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ANZ Banking Group shares pulled back from a record high after the lender reporter a half-yearly profit that came in below expectations.

The bank reported a 23 per cent increase in cash profit (the preferred measure in Australia) from a year ago to A$3.41bn ($2.57bn) for the six months ended March 31, but this was below analysts’ expectations for A$3.5bn

Return on equity, a key measure of bank profitability, rose to 12.5 per cent from 11.2 per cent a year ago. The company kept its dividend flat at 80 Australian cents per share.

There were some encouraging signs on the costs front, while the lender’s credit impairment charge as a proportion of gross loans was down to 0.25 per cent in its first half, from 0.32 per cent a year earlier.

Despite the sale of a number of its Asia-based business over the past six months, ANZ’s common equity Tier 1 ratio improved by a relatively marginal 0.3 percentage points to 10.1 per cent.

Shayne Elliott, chief executive, said the reshaping of the bank’s business over the past year had delivered “strong outcomes for customers and shareholders” and had laid the foundation for future growth and better returns. He continued:

The environment for banking remains constrained with intense competition pressure on margins, subdued lending growth, rapidly changing customer expectations and increasing regulation. The provision charge has improved and the outlook for the second half remains broadly neutral.

ANZ shares were down 2.7 per cent from Monday’s record high of A$32.76. Other Australian banks were all down, with National Australia Bank off 0.9 per cent, Commonwealth Bank down 1 per cent and Westpac sliding 1.3 per cent.

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