In a filing with the ASX on Monday, the bank confirmed that both its statutory and cash profits would feel the strain from this hefty charge.
This financial hit is set to nudge ANZ’s Level 2 Common Equity Tier 1 (CET1) Capital down by approximately 2 basis points, spotlighting the challenges of weaving Suncorp Bank into ANZ’s existing operations.
Among the key drivers of this adjustment is a $36 million accelerated software amortisation charge, designed to align Suncorp’s software practices with ANZ’s standards.
Moreover, ANZ is also facing a significant $244 million Collectively Assessed Credit Impairment Charge (CIC).
According to the bank, upon consolidating Suncorp Bank’s lending portfolio, ANZ had to recognise the performing loans without acknowledging pre-existing expected credit loss provisions, resulting in the establishment of its own ECL allowance and a corresponding credit impairment charge, which increased the portfolio’s carrying value and reduced acquisition-related goodwill.
Despite the daunting figures, ANZ said this CIC does not reflect a change in the credit quality of the portfolio and therefore, it is considered a one-time charge.
ANZ’s completion of its acquisition of Suncorp was announced last month, almost two years after first announcing the $4.9 billion deal.
At the time, ANZ chief executive Shayne Elliott said it was an “exciting” day for the banking group.
“This strategically important acquisition boosts our presence in Queensland, adds scale to our retail and commercial businesses, and means we can compete more effectively across the Australian market,” Elliott said.
“Tomorrow we will welcome the roughly 3,000-strong Suncorp Bank team and their 1.2 million customers into the ANZ Group.
“Suncorp Bank customers will continue to receive the same great service, from the same exceptional Suncorp Bank staff. Over time, we will make available to them ANZ’s newest technology, giving them access to the very latest in banking services.”
In earlier financial results, Elliott described ANZ’s preparations to integrate Suncorp as “well advanced”.
“While the time taken to progress the necessary approvals has taken longer than anticipated, we have used that time productively and we are more confident than ever about the benefits that will follow,” Elliott said earlier this year.
