ANZ blames COVID-19 pandemic for 40% plummet in FY20 net profit

The company, however, was still able to spare AU$170 million to invest in technology infrastructure and AU$200 million in digital and data.
Written by Aimee Chanthadavong, Contributor

The Australia and New Zealand Banking Corporation (ANZ) has reported its statutory net profit after tax for the full year to 30 September 2020 came in at AU$3.58 billion, down 40% from last year's AU$5.95 billion.

In terms of cash profit, the bank posted AU$3.76 billion, which was down 42% on the previous year.

The bank blamed the COVID-19 pandemic for the sharp downturn, elaborating that it was dragged down due to AU$2.74 billion worth of "credit impairment charges", a huge difference from last year's impairment of AU$795 million.

"We could never have forecast 2020, a year that started with devastating bushfires in Australia and unwound with the waves of a pandemic that continues today. While we still cannot predict its course, we remain confident we can deal with its impacts," ANZ boss Shayne Elliot said.

"As a bank, we entered 2020 in robust condition. We have a strong balance sheet with record levels of capital and liquidity as well as provisions for potential future losses. We want our customers to know we will continue to do all we can to support them through the tough times."

As part of its FY20 financial statement, the group amended the application of its software write-down policy to "reflect the shorter useful life of various types of software, including regulatory and compliance-focused assets and purchased assets". These changes led to accelerated software amortisation of AU$138 million after tax during the September 2020 half year.

"These changes reflect the group's rapidly changing technology and business needs and ongoing reinvestments in purchased and internally developed software to ensure asset remains fit for purpose," the blue bank stated.

For the full year, a total of AU$170 million was invested in technology infrastructure, and AU$200 million in digital and data.

"We have invested in future growth opportunities, we have reshaped how we serve customers, and we are using our data capability to guide our decisions," Elliot said.

He continued, adding that while times were challenging, the bank remained optimistic about its outlook.

"While we are not managing the business expecting things to return to the way they were before the pandemic, nor are we sitting idle waiting for the next event to happen to us, ANZ is well placed to respond to the opportunities that are emerging as a result of accelerated structural shifts in the economy," he said.

The results and messaging are not too dissimilar to what the blue bank indicated during its half-year results where it reported a 51% drop in statutory net profit for the first half of 2020 to AU$1.55 billion. 

Last week, ANZ revealed that the company turned to Red Hat a year ago for help to bring its internet banking proof of concept to life.

ANZ has now migrated 30% of its traffic to the platform and within the first hour of go-live, it processed around AU$2.9 billion worth of payments.

Tech area lead for ANZ's digital arm Raghavendra Bhat said the bank's expectation is to complete about 80% of the traffic transition onto the new platform by November, with complete transition by March. 

Elsewhere in the payments landscape, Verifone has partnered with Centrepay to deliver a payment platform that can process contactless payments, accept digital assets, redeem gift cards, carry out surveys, and utilise loyalty programs using a single payment device.

According to the companies, the payment application relies on QR codes and near-field communication technology to enable transactions with Centrepay-supported mobile wallets.

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