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Australia and New Zealand Banking Group Limited (ANZ) posted a statutory profit of $2.94 billion for the year ended 30 September 2009, down 11% on the prior year. The bank said it was facing a number of headwinds in 2010 including a stronger Australian Dollar and a less favourable market environment.

Looking at the results, ANZ said underlying profit for the year increased 10% on FY08 to $3.77 billion, which reflected the net impact on statutory profit of $829 million from one-off items.

The company reported a 17% increase in revenue, however this was countered by a 12% rise in costs due to the expansion in the Asia Pacific region, remediation and growth in institutional and group transformation.

Statutory EPS fell 23%, while net interest margin increased 16 basis points with higher funding costs partially offsetting improvements in asset margins.

ANZ said profit was up 13% and 81% in Australia and the Asia Pacific Europe & Americas region respectively, but down in New Zealand by 34%. Institutional division profit was up 82% following a 37% rise in income, driven by Global Markets business.

The bank also declared a final dividend of 56c per share, down 25% on the previous year.

CEO, Mike Smith, said the bank had made good progress in delivering priorities it set out in December 2007.

“We’ve made good progress with the turnaround of Institutional, revenue is growing faster than costs, we are delivering excellent results in Asia and our largest franchise - Australia - is performing well,” Mr Smith said.

“We’ve continued to focus on the key drivers for the Bank – maintaining our strong capital and liquidity position, ensuring we have adequate provision coverage, completing remediation in parts of the business and making investments that position ANZ for future growth.”

Mr Smith said he expects bad debts from highly leveraged entities and from the commercial sector and higher risk personal customers to continue into 2010.

”However given the resilience of the Australian economy, the stabilisation we are beginning to see in the New Zealand economy and the strength of the Asian economies, particularly China, we believe credit quality has now stabilised,” he said.

“It’s prudent however to be cautious. The global economy is still facing many difficulties and the Australian economy remains fragile.”

At the close of trade Wednesday, ANZ shares were trading at $23.35.

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