ANZ has started 2015 on a disappointing note, with its first quarter results generating concerns about the outlook for Australia's third largest bank.
The bank lifted its cash profit three per cent to $1.8 billion during the first three months of its 2015 financial year, while net profit was flat at $1.65 billion.
But investors were disappointed by a bigger-than-expected fall in the bank's net interest margin, as well as a mixed performance from its markets business.
CLSA's equity analyst Brian Johnson said bank-watchers would lower their full year earnings expectations for ANZ in the wake of the result.
"It's a disappointing result on the revenue side and it's a worse-than-peer result on the net interest margin result and the financial markets trading result is somewhat weaker," he told AAP.
"It's a very low quality result and people will be downgrading their earnings forecasts on the back of it."
ANZ shares sold off in response to the result, sliding 88 cents, or 2.5 per cent, to $34.99.
But ANZ chief executive Mike Smith said the result was a solid start to the bank's financial year in difficult trading conditions, with strong performances across its Australian, New Zealand and Asian divisions.
"Overall, ANZ is performing broadly in line with our expectations," he said.
"Our super regional strategy continues to provide us with growth options and we will also ensure our cloth is cut to suit the conditions."
The group's net interest margin - the profit it makes on loans - slipped six basis points during the quarter.
By comparison, the Commonwealth Bank's margin slipped two basis points during its first half, while National Australia Bank kept its margin flat.
ANZ attributed the slide to the impact of a weaker Australian dollar, plus the weak performance of its global markets division.
But OptionsXpress Mr Le Brun said the margin slide was also likely to be a reflection of tough competition for home loans among Australian banks.
"It really is a symptom of the extremely fierce competition in the home loan division," he said.
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