ANZ Soldiers on Amidst the Chaos

ANZ Bank lifted interim dividend 12.5% to 83 cents a share after a modest 12% rise in cash earnings for the six months to March.

ANZ said cash profit from continuing operations rose 12% to a record $3,821 million, when compared with the prior half in 2022.

Statutory Profit after tax for the half year was $3,547 million.

Melbourne’s second banking major reported a day after the NAB produced a solid rise in dividend (to 83 cents a share) and 17% lift profit.

That was to no avail and investors didn’t like the nitty gritty in the results, especially signs of pressure on NAB’s net interest margin which was up 21 points to 1.77% (or 14 points if the impact of liquid securities of 7 points was discounted).

NAB shares fell 6.4% in a negative reaction on Thursday, so will the ANZ shares get the same treatment today?

ANZ must have been worried about its net interest margin (NIM) because it wasn’t mentioned at all in the brief market announcement and had to be dug out of the larger filing at the ASX.

That showed a rise of 10.7% from the first half of 2021-22’s figure of 1.58% to $1.75% which was hardly convincing.

In contrast to the NAB which slowed its home lending, the ANZ boasted that it grew its mortgage book faster than the market – a reversal of its performance up till the last year.

The ANZ again didn’t make it easy by comparing its performance in most of its results filings to the second half of 201-22 and not to the first half, which is the more accurate comparison.

Looking at the results, CEO, Shayne Elliott, said: “This was a strong financial performance in which all four divisions made a material contribution. The record result was driven by solid revenue growth across the board and the benefits of having a well-diversified business.

“Australia Retail grew home loans faster than the market, while also driving good growth in deposits. We continued the rollout of ANZ Plus, which had $6 billion of deposits at end-April from over 250,000 customers, 30% of which were new to bank, with 39% new to bank in March.

“Institutional posted a record half-year result, producing returns well above the cost of capital in each region and strong revenue growth across all products. The international business performed strongly, contributing to more than 60% of the Division’s revenue growth compared with the prior comparable period.

“In New Zealand, revenue and returns were both up strongly compared with the first half of 2022 and we continue to lead the market in all of our target segments. We are well positioned to continue growing the business while also supporting customers through an uncertain environment.

“Australia Commercial was a strong contributor to Group revenue, generating the highest return on equity of our divisions and delivering revenue growth of 30% compared with the prior comparable period. During the half we performed particularly well supporting customers in agriculture, trade and manufacturing.

And looking to the immediate future, he said “The next six months will be more difficult than the last. Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand.

“We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy. While the number of ANZ customers in difficulty remains low, we stand ready to help in these potentially challenging times.”

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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