ANZ ‘truly international’

Press, 7 February 1986, Page 8

ANZ ‘truly international’

Australian and New Zealand Banking Group, Ltd, has become a truly international bank through its acquisition of Grindlays Bank, the Chairman, Sir William Vines, says in the group’s annual report for the year ended September 30. The group profit, before extraordinary items, of sAust32o.2 million reflected increased contributions from offshore operations, partly because of favourable exchange rate movements.

The profit represented a return of 16.2 per cent on average shareholders’ funds, increased by the one-for-four rights issue which raised sAust22s million in September, 1984. The earnings rate in 1984 was 18.6 per cent. The group received its first contribution from the Grindlays group, amounting to sAustll.7 million. This result was depressed by additional doubtful debt provisions made in segments of the lending portfolio adversely affected by economic and business conditions;

However, Sir William said that considerable progress had been made with the integration and nationalisation of ANZ and Grindlays operations around the world. Although Grindlays’ profit return for the year was below that of the ANZ group as a whole, benefits have begun to flow to the group and are expected to increase in future years, he said.\ .

As announced, the recommended final dividend of 16c a share will make a total payment of

31c for the year, compared with 30c for the previous yean the 31 per cent dividend is covered more than three times.

Other highlights for the year were:

• Regional administrations were established in London, New York, and Hong Kong.

• Establishment of a combined merchant banking operation under the name of ANZ Capital Markets Corporation, Ltd, after the acquisitions of minority shareholdings in AIFC and Delfui-BNY, and merging them with Grindlays Australia, Ltd.

® Establishment of integrated investment banking and stockbroking operations in London, to trade as ANZ Merchant Bank Limited from January 1986. This combines the activities of Grindlays’ Investment Bank and Ca-pel-Cure Myers, stockbrokers.

• Transaction Banking, ANZ’s electronic teller terminal value capture system, operational in approximately 900 branches. © Esanda group expanded asset base by 21.0 per cent.

® Investment and Trust Services division established to co-ordinate the marketing of the Group’s investment and trust subsidiaries and services. Total funds under management exceed $4OOO million.

© ANZ lead managed the $3BO million Amadeus Basin to Darwin gas pipeline.

© Incorporation of Daiwa-ANZ International Limited in which ANZ has a 50 per cent interest and

which will provide Japanese sourced capital market and securities facilities to Australian corporations.

® Acquisition in New Zealand of a building society (UDC Endeavour Building Society) and a 50 per cent interest in Metropolitan Life Assurance Company by the Group’s New Zealand subsidiary. © Acquisition of operations of Barclays Bank pic in Fiji and Vanuatu. ® Australian Trading Bank deposits increased by 21.2 per cent, and Saving Bank deposits increased by 6.3 per cent. Referring to New Zealand operations, the directors say that the performance of the 75 per cent owned New Zealand subsidiary continues to be very satisfactory. •

Its result was achieved against a background of a rapidly changing banking and financial environment In December, 1984, new Government liquidity management arrangements were established, and foreign exchange controls, which had been in place since 1938, were abolished. Further deregulatory moves included the removal of the statutory reserve assets ratio and, significantly,■, the floating of the New Zealand dollar in March, 1985. These moves followed measures in 1984 to remove institutional credit growth guidelines and interest rate controls.

The Bank agrees with the increasing reliance being placed on market mechanisms to achieve monetary control, and particularly welcomes the liberalisation of the finance sector. Effectively this has meant that trading banks have been free for the first time in many years to compete across all deposit maturities, and to

offer a full range of domestic and international financial services.

Government monetary policy has focused on controlling the growth of a primary liquidity base and thus influence the wider monetary aggregates. However, both money supply (M 3 and private sector credit have risen strongly in 1985, partly reflecting the increasing share of banks in the financial system. Interest rates have reached very high levels, resulting mainly from the heavy government stock tender programme. It also reflects • Increased competition for deposits and a strong demand for funds for both business and personal use as the economy continued to exhibit steady growth through the first half of 1985.

Bank lending rates Increased throughout the year, reflecting the rising deposit costs and strong pressure on margins. By the September, 1985, quarter it was evident that the high cost of finance was impacting On both personal and business spending decisions, thus reducing the level of economic activity. ANZ deposits rose 23 per cent during the year, while lending increased by 22 per cent

The wholly-owned finance company UDC Group Holdings, Ltd, experienced strong growth in business demand amid a strong competitive environment and made a profit contribution slightly reduced from the previous year.

In November, 1984, the Permanent Investment Building Society of Canterbury was purchased by UDC. Subsequently renamed UDC Endeavour Building Society, the acquisition forms part of an initiative by UDC to develop personal sector business. In July, 1985, the Bank acquired 50 per cent of the shareholding of Metropolitan Life Assurance Company of N.Z. Ltd.