Updated May 01, 2018 10:47:06

Photo: ANZ is shrinking to grow, selling non-core assets including its scandal-prone financial planning businesses. (AAP: Sergio Dionisio)

ANZ's first-half profit has jumped 14 per cent to $3.3 billion as it pushes ahead with plans to dispose of its scandal-prone financial planning business and exit its investments in Asia.

Cash profit — the bank's preferred measure, which strips out one-off items — rose 4 per cent to $3.5 billion compared to a year ago and was in line with market expectations.

The big rethink on the bank's operations includes bailing out of the financial planning sector — which has been the focus of intense scrutiny at the banking royal commission — with its Aligned Dealer Groups business slated for sale to the non-bank wealth manager IOOF.

The ADG business warehoused platforms such as RI Advice and Millenium3, which are now facing the prospect of being charged with numerous breaches the corporations act.

In a statement released to the ASX, ANZ said it had so far budgeted for $50 million in legal costs arising from the commission but said it was, "unable to predict the outcome of the inquiry or its impact on either the bank or the broader industry".

Workforce cut by 10 per cent

Other non-banking operations that will be carved out include life insurance and the Australian Pensions and Investments business.

This follows the sale of ANZ's six retail and wealth businesses in Asia, including the Shanghai Rural Commercial Bank, which had been intended to establish ANZ's footprint in China.

In the past 12 months ANZ has slashed its workforce by almost 4,500, or almost 10 per cent.

ANZ chief executive Shayne Elliott said the strategy was in place to build a better balanced, better capitalised and simpler bank.

"We have increased the allocation of capital to our higher performing businesses, delivered on our simplification promise by divesting non-core assets, reducing product complexity and continued to reshape our workforce so we can better respond to changing market dynamics," Mr Elliott said.

Banks have failed the community

"We still have work to do … our aim is to grow a responsible and decent business for our clients and shareholders," Mr Elliott told an analyst briefing.

"The financial sector has suffered significant reputational damage."

Mr Elliott said banks had failed the community and there would be no delay in implementing the lessons learnt from the royal commission.

"We are making progress, but not enough [in respect to the commission's lessons]."

Mr Elliott said the roles mortgage brokers and financial planners had to change.

"This is not a time for incumbent thinking, it is a time for change."

Mr Elliott said the commission would also have significant impact on lending.

"Credit standards are tightening and credit growth is shrinking," he said.

Reasonable result

Morgan Stanley's Richard Wiles said it was a reasonable result in difficult circumstances.

Revenue fell 0.5 per cent, although the sale of unwanted business added 2 per cent to the bottom line.

The profit was also boosted with credit quality improving again as impairment charges on bad loans fell by $408 million over the half.

The sale of the Asian businesses help boost the bank's top shelf capital buffer to well above APRA's demands for an "unquestionably strong" balance sheet.

"We expect revenue growth for the second half of 2018 to continue to be constrained by intense competition as well as the impact of increased regulation," Mr Elliott said.

"Historically high levels of household debt and low wage growth will offset some of the positive impact of recent strong employment data, so consumers are likely to remain cautious."

The interim dividend was flat at 80 cents per share.

Topics: banking, company-news, stockmarket, australia

First posted May 01, 2018 08:27:06