ANZ says 21% after-tax profit rise due to forex, interest rate risk management

Thursday, 8 May 2025

Shares in ANZ’s parent bank are listed on the Australian stock market.

ANZ has posted an after-tax profit of $1.28 billion in the six-month period to March 31, an increase of 21% over the same period last year.

The bank says a large portion of the gain was the result of successes in the foreign exchange and interest rate hedging markets.

Banks take out hedges to protect themselves from interest rate and foreign exchange movements, and ANZ’s hedging resulted in gains to the bank of $116 million in the six-month period, a big turnaround from losses of $78m in the six months to 30 September 2024.

Chief executive Antonia Watson said the bank’s cash net profit after tax of $1.16b, stripping out the hedging gains, was up only 3% on the previous six-month period.

In the six-month period to the end of March last year, the bank’s cash net profit was $1.16b.

Watson said: “Our performance reflects the broader economy we operate in. With revenue and costs largely flat, our half-year result demonstrates consistent performance.”

ANZ chief executive Antonia Watson reiterated her claim at select committee that the bank did not make super profits.

ANZ’s half-year profit rise follows rises announced by Westpac and BNZ earlier in the week, with all posting rises despite the struggles of households and the economy.

Watson said home loan borrowers were feeling the benefit of falling interest rates.

“Many Kiwis are starting to feel the benefits of a lower inflation and interest rate environment and our farmers are seeing strong commodity prices,” she said.

“By the end of this year, around 86% of our customers with a fixed interest rate higher than 6% will roll off onto lower rates,” Watson said.

“These borrowers could potentially see 100-basis points or more coming off their home loans when they refix. For someone with a $500,000 loan this could mean monthly savings of around $260 in repayments.

“However, global uncertainty is likely to keep firms cautious about taking risks for a bit longer, slowing the recovery in investment and employment.

ANZ chief executive Antonia Watson appeared before the Finance and Expenditure Select Committee to answer questions about the bank’s profitability.

“Kiwis are very aware of what is going on in the economy and we are seeing this play out through our customers’ behaviour,” Watson said.

Household behaviour was characterised by caution, and a desire to repay debt more quickly.

Over the past three months just under a quarter of all ANZ’s home loan customers refixing at a lower rate had either kept their repayment amounts the same, or increased them which meant they will now be paying off their home loans faster than before.

Almost 40% of home loan customers were still ahead on their payments by six months or more, Watson said, and 45% had a savings buffer of $5000 or more.

But cautious consumer spending was impacting some sectors like retail and hospitality, she said.

“While there are still challenges ahead, we’re seeing encouraging signs that New Zealand’s economy has some firm foundations and there are green shoots.

“It’s important to note that while it is now looking like it will take a little longer, the New Zealand economy is forecast to continue to improve as the impacts of interest rate cuts work their way through,” she said.