The ANZ announced a 24 per cent slump in its first half cash earnings and cut its dividend by 7 per cent, flagging payouts will return to more conservative and sustainable levels.

Key points: Cash earnings, net profit drop in six months to March

Cash earnings, net profit drop in six months to March ANZ hit with $717 million charge

ANZ hit with $717 million charge CEO says bank aiming for dividend payout ratio of 60-65%

The cash profit — the bank's preferred measure stripping out one-off items — came in at $2.8 billion, well below the consensus forecast of $3.6 billion.

Net profit for the first half was $2.7 billion, a 22 per cent decline on the $3.5 billion reported this time last year.

The announcement follows the disappointing $3.9 billion first-half profit Westpac posted yesterday.

ANZ's bottom line was hit by a $717 million charge that the bank said was "primarily related to initiatives to reposition the Group for stronger profit … growth in the future."

The charge includes changes to accounting practices, which cost $441 million, a $260 million impairment on its investment in Malaysia's AmBank, and $100 million in restructuring costs.

The fact that the dividend fell was not entirely surprising, but the magnitude of the 7 per cent cut to 80 cents a share was far deeper than analysts had forecast.

It is the first time since the global financial crisis that the bank has cut its dividend.

ANZ chief executive Shayne Elliott said the cut was a move to gradually consolidate the bank's dividend payout ratio within its historic range of 60–65 per cent of annual cash profit, which provides "a conservative, sustainable and fully franked dividend base for the future".

The bank had previously been paying out 84 per cent of cash earnings to its shareholders as dividends.

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"This setting better reflects the changed banking environment in which we operate and the greater demands for capital," Mr Elliott said.

"This result reflects a challenging period for banking and we have taken the opportunity to move decisively and adapt to the changing environment by building a simpler, better capitalised and more balanced bank."

Gross impaired assets were $2.9 billion, up 6 per cent, with new impaired assets flat compared to the prior half.

The total provision charge for bad and doubtful debts of $918 million was in line with the bank's disclosure last month of the hit it had taken from a number of large institutional loans that were in trouble.

"While the overall credit environment remains broadly stable, ANZ has continued to see pockets of weakness associated with low commodity prices in the resources sector and in related industries," Mr Elliott said.

'A simpler, better capitalised and more agile bank'

Stripping out the $700 million worth of adjustments, charges and write-downs, the profit was flat and only just below consensus forecasts.

Over the year underlying revenue rose only 2 per cent, while costs were down 1 per cent.

Morgan Stanley banking analyst Richard Wiles said the pleasing aspect of the result was as the incoming chief executive, Mr Elliott had taken some decisive steps to "create a simpler, better capitalised and more agile bank".

Mr Wiles said the new payout range looked sustainable, but dividends could fall even further if profits do not recover next year.

Investors appeared to support the change in direction and at midday (AEDT) ANZ shares were up almost 3 per cent to $24.44.