Anz Banking Group

ANZ Banking Group Posts Weakest Profit Growth in 2 ½ Years ...

(Updates share price in fifth paragraph, interest rates kept on hold in 17th.)

May 3 (Bloomberg) — Australia & New Zealand Banking Group Ltd., the worst performer among Australia’s four largest banking stocks this year, posted the smallest half-yearly profit increase in 2 ½ years as lending profitability slipped.

Net income in the six months to March 31 gained 3 percent to A$2.66 billion ($2.91 billion) from the previous six months, the Melbourne-based bank said today, as provisions for bad debt dropped. Profit missed the A$2.77 billion median estimate of six analysts surveyed by Bloomberg News.

Chief Executive Officer Michael Smith, 54, aims to double profit from Asia to 30 percent in the next seven years as he expands in the region. The bank shares declined after net interest margin, a measure of the profitability of its lending business, shrank to 2.47 percent.

“The bad-debt charge is going down but there’s no growth in overseas deposits and the net interest margin is falling,â€� said Brett Le Mesurier, an analyst at BBY Ltd. in Sydney with a “buyâ€� rating on ANZ Bank. “ANZ used to be a high-growth option. The evidence isn’t there to support that now.â€�

The shares slipped 1.3 percent to A$23.99 at 2:37 p.m. in Sydney trading. They have gained 2.8 percent this year, lagging behind National Australia Bank Ltd.’s 14 percent rise and Westpac Banking Corp.’s 10 percent increase. National Australia Bank and Westpac are scheduled to publish first-half earnings this week.

‘Flat Spot’

“Parts of the Australian economy have hit a flat spot with consumers and businesses becoming more conservative,â€� Smith said in today’s statement. “We are starting to see the effects of a structural change underway as the Australian economy continues the shift toward being based much more on hard and soft commodities. One of those changes is the stronger Australian dollar which has impacted our international earnings.â€�

First-half underlying profit, which excludes some acquisition costs and information technology spending, climbed 23 percent from a year earlier to A$2.82 billion. Net income in the half climbed 38 percent from the same period a year ago.

ANZ Bank’s first-half net interest income, or revenue from borrowers after deducting interest paid to depositors, gained 8 percent from the year earlier period to A$5.65 billion. Provisions for credit impairments in the first half dropped 38 percent to A$675 million.

Top Stocks 2011, A Sharebuyer's Guide to Leading Australian Companies

Corporations law in Australia

Business law

LOCAL government financial management & borrowing legislation handbook

Who owns whom, Australasia and Far East