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Discussion and Analysis |
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For the financial year ended 31 March 2001 |
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Discussion and analysis of Profit and Loss Statement |
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The economic entity achieved a net profit after income tax attributable to ordinary equityholders of $242.0 million, a 15.1% increase on last year. The after tax return on average ordinary shareholders’ funds was 27.1%, slightly down on last year (28.1%). |
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Operating income |
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Operating income increased by $269.4 million (22.7%) to $1,455.9 million. The growth occurred across the majority of business divisions and was assisted in part by the first full year contribution from businesses acquired from BTIB on 31 July 1999. |
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Net interest and similar income decreased by $7.7 million (4.1%) to $179.1 million. The decline was due mainly to funding costs associated with the growth of the Equity Markets Group, offset by margin income on an increased loan book. |
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Trading income increased by $161.0 million (60.0%) to $429.1 million. This was due primarily to Equity Markets’ activities in Asia and Europe and full year contributions from former BTIB businesses in the Treasury and Commodities Group such as agricultural commodities and debt markets. |
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Fee and commission income increased by $194.0 million (29.3%) to $855.4 million. This was driven by all businesses in the Asset and Infrastructure Group, the advisory activities in the Corporate Advisory and Institutional Stockbroking Group and securitisation and property fees in the Banking and Property Group. |
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Other operating income is a net expense of $7.8 million this year compared to net income of $66.2 million for last year. The net expense in the current year arose primarily because of the increase in the provision for uncertainties based upon growth in the economic entity’s risk weighted assets. The net income last year arose primarily because of the partial realisation of the investment in LookSmart Inc. |
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Operating expenses increased by $245.5 million (27.7%) to $1,130.6 million. This is largely attributable to an increase in the average level of staff from 3,595 to 4,269 (18.7%), an increase in the Bank’s premises, increased costs associated with expanding offshore operations and external professional fees associated with increased transaction flow. |
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Income tax |
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Income tax attributable to operating profits attributable to ordinary equityholders has declined from 27.3% of operating profit attributable to ordinary equityholders in 2000 to 18.1% in 2001. The fall in the effective tax rate is due mainly to increased offshore earnings which are subject to lower rates of tax and a lower corporate tax rate of 34% for the second half of the financial year. |
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Earnings per share |
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Earnings per share grew to 138.88 cents from 124.33 cents in 2000. Increased earnings were partially offset by an increase in the weighted average number of shares on issue. |
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Dividend on ordinary shares |
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The Board has resolved to pay a final cash dividend of 52 cents per fully paid ordinary share (2000: 52 cents per share) in respect of the year to 31 March 2001. The total annual dividend is 93 cents per share (2000: 86 cents per share). |
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The interim dividend paid during the year was 70% franked at 34%. Dividends provided as at 31 March 2001 are 70% franked at 30%. |
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The extent of franking future dividends is uncertain and dependent upon the Bank’s Australian taxable income. Future dividends are expected to be franked around current levels. |
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Discussion and analysis of Balance Sheet |
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Shareholders’ equity increased by $98.7 million (8%) to $1.4 billion. This is due to the issue of new shares following the exercise of options, partially offset by the on-market buyback of $36.0 million shares that occurred in December 2000 and growth in retained earnings. |
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Total capital adequacy ratio at 31 March 2001 decreased from 18.4% to 16.0% with the Tier 1 capital ratio also decreasing from 14.5% to 12.9%. The ratios were primarily impacted by the $1.3 billion growth in risk weighted assets. |
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Total assets increased by $4.5 billion (19.1%) to $27.8 billion. This was primarily due to large revaluations on the foreign currency denominated instruments held by the economic entity, increases in loan assets and increased securities purchased under resale agreement activity in the Equity Markets Group and the debt markets business in the Treasury and Commodities Group. |
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Loan assets increased by $1.3 billion (19.1%) to $7.8 billion due to growth in the securitisation, mortgage and property finance businesses in the Banking and Property Group and the finance leasing business in the Asset and Infrastructure Group. |
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Credit ratings continue to reflect strong prudential controls and diversified earnings. All external ratings were maintained during the financial year. |
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Discussion and analysis of Cash Flow Statement |
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Net cash outflows from operating activities were $169.0 million. The outflow was primarily due to policy payments by the Life Company exceeding premiums received, outflows from the increase in loan assets and increased trading activities. |
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Net cash inflows from investing activities was $290.2 million. The inflow was primarily due to the sale of a number of controlled entities and realisations of investment assets by the Life Company to fund payments to policyholders. |
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Net cash outflows from financing activities was $264.6 million. The outflow was primarily due to the repayment of subordinated debt, dividends and distributions and the share buyback, partially offset by the issue of ordinary shares from the exercise of employee options. |
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