Boom time for Australian bank

Australians' free-spending habits have pushed profits at Australia's fourth largest lender up to record levels.

Australia and New Zealand Bank (ANZ) saw its net income - before one-off costs - shoot up 16% in the year to September to A$2.2bn ( ).

The increase, it said, was partly due to the surge in its business handling the affairs of wealthy private clients.

But like its fellow lenders, ANZ has done very well out of the massive surge in credit card debt, fed by a booming economy and interest rates at 30-year lows.

The boom years

The bank's performance was well ahead of forecasts, which had expected a 10% boost to profits over last year.

But the growth in consumer spending - the engine keeping economies around the world above water as the downturn persists - meant the second half of the year produced record profits, up 30% on the same period last year.

The booming Australian housing market also contributed to performance, the bank said.

But chief executive John McFarlane was at pains to warn that the housing explosion was coming to an end.

"The housing market is overheating and is prone to decline," he said, although he said an upswing in business credit might fill in some of the gap.

So far banks like ANZ and rivals National Australia Bank have been protected from the bad international loan problems which have beset peers in the US and Europe by the strong home economy, growing at about 4% a year.

ANZ shares rose 2% in morning trading.