Australia and New Zealand Banking Group on February 17 reported a 4 percent rise in first quarter unaudited cash profit but warned slowing growth and heightened volatility in Asia could lead to a higher bad debt charge for the current half-year.
Unaudited cash profit stood at A$1.85 billion ($1.31 billion) for the quarter ended December 31, Australia's No 4 lender said in a limited trading update, without disclosing year-ago figures.
It flagged higher group credit charge of over A$800 million for the six months to March 31 compared to a market consensus of A$735 million, led by a slowdown in Asia.
ANZ is the only one of Australia's major four banks to have made a big push in Asia although new Chief Executive Officer Shayne Elliott is now increasing its focus on the more lucrative mortgage market at home where growth is faster and returns attractive.
"It's been a little bit more volatile than we were certainly expecting and some of those conditions have been a little bit more difficult," Elliott said in a video interview on the bank's website, about Asia.
Elliott said the hit came in the manufacturing bases across Asia-Pacific, predominantly Indonesia.
"And that absolutely is having an impact in terms of our credit books. And we've started to see that in the recent weeks and we've flagged that in our result update," he said.
The bank sees gross impaired assets for the half-year broadly in-line with the prior half despite falling in the December quarter.
Shares at Australia's major banks have suffered their worst start to a year since the global financial crisis, as a slowing mortgage market and tighter capital rules crimp margins and profits.
Analysts have widely predicted the days of strong dividend growth at Australian banks may be over, with some pointing at ANZ to be the first to cut. When asked about the outlook for dividends, Elliott said, "we have to be really vigilant around capital and around our credit management but also be really tightly managed on costs."
ANZ shares are the worst performers of the "Big Four" Australian banks in 2015, tumbling nearly 17 percent so far this year, the most among the major banks.
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