ANZ Bank Profit Tops Estimates as Australia’s Recovery Builds
(Bloomberg) -- Australia & New Zealand Banking Group Ltd.’s full-year profit beat estimates as the lender wound back pandemic provisions and its customers shrugged off lengthy lockdowns in the country’s two most populous cities to help bolster an economic recovery.
Cash earnings from continuous operations rose to A$6.20 billion ($4.7 billion) in the 12 months through Sept. 30, compared with A$3.76 billion a year earlier, according to a statement Thursday. That topped the average analysts’ expectation for A$6.06 billion. The shares advanced 1.8% in early trading.
ANZ Bank is the first of the nation’s four biggest banks to give an investor update this results season. The bank, which announced a A$1.5 billion buyback in July, is topping up shareholders with a 72 cent a share dividend for the second half.
“On one hand we share the optimism as lockdowns end, but on the other hand, accept there are still many uncertainties.” Chief Executive Officer Shayne Elliott told investors. The bank has more than A$4 billion of credit reserves should conditions deteriorate, he said.
The lender’s shares ticked 1.8% higher as of 10:29 a.m. in Sydney. The stock was up 25% this year through Wednesday’s close, compared with a 27% rise in a gauge of the country’s financial stocks over that period.
The number of loans provided rose 5% from a year ago but home lending volume in the second half of the year was hurt by stiff competition, customers’ decisions to pay down their loans faster, and delays in processing loans. Almost half of all retail sales in Australia, including home loans, are now being conducted through digital channels, up from 40% a year ago, ANZ Bank said in the statement.
In New Zealand, home loans grew about 11% as the bank processed a record 82,000 new accounts.
What Bloomberg Intelligence Says
“ANZ’s profit could drop as much as 15% next year because of tough conditions for loan growth and potential for weaker margins.”
-- Matt Ingram, senior analyst with Bloomberg Intelligence. Read note.
The bank released a net A$567 million in credit provisions, and said that its customers continued to manage well through the pandemic.
Goldman Sachs Group Inc. maintained a “buy” recommendation on the shares, while highlighting downside risks that lending competition intensifies, or an economic slowdown cuts the propensity of consumers and businesses to borrow.
“Growth in the competitive home lending market will be a challenge, with the bank’s portfolio expanding only 1% year-on-year,” said Frank Mirenzi, vice president, Moody’s Investors Service. “The outlook for net interest margin growth will likely be difficult in 2022 with higher liquid assets and a possible increase in funding costs presenting headwinds.”
- For more details on the results, click here.
©2021 Bloomberg L.P.