The conflict in the Middle East is creating greater economic uncertainty, particularly for customers, one of Australia’s big four banks says.
The warning from ANZ Bank came as the fourth-ranked top institution posted a flat bottom line first-half net profit of $3.65 billion.
The bank’s preferred cash profit metric, excluding significant items, jumped 14 per cent to $3.78 billion year-on-year and rose a massive 70 per cent from the final quarter of its financial year.
ANZ is the first of the three major banks to report its earnings for the three months to March 31 this profits season. Commonwealth Bank will post is third quarter results later this month.
All are being closely watched for signals on how customers are weathering a high interest rate and high inflation environment.
ANZ’s result was boosted by a nine per cent cut in operating expenses, as operating income remained flat at $11.2 billion, excluding one-offs.
Chief executive Nuno Matos said the bank, which has a large institutional trading arm, believed the world was now more complex due to the war in the Middle East, which began on February 28.
“As Australia’s most international bank we have a front-row seat to global developments,” he said on Friday.
“Much of the potential impact of this crisis remains ahead of us, but the longer the flow of oil is constrained, the greater the chance the crisis shifts from being primarily an inflation challenge, to much more a supply and growth challenge.”
On Thursday during Asian trading, the price of Brent crude oil – the global benchmark – jumped above $US125 a barrel as the Strait of Hormuz, a key passageway for about 20 per cent of the world’s oil supplies, remains closed.
Before the war it was trading around $US60. On Friday morning it was around $US110.
High oil prices are translating to higher fuel costs for the Australian community and businesses.
At the same, domestic inflation is spiking and interest rates as set by the central bank are due to rise again this month.
“Likewise, in both Australia and New Zealand, households entered this period with generally strong balance sheets and high savings buffers,” Mr Matos said.
“We have not seen any material increase in new customers entering hardship or receiving assistance.
“However, we recognise that some individuals and businesses are navigating these challenging circumstances.”
ANZ will pay shareholders an interim dividend of 83 cents per share, in line with last year.
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