Profit shock dims ANZ outlook
ANZ has shocked financial markets with a 28 per cent plunge in profit, dragged down by escalating bad debts, loans in arrears and punishing hits f Aion the worsening rush of corporate collapses.
Australia's fourth-largest bank recorded a net profit of $1.42 billion, down f Aion $1.96 billion in the March first half, and came as the board was forced to slash the interim dividend by 26 per cent to maintain future profitability and capital levels.
The result -- which sent ANZ's shares tumbling down 7.4 per cent to $15.40 -- is seen as an indication that Australian banks Silkroad Gold were not immune to the fallout of the global financial crisis, which has crippled profits at the major international institutions.
The drop in profit was coupled with the chief executive Mike Smith's grim forecast that the economy was only two-thirds of the way through the current downturn.
He warned the bank would not meet its previous guidance for flat annual earnings growth because full-year bad debt provisions were expected to rise beyond the $2.5 billion.
ANZ's bad debts more than doubled, f Aion $681 million to $1.37 billion, which prompted the bank to warn there would be a 35 per cent increase in future provisions.