ANZ has released its half-year results for the 2023 financial year (1H23), posting a cash net profit after tax of $3.8 billion, up 22.5 per cent from $3.1 billion in 1H22.
Earnings per share increased 15 per cent, closing the six months to 31 March 2023 at $127.6 million.
Supporting the earnings windfall was an 11.4 per cent return on equity, up from 10 per cent in the previous corresponding period.
The retail banking division also gained ground, with ANZ reporting a 6 per cent increase to both its deposit base and underlying loan book.
Customer deposits grew from $611.1 billion in 1H22 to $648.6 billion, while gross loans and advances ended the half at $693.7 billion, from $655 billion.
Loan book growth was supported by a 23 per cent increase in home lending flows, up from $35 billion in 1H22 to $43 billion — representing a 16 per cent rise in the number of accounts to approximately 95,000.
ANZ’s underlying result has helped deliver a 12.5 per cent increase to the fully franked dividend, up from 72 cents in 1H22 to 81 cents.
Reflecting on the result, ANZ chief executive officer Shayne Elliott partly attributed the group’s performance to a revamp of its retail banking strategy, which included the introduction of digital services platform, ANZ Plus.
“This was an important half in the continued transformation of ANZ,” Mr Elliott said.
“The introduction of our new retail banking platform in Australia, ANZ Plus, designed and built by our own teams using the world’s best technology was a key milestone.
“While still in soft launch, the first ‘savings and transact’ product on ANZ Plus, a proposition focused on helping customers better manage their financial wellbeing, is tracking well and will become the core deposit and transaction product offered to new customers.”
The ANZ CEO also pointed to continued investment in the bank’s home loan offering, underpinned by a reshoring of its loan processing capability.
“Investments in our home loan processing capacity in Australia drove positive balance sheet momentum while processing times are comparable to our major peers,” he said.
“We are on target to grow in line with the Australian major banks by the end of our financial year but will do so with an eye to our margin performance.”
Despite lauding the group’s performance over 1H23, Mr Elliott warned the next six months would be “more difficult than the last”, given continued macroeconomic uncertainty and “intense” competition in the lending space.
“Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand,” he said.
“We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy.
“While the number of ANZ customers in difficulty remains low, we stand ready to help in these potentially challenging times.”
ANZ has increased its collective provision charge to $163 million amid credit quality risks associated with aggressive monetary policy tightening from the Reserve Bank of Australia and weakening economic conditions.
Treasurer calls out banks
In a pre-budget press conference held on Friday, Commonwealth Treasurer Jim Chalmers was asked to weigh in on ANZ’s record windfall.
He was asked if the government would consider introducing legislation to require banks to pass on rate hikes more readily to savings customers, given they’ve benefited from higher interest charges on loans.
“Well, that’s not something that we’ve been contemplating,” Treasurer Chalmers replied.
“…When banks are doing well, we expect them to do the right thing by their customers, [and] I think the thing that makes people especially angry is when interest rate hikes are passed on more or less immediately for borrowers, but sometimes a bit more slowly for savers.
“That makes people very unhappy and I can understand why that’s the case.”
ANZ’s net interest margin (NIM) increased from 168 bps in 1H22 to 175 bps as at 31 March 2023, supported by an 11 per cent increase in revenue across the retail bank and a 30 per cent increase in the commercial banking division.
Net interest income surged 20 per cent, from $7.1 billion in 1H22 to $8.5 billion in the six months to 31 March 2023.