investor daily logo

ANZ reports profit drop, announces $2bn share buyback

By Rhea Nath
3 minute read

The big four bank’s latest results indicate a drop in the cash profit of 7 per cent on the prior corresponding period.

ANZ has reported a half-year cash profit of $3.55 million, down from $3.82 million recorded in the first half of financial year 2023.

In an ASX announcement on Tuesday, the bank said its statutory profit after tax stood at $3.4 million, down 4 per cent on the prior corresponding period and 1 per cent on the previous half.

It announced a partially franked dividend of 83 cents per share, up 2 cents on last year.

“This half’s strong performance is a direct consequence of peer-leading diversification as well as our disciplined focus on productivity and delivery,” Shayne Elliott, ANZ chief executive officer, said.

Following a record 2023, the bank saw “good progress” across a number of areas, he said, including leveraging its institutional processing platforms, driving productivity, and preparing for the integration of Suncorp Bank, which was greenlit by the Australian Competition Tribunal in February.

“Our preparations to integrate Suncorp Bank are 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,” said Elliott.

The bank’s Australian retail business suffered a 9 per cent setback to its cash profit which dropped to $794 million, while its Australian commercial business’ cash profit contracted 5 per cent to $655 million.

ANZ’s institutional segment reported a cash profit of $1.52 million, up 12 per cent, delivering the strongest first half performance since FY2017.

Its New Zealand business, too, saw profit growth of 2 per cent to $852 million. The moderate balance sheet growth with lending was 1 per cent and deposits up 2 per cent, “despite challenging economic conditions”.

“Our diversification continues to serve us well. In a world where retail banking in Australia and New Zealand is more competitive than ever, our international business performed strongly, with revenue up 16 per cent for the half,” said Elliott.

Given the group’s “strong capital position”, ANZ announced it intends to buy-back up to $2 billion of shares on-market as part of its capital management plan.

This is expected to reduce ANZ’s Level 1 and Level 2 March 2024 CET1 ratios by approximately 54 and 46 basis points, respectively.

Additionally, the bank completed the partial sale of its stake in Malaysia’s AmBank, releasing $668 million in capital, which will be returned to shareholders via its $2 billion on market share buyback.

Over the past week, both Westpac and NAB also announced share buyback programs, reporting hikes of $1 billion and $1.5 billion, respectively.

Looking ahead, ANZ CEO Elliott flagged a “challenging” environment both domestically and internationally.

The Australian and New Zealand economies are likely to remain subdued, he said, against the backdrop of electoral uncertainty, geopolitical tensions, and interventionist trade and industry policies globally.

“Despite these conditions, we are well positioned with the diversity of our businesses, prudent management, and the strength of our customers holding us in good stead,” Elliot said.

“In fact, our work to build a well-managed, de-risked and diversified bank, coupled with our unique international presence, means we are well placed to succeed in this environment.”