From BBY:
ANZ announced $1.73B in cash earnings for 1Q14 which was $100M higher than our expectation. The difference is fully explained by a lower bad debt charge. It was $191M in 1Q14 compared to a quarterly average of $300M in FY13.
The lower bad debt charge was consistent with lower individual provisions and lower impaired assets.
The net interest margin continues to fall and asset growth continues to be strong. Total exposure at default increased by 4% in the 6 months to 31/12/13.
The company expects income growth to be at least 4% this year with expense growth being 2%, assuming constant FX rates. The income growth target seems reasonable but the expense one looks optimistic.
Summary: this should be a good day for banks – up a few %, with ANZ putting their nose in front. Our earnings upgrade will be approx. $300M after tax for FY14 which is almost 5% and it will be slightly less in the following years.
