ANZ Bank: 2008 earnings likely to be hurt by US crisis
Australia & New Zealand Banking Group Ltd, Australia's third-largest lender by market capitalization, warned on Monday its earnings are likely to be hurt this fiscal year by fallout from the global tightening of credit.
By Agencies |
SYDNEY: Australia & New Zealand Banking Group Ltd, Australia's third-largest lender by market capitalization, warned on Monday its earnings are likely to be hurt this fiscal year by fallout from the global tightening of credit.
ANZ said it plans to take higher provisions for potential bad debts _ including a $200 million charge for exposure to a US insurer that will ``offset'' an anticipated 11.5 per cent rise in underlying profit.
It will also make a $82 million provision for exposure to an unnamed Australian property group, which analysts expect is Centro Properties, and a $46 million provision for an unnamed failed miner.
``In the first four months of trading, good performances from Personal and Asia, a turnaround in Institutional and solid returns from New Zealand have been overshadowed by higher credit costs on commercial lending,'' Chief Executive Mike Smith said.
The bank's surprise warning spooked investors, sending shares in the financial sector sharply lower. Australian banks do not have any direct US subprime mortgage exposure, but traders said ANZ's update shows that lenders are not immune from shock waves spreading around the world from the loan crisis.
Defaults on risky US housing mortgages have ended up costing investment banks including Citigroup Inc, Merrill Lynch & Company and UBS AG billions of dollars (euros) and have led to fears that companies, such as MBIA Inc and Ambac Financial Group Inc, that insure bonds based on the so-called subprime loans may fail.
ADVERTISEMENT
ANZ plunged almost 5 per cent to $22.74 in early trade. ANZ reported a net profit of $3.8 billion for the year ended September 30, 2007. Analysts on average forecast a profit of $4 billion for the 2008 financial year, according to Thomson One Analytics. Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
