Business Essentials for Professionals


ANZ's Annual Income Increase Due To A Home Loan Increase And Higher Interest Rates

ANZ's Annual Income Increase Due To A Home Loan Increase And Higher Interest Rates
Australia and New Zealand Banking Group Ltd announced a larger annual cash profit, exceeding market expectations, with its home loan division getting better and higher interest rates increased the margins of the bank in the second half.
After an revamp to take care of delays in processing that had retrained the lender in taking benefit on a housing boom during the pandemic, ANZ said its home loan application times were back on par with industry peers.
However, shares fell as much as 4.6 per cent to A$24.67 in their worst intraday loss since June, compared to a 1.4 per cent drop in the broader financial index, as the lender also warned of wage and vendor cost inflation.
"Despite higher costs we see upside to consensus FY23 core earnings as the NIM leverage has become more obvious," analysts at Citi said in a note.
The lender also intends to introduce a fully automated digital home loan to further strengthen its mortgage loans business, and is planning a digital home loan pilot program in the coming weeks.
ANZ's group net interest margin, a key measure of profitability, increased by 10 basis points from the first half of the year to 1.68% in the second half.
Runaway inflation has prompted Australia's central bank to embark on its most aggressive tightening cycle in decades, boosting margins for banks that had previously struggled with record-low interest rates.
The bank anticipates a favorable environment for margins in the first half, though any deviation from the exit margin is likely to be modest.
Annual cash profit from continuing operations was A$6.52 billion ($4.23 billion), exceeding the A$6.31 billion consensus estimate of Visible Alpha.
The bank proposed a final dividend of 74 Australian cents per share, up from 72 cents the previous year.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc