%, customer deposits up 8%.
