Outgoing chief executive warns of ‘uncertain’ global conditions
ANZ has released its first set of fully incorporated interim results following its acquisition of Suncorp Bank in mid-2024.
As with other members of the Big Four, ANZ faced tough lending competition during the reporting period, causing net interest margins (NIMs) to decline by six basis points to 2.38% across the banking segment'.
Westpac’s results and NAB’s results highlighted similar trends earlier this week.
ANZ similarly saw an increase in non-performing loans during the first half, which the bank chalked up to “defaults on well secured mortgages in the Australia Retail and New Zealand divisions where 90+ days past due delinquency rates have increased”, as well as the acquisition of Suncorp Bank.
While lending volumes in ANZ’s Australian Retail division increased, NIMs contracted by 10 basis points on a year-on-year basis to 1.84% due to “home loan pricing competition and higher net funding costs”. Operating income also took a hit due to inflation.
NIMs contracted by seven basis points to 2.53% in the Australian Commercial division due to “asset margin contraction from pricing competition, unfavourable deposit margin and mix with a shift towards lower margin savings and term deposits”.
Despite the contraction in Retail and Commercial, ANZ’s Institutional division – the bank’s largest and most cash generative – maintained a steady margin at 0.76% (including Markets).
Suncorp Bank delivered a NIMs of 2.12%.
Commenting on the results, outgoing chief executive Shayne Elliot (pictured) said: “The future of global conditions is uncertain and there will continue to be periods of increased volatility. It is times like these that our strong balance sheet, including capital, provisions and liquidity, is critical.”
ANZ was recently rapped by the Australian Prudential Regulation Authority (APRA) for “persistent weaknesses” in its risk-management practices, forcing the bank to increase its capital add-on to $1bn.
Elliot alluded to that development, saying: “Work is underway to strengthen our non-financial risk-management practices and risk culture to meet the Australian Prudential Regulation Authority’s expectations and to embed non-financial risk-management practices consistently across the bank.”
Nuno Matos will take over from Elliot next week.
