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Tuesday, January 30, 2007

ANZ and Westpac make huge profits under Reserve Bank's monetary policy

In light of continued interest rate rises by the Reserve Bank of Fiji in the last two years, the two largest banks in Fiji, ANZ Banking Group Limited and Westpac Banking Corporation, have made record profits for their financial years ending 30 September 2006.

In a disclosure statement published a few days ago, ANZ Bank reported net profit after tax of F$42.9 million while Westpac reported net profit after tax at F$30.2 million, a total of F$73.1 million for the two banks.

Whilst interest rates on deposit and deposit products have been on the rise in line with the Reserve Bank's monetary policy settings, the banks appear to have made the bulk of their income from substantial increases in interest received on loans they have made. ANZ recorded a F$25.7 million or 49.8% increase in interest income to F$77.3 million in 1996, from F$51.6 million a year earlier. This, when interest paid on deposits rose by F$10.2 million. Westpac, on the other hand, reported a F$10.5 million or 23.8% increase in interest income to F$54.8 million in 1996, from $44.2 million a year earlier. Westpac's interest paid on deposits rose by F$7 million in 1996.

On fee income, ANZ registered a reduction of F$1.4 million while Westpac recorded an increase of F$3.2 million for 1996.

Check out our next post for what lessons/conclusions we can draw from the banks' financial results.

[Another two banks to publish their results next will be Colonial National Bank and the former Habib Bank. This will be around April. Let's keep a lookout for those disclosure statements when they come out.]

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