ANZ (ASX: ANZ) avoids profit drop with Suncorp as CEO Shayne Elliott readies to depart
The industry had dialled in expectations the banking major would deliver earnings in the region of $3.4bn, but ANZ held cash profits stable, meeting results posted by the bank at the same time last year.
ANZ's flat profit comes in the wake of a mixed week from the sector after Westpac and NAB both revealed their earnings update earlier in the week.
However, cash earnings were up 12 per cent on the second half earnings posted by the bank last year, with ANZ chief executive Shayne Elliott noting the bank had been again 'driven by our continued momentum across each of our divisions'.
Mr Elliott, who marks his last ANZ earnings on Thursday ahead of his exit from the bank on May 11, said the bank had delivered record revenues.
This came after ANZ's $4.9bn acquisition of Suncorp Bank, which bolstered earnings.
ANZ warned without Suncorp Bank, it would have faced an 8 per cent cash profit slump to $3.28bn.
'This highlights both the strength of our franchise and the step change in our earnings from the inclusion of the first half of Suncorp Bank's earnings,' Mr Elliott said.
Mr Elliott said ANZ was 'well-placed for the future' as he prepared to hand control of the financial giant to HSBC banker Nuno Matos, who marks his first day on May 12.
'Our strong balance sheet, along with our diversified portfolio, leave the bank well-placed to navigate ongoing volatility,' he said.
ANZ CEO Shayne Elliott will hand over to Nuno Matos on May 12. Picture: Arsineh Houspian.
Mr Elliott leaves ANZ as the bank struggles under the weight of a further $250m capital overlay imposed by the Australian Prudential Regulation Authority, now topping $1bn.
APRA smacked ANZ with the $1bn bill, warning the bank had failed to manage non-financial risks.
Mr Elliott said work was underway to risk the non-financial risk issues, but ANZ is also staring down a potential enforcement action from the Australian Securities & Investments Commission later this year over allegations its markets business rigged government bond rates in a 2023 $14bn deal.
The markets business delivered $342m in cash earnings for the period, down from the $442m posted last year.
Overall, the institutional bank delivered $1.3bn in earnings, down 9 per cent on last year's first half result.
The Institutional Bank also saw deposits and lending up 4 per cent over the half.
The retail business saw its earnings slump 11 per cent, sliding to $705m.
This is despite home lending lifting 3 per cent in the period, while customer deposits lifted 4 per cent over the half.
ANZ Plus, the bank's flagship technology transformation, also hit 1 million customers in the period, with $20bn in deposits now on the banking platform.
Suncorp Bank saw a more muted result, with loans up only 1 per cent and deposits rising just 2 per cent in the half.
The bolt-on banking business reported $286m in earnings for the half.
ANZ bought Suncorp Bank for $4.9bn. Picture: William West/AFP
ANZ also reported growth in both lending and deposits for its commercial bank, which delivered $655m in earnings.
Its New Zealand operation saw moderate growth in deposits and lending, with profits flat on last year's first half result.
Mr Elliott said Australia's households remained 'robust and resilient' noting while interest rate relief was welcomed, many of the bank's customers already had 'strong balance sheets'.
Looking back on his time at the top, Mr Elliott said ANZ was now a 'simpler, stronger and better bank', than the financial institution he inherited almost 10 years ago.
'Over this time we have focused our strategy, strengthened the balance sheet, tightened customer selection, delivered significant productivity benefits, improved capital efficiency, reduced risk intensity, and made a material shift in our culture,' Mr Elliott said.
ANZ declared a 83c dividend, meeting expectations, with 70 per cent franked, in no change on the bank's last result.
The bank also moved to extend a $2bn buyback for a further 12 months, after snapping up just $1.2bn of its total budget.
However, the bank warned it would 'adopt slightly more conservative capital settings' ahead, warning this would influence 'the pace of the remaining buyback'.
Shares in ANZ last traded at $29.98.
Read related topics: Anz BankSuncorp
David Ross
Journalist
David Ross is a Sydney-based journalist at The Australian. He previously worked at the European Parliament and as a freelance journalist, writing for many publications including Myanmar Business Today where he was an Australian correspondent. He has a Masters in Journalism from The University of Melbourne.
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