ANZ’s H1 cash earnings largely flat, margins stay pressured

AUSTRALIA’S ANZ Group reported largely flat first-half cash earnings on Thursday (May 8), as persistent competition in the home loan market and a rise in asset impairments offset lending growth.

Intense competition to sell cheaper home loans to customers hurt by higher interest rates and living costs has been pressuring the bank’s margin.

In February, the Reserve Bank of Australia delivered its first interest rate cut since November 2020, and markets have priced in another quarter-point reduction later this month.

“While initial rate relief was welcomed by retail and commercial customers, we know many continue to face challenges,” said ANZ outgoing chief executive officer Shayne Elliott, who will hand over the reins to Nuno Matos next week.

Its net interest margin, a key measure of profitability, was stable at 1.56 per cent compared with the same period last year, but narrowed two basis points from the April-to-September 2024 period.

Gross impaired assets increased 48 per cent to A$2.5 billion in H1 – the highest since March 2021 – mainly driven by a rise in home loan restructuring.

ANZ‘s Australian retail division logged home loan growth of 3 per cent, while core institutional lending was up 4 per cent.

The country’s fourth-largest bank said cash profit was A$3.57 billion (S$3 billion) for the six months ended Mar 31, compared with A$3.55 billion a year earlier and the Visible Alpha consensus estimate of A$3.54 billion.

“The future of global conditions is uncertain and there will continue to be periods of increased volatility,” Elliott said, adding that the bank’s balance-sheet strength will allow it to navigate the uncertainty.

The Melbourne-based lender declared an interim dividend of 83 Australian cents per share, in line with the year earlier. REUTERS