Australia And New Zealand Banking Group Limited (ANZ)
HOLD

Better performance

 27 Oct 2022
Sector: Financials

FY22 RESULT

Need To Know

  • Cash earnings 2% ahead, dividend 146cps vs 144cps expected
  • Margins +10bps in half, with further improved exit run-rate
  • ANZ guiding to positive jaws in FY23E

Cash Earnings $A6.5bn vs $A6.3bn market

Dividend 146cps vs 144cps market

NIM 1.71% vs 1.58% 1H22. Sept. exit run rate 1.80%

Bad debts 2H22 -$A52m vs market -$A70m.   

CET1 12.3% flat on 1H22

Suncorp Bank merger – still on track for mid 2023.

Investment Implications

A stronger result from ANZ than what we have seen over the last 12 months and should be well received by the market.

Rising Net Interest Margins (NIMs), mortgage growth returning to system, suggests ANZ has turned around the operational performance.

FY23E outlook is for positive operating jaws, despite 5% cost growth guidance. 

ANZ expects NIM to rise in 1H23E, although at a more modest rate than +10bps in 2H22.  The market is forecasting FY23E NIM at 1.74%, vs 1.80% exit run-rate at end of September.

Market is likely look low single digit earnings upgrades to estimates for both FY23E and FY24E

ANZ has been the top performing major bank over the last 3 months, outperforming both peers and the market. The outperformance is largely a function of ANZ’s depressed valuation post the A$3.5bn equity raising in mid 2022 vs peers.

We would expect the improved NIM performance to carried across to both National Australia Bank (NAB) and Westpac Banking Corporation (WBC) which report Resultss next week.

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Stock overview

Share Price

Company overview

ANZ Bank is Australia’s fourth-largest retail bank.

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