ENP Newswire -
Release date- 12082014 - INVESTMENT IN LONG TERM STRATEGIC PRIORITIES DRIVES EARNINGS GROWTH.
Highlights of 2014
Statutory net profit after tax (NPAT) of
Cash NPAT of
Return on equity (cash basis) of 18.7 per cent an increase of 50 basis points (bpts);
Fully franked final dividend of
Group cost to income ratio improves 70 bpts to 42.9 per cent as productivity initiatives deliver tangible outcomes;
Strong organic capital growth increases both Common Equity Tier 1 (CET 1) Capital, on an
Strong Balance Sheet growth with Average interest earning assets up
Customer deposits up
The Group continues to invest in the future (
1Except where otherwise stated, all figures relate to the full year ended
2For an explanation of, and reconciliation between, Statutory and Cash NPAT refer to pages 2, 3 and 15 of the Group's Profit Announcement for the full year ended
3Comparative information has been restated to conform to presentation in the current period.
The Board declared a final dividend of
The Group's Dividend Reinvestment Plan (DRP) will continue to operate, but no discount will be applied to shares issued under the plan for this dividend. Given the Group's high level of CET 1 capital, the Board has decided to neutralise or minimise the dilutive impact of the DRP through an on-market share purchase and transfer to participants. The Group is also considering the issue of a Tier 1 capital instrument to replace PERLS V should markets remain receptive.
Commenting on the result, Group Chief Executive Officer,
'And as a 102 year-old company, we are always keeping an eye on the future. This year we have again struck a balance between the Group's short term and long term priorities. At the same time as delivering a 12 per cent increase in cash earnings, and a strong return on equity, we reinvested
Key components of the result include:
Continuing with the success of the customer focus strategy, the Group retained (for a period of 18 months) its position as number one in customer satisfaction (relative to peers) in its Australian retail banking business, while maintaining its leadership position in business customer satisfaction;
Group net interest income and other banking income increased by 8 and 4 per cent respectively in the banking businesses, with average interest earning assets up
Net interest margin (NIM) increased by 1 bpt to 2.14 per cent year on year with the positive impacts of a change in portfolio mix offset by a number of factors including an increase in liquid assets and increased pressure on lending and deposit pricing;
Wealth Management's earnings grew as average
Cash earnings grew in
Continuing progress was made in
The Group improved its cost to income ratio by 70 bpts, achieved in large part through the Group-wide productivity focus, which delivered savings of
In a benign credit environment, the ratio of cash loan impairment expense (LIE) to gross loans and acceptances improved 4 bpts (to 16 bpts) due to favourable loan loss experience and a reduction in individual provisioning requirements;
The Group invested
Conservative provisioning was maintained, with total provisions of
On-going organic capital generation delivered a Basel III CET1 (Internationally Harmonised) ratio of 12.1 per cent, up 110 bpts. The Group's CET 1 (APRA) also increased 110 bpts to 9.3 per cent; and
The Group remained one of only a limited number of global banks in the 'AA-' ratings category.
Strong deposit growth during the period has seen the Group satisfy a significant proportion of its funding requirements from customer deposits, with deposits now providing 64 per cent of total Group funding. During the year the Group took advantage of improving conditions in wholesale markets, issuing
Despite the continued benign credit environment and the improving macro-economic outlook, the Group remains cautious, maintaining a strong balance sheet with high levels of capital and provisioning. Liquidity portfolio was
Turning to the future,
'The past twelve months have also been a period of relative stability in the global economy although downside risks remain.'
'If the stability in global markets continues, gradual increases in consumer spending and demand for credit from businesses over the next year are likely, as long as budget discussions are progressed and there is a clear understanding of
'In terms of our own business settings, and economic policy, it is critical to take a long term view of the Australian economy. We will continue our focus on the future and building our priority capabilities: people, technology, productivity and strength. We will also actively support policies designed to build a sustainable Australian economy over the next decade.'
(1) Includes transactions, savings and investment average interest bearing deposits.
(2) During the year the Group successfully completed the internalisation of the management of
Appendix: Summary table of key financial information
Chart of 2014 annual results
(1) Comparative information has been reclassified to conform to presentation in the current year.
(2) Net Profit after income tax ('cash basis') - represents net profit after tax and non-controlling interests before
(3) Net Profit after income tax ('statutory basis') - represents net profit after tax and non-controlling interests,
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