By Alice Uribe

SYDNEY--Australia & New Zealand Banking Group Ltd. said it will pay an interim dividend after initially deferring the decision in April because of uncertain economic conditions.

The lender on Wednesday said that unaudited statutory profit for its fiscal third quarter ended June 30 was 1.33 billion Australian dollars ($963.5 million), higher than an average of A$773 million for the previous two quarters.

ANZ also reported a third-quarter unaudited cash profit of A$1.50 billion, higher than the quarterly average of A$707 million.

"Our performance during these difficult times demonstrates the strength of our portfolio as we balance the need to support customers and our staff through this global pandemic while also providing a fair return for shareholders," said ANZ Chief Executive Shayne Elliott.

ANZ directors proposed a 2020 interim dividend of A$0.25 a share, fully franked, to be paid to shareholders on September 30. New Zealand imputation credits of 3 New Zealand cents per ordinary share will also be attached, said the lender.

The interim dividend represents 46% of ANZ's first-half statutory profit.

The Australian Prudential Regulation Authority in July advised that banks no longer needed to pause dividends, which was a softer stance than its April request that boards "seriously consider" suspending payments amid the uncertainty caused by the pandemic. It also asked banks to cap dividend payouts to 50% of earnings.

Commonwealth Bank of Australia last week said its final dividend would be A$0.98, while Westpac on Tuesday scrapped its first-half dividend due to an uncertain outlook. National Australian Bank Ltd. said it would pay an interim dividend of A$0.30 when it released its half-year results in April.

"We know many of our shareholders rely on dividends. We've been able to build on our strong capital position this quarter, and this has enabled us to pay a dividend that balances the needs of our shareholders with the uncertain economic environment," said ANZ Chairman David Gonski.

"We agree with APRA's view that all Authorized Deposit-Taking Institutions should be prudent in considering dividends. We arrived at our decision independently and it sits comfortably within APRA's guidance."

Still, ANZ said it would take a total provision of A$500 million for the quarter, down from the A$1.67 billion charge in the first half. This new charge includes an individually assessed provision of A$264 million and a collective provision of A$236 million, which the bank said came as it strengthened credit reserves, in particular for deferral packages and its small business customers.

Mr. Elliott called it a prudent move. "There's some money aside for a rainy day, to strengthen our capital base for the long term and a small amount being paid to shareholders," he said.

ANZ's Level 2 Common Equity tier 1 capital ratio was 11.1% at the end of June from 10.8% at the end of March.

ANZ said that it was continuing to work with customers impacted by Covid-19 to restructure loans and in some circumstances will provide an extension to loan repayment deferrals for a further four months.

In Australia, the lender said it had 84,000 deferrals in place for home loan accounts at July 31 valued at A$31 billion, which represents 9% of Australian home loan accounts. ANZ has also deferred 22,000 business loans at July 31, valued at A$9.5 billion and representing 14% of commercial lending exposures. 



  Write to Alice Uribe at alice.uribe@wsj.com