ANZ Bank may feel satisfied with a 5% rise in cash earnings to $6.5 billion for the year to September 30, but it was not to the liking of investors.
While the results were just ahead of several gloomier analyst forecasts, investors took a dim view and sent the shares down $1.85 to a day’s low of $24.16 before they recovered some of the losses to close at $24.99, off 3.2%.
The losses saw prices of the NAB and Westpac ease, but the Commonwealth and Macquarie (which reports its interim figures today) resisted the negative trend.
NAB and Westpac report their 2021-22 results early next month and the Commonwealth has its first quarter update in mid-November.
The ANZ will pay a final dividend of 74 cents a share (up 2 cents a share), taking the full year payout to $1.46 a share, up 3% (which is less than half the inflation rate).
ANZ said its statutory profit after tax was up 16% to $7.119 billion.
The 5% rise in full year cash profit followed a strong second half which saw ANZ’s cash profit rise 9% to $3,402 million thanks to improvements in its net interest margin (NIM) in the wake of the Reserve Bank’s succession of rate increases, which in turn boosted home lending rates and NIM.
As a result, ANZ’s second half NIM improved to 1.68% in the September quarter, with an a final margin of 1.8%.
While the bank believes that the current environment is “supportive for margins in the first half” of FY 2023 (to March 31, 2023), it believes any “change from the exit margin (of 1.80%) is likely to be more modest.”
In other words, don’t look for a big jump in the NIM in a year’s time and that was part of the result that the market didn’t like sold down the shares in the belief the ANZ was really saying, ‘don’t look for a big profit rise next year’.
ANZ said the second half saw its Australia Retail business enjoy a 6% increase in profit over the first half as it ended the year with positive home loan momentum and approval times back in line with major peers.
(The ANZ’s weak home lending for two years had been a constant target of criticism from analysts and big investors.)
There was also strong customer up-take of ANZ Plus, with deposits reaching $1.2 billion, growing at a faster pace than any new digital bank in Australia.
The Australia Commercial business saw a 10% increase in revenue for the year and an 11% increase in profit thanks to solid volume growth and disciplined margin management.
The ANZ said this business grew net loans and advances by 6% over the year with solid lending growth in specialist segments including agribusiness (which has bounced back strongly with the drought well and truly broken) and health.
Elsewhere, the Institutional division ended the year strongly with a 10% half on half increase in revenue thanks to strong demand and the New Zealand business reported a 5% half on half rise in profit.
ANZ CEO, Shayne Elliott was pleased with the bank’s performance, saying in Thursday morning’s release
“This was a strong financial result with all divisions making a material contribution and demonstrating the benefits of a diversified portfolio.
“We restored momentum in Australian home loans with application approval times back in line with industry peers. We continued the re-platforming of Australia Retail onto ANZ Plus, which is our new digital bank, with deposits already exceeding $1.2 billion and growing at a rate faster than any new digital bank in Australia.”
