ANZ profits hit by market woes: Economy roundup

ANZ Bank says anticipated profit growth for 2008 will be cancelled out by increased costs associated with the international credit squeeze.

ANZ today told markets that it has made provision for potential losses of up to $200 million associated with its exposure to US monoline bond insurer ACA Capital Holdings.

In combination with higher costs of borrowing created by tighter financial market conditions, the losses will “offset” expected 11.5% profit growth for 2008, ANZ chief executive Michael Smith said at a briefing yesterday.

Smith said the upheaval in global debt markets “is a financial services bloodbath”, and credit costs will be well above underlying earnings growth.

ANZ Bank shares have fallen 5.14% on the announcement to $22.70 at 12.40pm.

At the same time the broader market is also down, with the S&P/ASX200 dropping 0.6% on Friday’s close to 5574.7.

And tourist numbers held steady in January, with Australian Bureau of Statistics figures showing the number of short-stay visitor arrivals dropping by 200 people from December 2007 to 469,200.