By Paulina Duran
SYDNEY (Reuters) - Australia's No. 3 lender Australia and New Zealand Banking Group Ltd (AX:ANZ) on Thursday posted an 18 percent jump in annual cash profit, bouncing back from the previous year's slump as it offset soft revenue with cost cuts and improvement in bad debts.
Cash profit, which excludes various one-off items, was A$6.94 billion (4.03 billion pounds) for the year ended Sept. 30, compared with A$5.89 billion in the prior year. The bank's statutory net profit rose 12 percent to A$6.41 billion, slightly below the A$6.87 billion average estimate of nine analysts surveyed by Thomson Reuters I/B/E/S.
The profit report was "compositionally a weaker-than-expected result, with soft revenues offset by low bad debts," Credit Suisse (SIX:CSGN) analysts said in a note to clients.
"Soft revenue is a negative read-through for the sector, but also made worse by ANZ-specific factors," they added.
Operating income fell 1 percent for the year, to A$20.48 billion, while expenses fell 9 percent, ANZ said.
In the prior-year period, the bank recorded its weakest profit in five years as a result of A$1.1 billion in restructuring charges and a spike in bad debts.
On Thursday, the bank said its final dividend would be flat, at 80 cents per share.
"For the industry, the first thing people want to focus on at this part of the cycle is revenue growth or the lack thereof," ANZ Chief Executive Officer Shayne Elliott said in an internal interview published by the ASX.
"The reality is it is hard out there (and) revenue growth is a little bit harder to come by," he added.
ANZ said last week it sold a stake in Philippines-based Metrobank Card Corporation to Metrobank, and split its wealth management business to sell the pension unit to IOOF Holdings (AX:IFL) for A$975 million.
Those moves came amid a broader trend of Australian banks quitting non-core and scandal-hit divisions to boost capital.
ANZ's common equity Tier-1 capital ratio at the end of September rose to 10.6 percent from 9.6 percent a year earlier, marginally above the Australian Prudential (LON:PRU) Regulation Authority's target of at least 10.5 percent.
The net interest margin, or the difference between what a bank pays to borrow money and what it charges customers for loans, slipped by eight percentage points, weighed by a new mortgage tax.