‘Ahead of us’: ANZ boss warns of future impact of Iran war

ANZ Bank chief executive Nuno Matos has sounded a warning over the economic risks that would arise from a prolonged conflict in the Middle East, as the bank delivered $3.8 billion in cash profits for its first half.

ANZ’s results on Friday said its March-half profits were 6 per cent higher than the same half last year. The banking giant, which is kicking off a round of profit results from Australian banks, said the war had not sparked an increase in financial distress among its business and household customers.

Matos noted ANZ is the most international of Australia’s big four banks, giving it a “front-row seat to global developments,” and he said its customers were entering the energy crisis sparked by the Iran war in a strong position.

Households were starting to feel some impact from higher transport costs, Matos said, and some would therefore have less money for non-essential spending. He said hardship levels had not changed yet but it was also “too soon to say.”

Large corporate customers had plenty of cash and were well-prepared for a shock such as this, he said, but also said they would start “feeling more limitations” if the energy crisis continued.

“Much of the potential impact of this crisis remains ahead of us, but the longer the flow of oil is constrained, the greater the chance the crisis shifts from being primarily an inflation challenge, to much more a supply and growth challenge,” Matos said.

“Our corporate customers have been preparing for shocks, building capital and liquidity, maintaining flexibility and improving supply chain resilience. As such, there has been no material change in the overall borrowing behaviour of our customers.”

ANZ’s results showed operating income was flat in the March half, compared with the September half, while its operating expenses dropped 9 per cent amid heavy job cuts. Bad debt charges were also slightly lower, which helped the bottom line.