For all the silly business media talk about how the ANZ had somehow ‘failed’ to ride the housing boom in the year to September 30, and how that had it poorly placed and under pressure, the bottom line is that the bank has emerged from two years of pandemic hit lockdowns and disruptions in good shape and looking prudently run.
Cash earnings rose 65%; thanks in part to a net $567 million release of 2020’s provisions for loan losses from COVID-19; the actual bad debt performance was OK, oh and dividends were up 82% (to $1.42 a share); the bank did a $1.5 billion buy back during the year, costs fell 4% and there were tasty increases in returns on assets and equity.
But the bank also ended 2020-21 with $6 billion of surplus capital (even after the buyback) and more than $4 billion of collective provisioning for potential loan losses is one that is signalling a high level of cautiousness and risk-aversion.
Most of ANZ’s release of its 2020 provisions happened in the March 31 half, before the Delta outbreaks flattened activity in NSW, Victoria and the ACT, and at times in WA, Southern Queensland, South Australia and in New Zealand, especially in the North Island around Auckland.
The reappearance of the pandemic and all the uncertainty that caused (and no doubt with a weather eye on rising house prices) saw the ANZ take the prudent step to preserve its high levels of provisioning in the September half.
Given the most recent experience, it’s no wonder there’s no guidance for 2021-22 except happy words about how the bank’s management is optimistic about the future.
CEO Shayne Elliott said in Thursday’s statement Mr Elliott: “Experience tells us the real impacts of COVID-19 will not be fully understood until at least the end of 2022, however we’re well positioned financially and culturally to respond.”
“There will be opportunities that arise and we are investing for growth with the mindset and agility to continue to deliver for customers, shareholders and the community.”
You won’t hear anything as anodyne today from Macquarie Group management when they discuss what should be a very solid first half performance. It’s not in their nature being an investment bank and investor, and not a commercial bank.
But you should look for similar remarks from Westpac on Monday and the NAB on November 9.
ANZ shares edged up 0.7% to $28.60 in a market that was down by a few points.
