Investing.com - The ANZ Group Holdings Ltd (ASX:ANZ) reported a record-breaking first-half cash profit due to impressive expansion in its home lending and institutional sectors. However, the bank anticipates facing obstacles in the upcoming months.
ANZ's cash profit leaped by 23%, reaching $3.82 billion - a figure that aligns with analysts' predictions. The statutory net profit for the half-year period ending March 31st was slightly lower at $3.55 billion, while operating income experienced a six percent increase to $10.14 billion.
CEO Shayne Elliott credited this success to robust revenue growth across all divisions but cautioned about potential difficulties in the next six months due to fierce competition and households grappling with rising interest rates.
Elliott stated on Friday, "Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand." He added that "We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy."
Despite being slightly below market expectations, ANZ's net interest margin – an essential indicator of profitability – rose seven basis points from the previous six months to reach 1.75% amid increasing interest rates.
The bank's institutional segment emerged as its top performer with revenue skyrocketing by 35% while doubling its contribution to overall profits. This division reaped benefits from elevated payment processing volumes alongside servicing other financial institutions.
Revenues also climbed within their commercial sector by 30%, while their New Zealand branch saw revenues rise by 14% accompanied by margin growth. The retail arm observed an eleven percent increase compared to last year primarily due to strong home loan volumes.
However, the competitive nature of the mortgage market suggests that this growth may have come at the expense of reduced margins. Although impaired loans decreased by 16%, ANZ has increased its provisions in anticipation of upcoming economic challenges.
Shareholders can expect a fully franked interim dividend payment of 81 cents per share, up from last year's 74 cents for the same timeframe.