* H1 gains driven by bad debt provision for refund
* Hike interim dividends, consider more payouts
* Set target to reduce annual costs to A $ 8 billion by 2023
* Australian banks are recovering fast from the COVID slump (Added CEO quotes, cost reduction goals, stock transfers)
SYDNEY, May 5 (Reuters) – The Australian and New Zealand Banking Group (ANZ) said it would consider a return on equity to shareholders as first-half profit more than doubled, driven by the release of funds previously set aside to cover potential COVID. -19 losses.
Australian banks are recovering from the pandemic earlier than their global counterparts, as the country’s success in controlling the virus combined with near-zero interest rates and high government spending boosts consumer confidence and the housing market.
As a result, ANZ and its larger domestic counterparts have rewritten provisions since February, were among the first banks in the world to forgo reserves that hurt their profits last year.
ANZ’s cash profit increased to A $ 2.99 billion ($ 2.3 billion) for the six months ended March 31 from A $ 1.41 billion last year. This released the A $ 491 million that previously charged the provision of bad debts to profit for half a year, a sharp rebound from the A $ 1.67 billion cost needed last year.
Australia’s fourth-largest bank said its large capital position meant it could now increase its interim dividend to 70 cents a share, from 25 cents last year, and would assess an option to return about A $ 7 billion in additional capital to investors.
“We are sitting at record capital levels. The money is of no use to us other than a sense of security and caution in times of uncertainty, ”said Chief Executive Officer Shayne Elliott.
He said, however, that the bank was still approaching the decision with caution.
“We need greater clarity about the economy,” Elliott said on the revenue call, noting the government’s COVID-19 wage subsidy expired just five weeks ago and banks are still studying their impact on unemployment.
Australia’s second-largest lender Westpac Banking Corp reported earlier this week first-half cash earnings more than tripled from a year ago, also boosted by the release of previously issued bad debt terms.
“The benefits of lowering the credit score are significantly better than we expected. “Many markets are happy with this result, and many will result in a further increase in confidence in the prospects of big banks,” said Azib Khan, a banking analyst at Morgans Financial.
The National Australia Bank reports interim earnings on Thursday, while the largest of Australia’s so-called Big Four, the Commonwealth Bank of Australia (CBA), has a different fiscal calendar and updates markets on its first quarter results next week.
ANZ said it would aim to reduce costs to A $ 8 billion per year by fiscal 2023, a year earlier than Westpac’s similar goal.
Shares of ANZ, which in the past two and a half months have rallied over their Big Four rivals, fell 1.8% on Wednesday. Analysts said as investors switched to CBA, it was slow over the same period, it raised its stake by 2.3%.
Melbourne-based ANZ’s common equity tier 1 (CET1) ratio, the main measure of cash reserves, rose to 12.4% at end-March from 11.3% on Sept. 30 ($ 1 = Australian $ 1.2960)
Reporting by Paulina Duran in Sydney; Additional reporting by Sameer Manekar in Bengaluru; Edited by Sam Holmes, Stephen Coates and Muralikumar Anantharaman