Changes to how ANZ Bank capitalises its software resulted in a full-year hit of $522 million and contributed to an 18 percent drop in the bank's cash profit.
Releasing its results for fiscal 2016 today, ANZ reported that its cash profit of $5.9 billion had been dragged down in part by a $522 million impact from costs associated with software capitalisation.
At the bank's half-year results in May, ANZ announced it had lifted the threshold on software capitalisation to $20 million and was directly expensing more project-related costs in order to give smaller items of software shorter and more useful lives "in the digital world".
It warned that the change would mean higher software expenses in the immediate term but lower amortisation charges in future periods.
The $522 million software capitalisation impact for the full-year represented the largest slice of the bank's $1 billion worth of specified items.
The bulk of the hit was experienced in the first half of the year, when costs of capitalised software came in at $441 million post tax.
The move has brought ANZ's capitalised software balance down from a peak of $2.9 billion in FY15 to to $2.2 billion this financial year.
Application of the software changes also added $370 million to the bank's operating expenses for the year, through software development costs that previously would have been capitalised and amortised in future reporting periods.
The change has also had the effect of "driving more discplined commercial decisions" across the bank, ANZ said.