ANZ’s Wealth Australia has reported a decrease in net funds management and insurance income as a result of adverse retail life claims experience.
The 2017 Annual Review showed a decrease of $163 million due to adverse retail life claims experience, and a one-off experience loss due to the exit of a group life insurance plan. This was partially offset by reinsurance profit share and favourable claims experience in Lenders Mortgage Insurance.
Funds management income decreased as a result of the strategy to rationalise the legacy portfolio to SmartChoice, which the bank said was a lower risk model. This was now complete.
“Operating expenses decreased due to productivity initiatives that resulted in a reduction in FTE (full-time equivalent), partially offset by inflation and higher regulatory compliance and remediation spend,” the review said.
This led to an $86 million decrease in cash profit from prior year, a reduction of 27 per cent.
The bank reduced full-time equivalent staff by four per cent, including a six per cent reduction in senior management as a result of a reshaping of the organisation.
There were now 44,896 full-time equivalent employees, down from 46,554 in 2016.
The bank’s statutory profit was $6.4 billion, up 12 per cent, while cash profit (which excludes non-core items from statutory profit), was $6.9 billion, up 18 per cent.
The final dividend of 80 cents per share brought the total to 160 cents per share fully franked for the year, unchanged from 2016.
“This reflects a dividend payout ratio of 68 per cent of cash profit with $4.6 billion in dividends paid to shareholders, moving ANZ closer to our target fully franked payout ratio of 60-65 per cent of cash profit,” the review said.