- ANZ Group Holdings Ltd announces a A$2 billion buyback as first-half earnings fall short of estimates.
- The bank’s cash profit fell 7% to A$3.55 billion in the six months to March 31, missing the average projection of A$3.63 billion.
- ANZ’s net interest margins fell to 1.56% from 1.75% in the prior year, contributing to a drop in total net interest income of A$597 million.
ANZ Group Holdings Ltd announces a A$2 billion buyback amidst declining profits, reflecting a trend among Australian banks to sweeten the deal for investors.
ANZ Announces A$2 Billion Buyback as Profits Decline
ANZ Group Holdings Ltd, the Melbourne-based lender, announced a A$2 billion buyback as first-half earnings missed estimates. This continues the trend of Australian banks handing investors a sweetener as profits decline. The bank’s shares fell as much as 2.7% in Sydney trading on Tuesday.
Decline in Cash Profit and Net Interest Margins
Cash profit fell 7% to A$3.55 billion in the six months to March 31 from a year earlier, short of the A$3.63 billion average projection in a Bloomberg survey of analysts. ANZ’s net interest margins — the core difference in banking between rates paid to depositors compared to the average loan rate written — fell to 1.56% from 1.75% in the prior year, short of the analyst estimate of 1.62%. The slip contributed to a drop in total net interest income of A$597 million, the bank said.
ANZ’s Growth Strategy and Future Outlook
Investors are scrutinizing two pillars of growth for ANZ after the bank won its fight to buy Suncorp Group Ltd.’s banking arm at the same time as it’s been growing its exposure in Asian markets such as India. The bank is cashed up from the partial sale of its stake in Malaysia’s AMMB Holdings Bhd., which netted the bank A$668 million and the passing on of which will be included in the buyback, the bank said.
Conclusion
Despite the challenging domestic and international environments, ANZ is well positioned with the diversity of its businesses, prudent management, and the strength of its customers. With its A$2 billion buyback announcement and strategic growth plans, the bank aims to provide tangible value to its investors in the face of declining profits.
