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ANZ’s annual revenue soars on rising home loans and rising interest rates

By on October 27, 2022 0
  • Annual cash profit increases by 5%
  • Reports higher costs related to salaries and supplier costs
  • Shares at 2-week low
  • NIM improves in H2 compared to H1

Oct 27 (Reuters) – Australia and New Zealand Banking Group Ltd (ANZ.AX) reported a rise in full-year profit on Thursday, beating market expectations, as its home lending business improved and rising interest rates boosted its margins in the second half.

ANZ said its home loan application times were back in line with industry peers, following an overhaul to address processing delays that had prevented the lender from profiting from a property boom. by COVID.

Shares, however, fell 4.6% to A$24.67 in their worst intraday loss since June, against a broader financial index down 1.4% as the lender also signaled headwinds resulting inflation of wages and supplier costs.

“Despite higher costs, we see an upside to FY23 consensus core earnings as NIM leverage has become more evident,” Citi analysts said in a note.

The lender is also aiming to introduce fully automated digital home lending to further bolster its mortgage business and is planning a pilot digital home lending program in the coming weeks.

ANZ Group’s net interest margin, a key measure of profitability, rose 10 basis points from the first half to 1.68% in the second half.

Soaring inflation prompted Australia’s central bank to continue its most aggressive tightening cycle in decades, boosting margins for banks that had struggled with historically low interest rates for the past two years.

The bank said it expects the environment to be favorable for margins in the first half, although any changes to the exit margin are likely to be more modest.

Annual cash profit from continuing operations was A$6.52 billion ($4.23 billion), beating the Visible Alpha consensus estimate of A$6.31 billion.

The bank has proposed a final dividend of 74 Australian cents per share, up from 72 cents last year.

($1 = 1.5408 Australian dollars)

Reporting by Harshita Swaminathan and Sameer Manekar in Bengaluru; Editing by Devika Syamnath and Sherry Jacob-Phillips

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