SYDNEY (AP) — One of Australia's largest banks, ANZ Banking Group, on Wednesday posted a 10 percent increase in its first half profit to 2.92 billion Australian dollars ($3.02 billion) but warned margins in its Australian business were declining.
The Melbourne-based bank's net profit for the six months to March 31 was up from AU$2.66 billion in the previous corresponding period.
Analysts had expected a higher net profit of about AU$2.96 billion.
Australian banks proved resilient against the global economic downturn and remain among a handful of banks in the world to maintain a AA credit rating.
Net profit rose on improving results from the bank's operations in Asia, the Pacific, Europe and the United States, ANZ said.
"In Australia, we made market share gains and customer satisfaction remained strong," chief executive Mike Smith said in a statement.
"Our financial performance, however, was subdued, significantly impacted by declining margins and the structural shift that's occurred since the financial crisis with persistently lower demand for credit," he added.
Margins declined because of the competition for deposits in the Australian banking industry, higher costs for long-term funding, and low demand for loans from consumers and businesses, the bank said.
ANZ's net interest margin for the six months through March was 2.38 percent, down from 2.44 percent in the six months through September, 2011.
The bank made no comment on whether it would reduce its interest rates on loans, after the central bank on Tuesday cut the benchmark cash rate by half a percentage point to 3.75 percent due to the slowing Australian economy.
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