Australia and New Zealand Banking Group Limited
| ASX code: ANZ | www.anz.com.au | |
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| Share price ($) | 26.71 | |
| 12-month high ($) | 29.53 | |
| 12-month low ($) | 22.98 | |
| Market capitalisation ($mn) | 75597.5 | |
| Price-to-NTA-per-share ratio | 1.4 | |
| 5-year share price return (% p.a.) | 0.6 | |
| Dividend reinvestment plan | Yes | |
| Sector: Financials | Company | Sector |
| Price/earnings ratio (times) | 11.9 | 15.0 |
| Dividend yield (%) | 6.0 | 5.9 |
Melbourne-based ANZ has its roots in the establishment of the Bank of Australasia in London in 1835. It is today one of the country's four banking giants and one of the largest companies. It is a market leader in New Zealand banking, and it is also active throughout Asia and the Pacific region. Altogether, it has a presence in more than 30 countries, including a major technology and back office operation in Bangalore, India, and minority stakes in a range of Asian banks.
Latest business results (March 2019, half year)
The after-tax profit rose modestly on a cash basis, which strips out one-off costs and asset sales, though on a statutory basis profits fell. Some of the increase came from favourable foreign exchange movements. The bank also achieved a decline in its operating costs, with a cut in staff numbers and a reduction in restructuring expenses. The best result came from the bank's institutional banking business, one of its traditional strengths, with profits up 32 per cent. A year earlier they had fallen by 26 per cent. However, the core Australian banking business saw profits down 13 per cent as the bank's net interest margin fell and its home loans business weakened. New Zealand banking is another of ANZ's strengths, representing more than 20 per cent of total company earnings, and profits were a little higher. But the Wealth division recorded a small loss.
Outlook
ANZ has initiated a restructuring of its operations, believing that Australian banks are set to face an increasing series of headwinds. It has divested itself of some underperforming businesses, and is backtracking on its ambitious moves into Asian banking. It has tightened its lending criteria, though has conceded that it may need to re-evaluate its new risk settings in order to boost market share. It believes it can continue to lower its cost base, and it expects its institutional banking business to remain buoyant. But like all the major banks it faces a rapidly changing financial environment, with higher compliance costs as a result of the recent Banking Royal Commission, and a plethora of challenges from new digital entrants to the banking industry. It will also suffer from any slowdown in the housing market or in the Australian economy. It maintains its strong position in New Zealand banking, but is concerned at signs of growing competition there and a slowing Auckland housing market.
| Year to 30 September | 2017 | 2018 |
| Operating income ($mn) | 19 816.0 | 19 214.0 |
| Net interest income ($mn) | 14 875.0 | 14 514.0 |
| Operating expenses ($mn) | 8 967.0 | 9 248.0 |
| Profit before tax ($mn) | 9 650.0 | 9 278.0 |
| Profit after tax ($mn) | 6 809.0 | 6 487.0 |
| Earnings per share (c) | 233.96 | 224.60 |
| Dividend (c) | 160 | 160 |
| Percentage franked | 100 | 100 |
| Non-interest income to total income (%) | 24.9 | 24.5 |
| Cost-to-income ratio (%) | 45.3 | 48.1 |
| Return on equity (%) | 11.7 | 11.0 |
| Return on assets (%) | 0.8 | 0.7 |
| Half year to 31 March | 2018 | 2019 |
| Operating income ($mn) | 9 870.0 | 9 746.0 |
| Profit before tax ($mn) | 4 989.0 | 4 988.0 |
| Profit after tax ($mn) | 3 493.0 | 3 564.0 |
| Earnings per share (c) | 98.30 | 123.00 |
| Dividend (c) | 80 | 80 |
| Percentage franked | 100 | 100 |
| Net tangible assets per share ($) | 18.28 | 18.94 |