ANZ.NZX - Anyone holding?

[Bobdn]

NZD is dropping like a stone against the AUD. Yay.

[tim23]

One of my few bright spots for the week happy holder swapped half my bonds for shares in march so far so good!

[Bobdn]

Nice one Tim, huge increase since March

[huxley]

ANZ group to sell some retail banking franchises in SE Asia. Focusing on its institutional business instead..

http://phx.corporate-ir.net/external...34675478989927

[Bobdn]

Only bright spot for me today is ANZ. Good to see the 80 cent dividend.

[Biscuit]

Only bright spot for me today is ANZ. Good to see the 80 cent dividend.

Geez they swamp you with info eh? I am going to be reading into the night. Never seen a company so keen to compare second half with first half results, must be trying to tell us something?

[macduffy]

Normal procedure with the banks to compare the two halves but particularly interesting in view of the many abnormal, one-off? items involved here.

They did a good job in preparing the market for the result - one of the few green spots in a sea of red today. Under-promise and (slightly) over-deliver!

[winner69]

Don't know whether this is more than just interesting

Enough reason for yanks to short aussie banks

@Hedgeye: Bubble in Australian and Canadian banks?
-The assets of Canada & Australia's top 4 banks are 2X GDP.
-In the US, ba… https://t.co/2l79WZASnt

[macduffy]

There's a huge difference between Aust top 4 banks and those of the USA. In Australia, the "others" would barely muster 10% of the business between them, I would think?

Not so in the USA where the top 4, although big and powerful, are challenged by a host of other players with a significant share of the overall banking business.

[Snoopy]

The December 15th 2015 UDC Prospectus release, at last gets the details of what happened at UDC during FY2015 out into the public arena.

https://www.udc.co.nz/pdf/UDC_Prospectus_69.pdf

The 'profit before tax' is listed as $79.323m (p34). But this includes a provision for credit impairment of $10.427m which I would remove to get the picture of ongoing operational performance. So I get EBT of $89.750m.

Now go to note 4 (p43) on interest expense. There is underlying interest over and above what is due to debenture holders of $18.951m.

So total underlying EBIT = $89.750m + $18.951m = $108.701m

Now turn to page 45 (note 6) and you will see total net loans and advances of: $2,347.163m

So the operating margin based on the end of year loan balance book is:

$108.701m/$2,347.163m = 4.63%

A significant improvement on FY2014 and it continues the improvement from a 3.87% margin in FY2012

Can't find a 'prospectus 70' that details the performance of UDC over FY2016.

It also seems that the previous links to past year prospectuses that I have given have been wiped by the company. However, some relevant financial statements may be found here:

https://www.udc.co.nz/investing/important-documents

Looking at

https://www.udc.co.nz/pdf/Full-Finan...ments-2016.pdf

The 'profit before tax' is listed as $81.417m (p3). But this includes a provision for credit impairment of $7.418m which I would remove to get the picture of ongoing operational performance. So I get EBT of $88.835m.

Now go to note 3 (p10) on interest expense. There is underlying interest over and above what is due to debenture holders of $18.398m.

So total underlying EBIT = $88.835m + $18.398m = $107.233m (near flat, slightly down on FY2015)

Now turn to page 12 (note 6) and you will see total net loans and advances of: $2,573.030m (nearly a 10% rise on FY2015). Yet despite the big rise in business, underlying operating profit has actually decreased.

The operating margin based on the end of year loan balance book is:

$107.233m/$2,573.030m = 4.17%

Put in context, the operating margin over the last few years has gone like this:

FY2016	4.17%
FY2015	4.63%
FY2014	4.41%
FY2013	4.02%
FY2012	3.87%

I am always suspicious of companies that try to obliterate their financial history. In this instance you can see why. The long trend of increasing margins has ended. It isn't surprising that UDC management don't want this fact widely broadcast to their existing debenture holders. The 8th December 2016 news release from UDC trumpeted the 'record FY2016 profit' only and made no mention of the shrinking operating margins.

With a likely sale of UDC from under the ANZ umbrella, S&P have reduced UDC's long term credit rating by three notches from AA- to A-. This is still better than the likes of Heartland Bank. But I think it is fair to say that UDC have lost their long held 'premium' over other finance company players in the NZ finance market. Something to reflect on for long term UDC debenture holders?

SNOOPY