The outlook for the Australian market – possibly for the rest of the year and into early 2018 could very well be will be set this week with the first of the annual profits from three of our four major banks – with the ANZ reporting its figures on Thursday while Macquarie Group will produce its interim result on Friday.
Westpac and the NAB are due to report next week. The CBA’s first quarter trading update is due at the bank’s AGM on November 16.
ANZ is expected to report a small rise in profit. ANZ Banking Group lifted its third quarter cash profit by 5.3% compared to the first two quarters to $1.79 billion thanks o stronger owner-occupier housing lending.
Analysts are tipping ANZ will be the first of the major banks to return capital to shareholders given its pro forma capital position is already at the level for "unquestionably strong" set by the Australian Prudential Regulation Authority last month.
The early consensus expectation of analysts for ANZ’s full-year cash profit is $6.89 billion, on revenue that is expected to hit $20.7 billion.
The 2015-17 full year profit from the ANZ’s dropped 24% to $5.7 billion, thanks to nearly $1.1 billion of write-downs as the bank restructures away from Asian retail banking.
The bank said cash profit was down 18% to $5.9 billion and excluding the one off charges, the underlying result was down just 3% at $7 billion. The bank has been selling assets in Asia and the businesses (it sold its advice operation to IOOF earlier this month) and could reveal the fate of its life insurance arm with Thursday’s result – or at worst provide a further update.
Analysts also see the ANZ as the first of the major banks to return capital to shareholders given its pro forma capital position is already at the level for “unquestionably strong” set by the Australian Prudential Regulation Authority in July. The bank paid an 80 cent final dividend for 2015-16.
Meanwhile Macquarie Group will report a small rise in first half earnings compared to the March second half, but it could be lower than the $1.05 billion reported a year ago.
In September, the country’s biggest investment bank said “stronger performance fees” from its stable of investment funds would allow the company to report a solid result for the six months to September 30.
Macquarie’s finance chief Patrick Upfold told the CLSA Investor Forum in Hong that; ”As a result of stronger performance fees now anticipated to be recognised in the first half, the 1H18 result is expected to be up on 1H17 and broadly in line with 2H17.”
It would seem that without the “stronger performance fees” the actual trading result might have been lower than forecast, which would be something of an embarrassment for the bank which had been forecasting a solid first half effort.
Mr Upfold reiterated Macquarie’s full year guidance for 2018 earnings to be "broadly in line" with this year’s $2.22 billion result.
ANZ shares closed at $30.59 on Friday – up 8.2% over the last year but only half a per cent so far in 2017. Macquarie shares are up 6.8% year to date and closed at $93.93 on Friday.
