Stronger profit, stable capital underpin ANZ lending capacity
ANZ has reported an unaudited statutory profit of $1.87 billion and a cash profit of $1.94 billion for the quarter ended 31 December 2025 (1Q26), with higher margins, lower expenses, and stable capital and asset quality across Australia and New Zealand.
Cash profit was up 75% on the quarterly average of the second half of FY25, which was affected by significant items. Excluding those, cash profit rose 17%, driven by a significant reduction in expenses and an improvement in revenue, lifting cash return on tangible equity by 173 basis points to 11.7%.
Revenue increased 1% versus the 2H25 quarterly average, with net interest income up 0.4% and other operating income up 5%, helped by stronger markets activity. Group net interest margin improved 2bps to 1.56%; excluding markets, NIM was up 3bps, supported by a favourable funding mix shift towards operational deposits and higher earnings on replicating portfolios.
Customer deposits grew by $39 billion (5%) between September and December 2025, while net loans and advances increased $8 billion, including $5 billion of institutional lending.
ANZ’s common equity tier 1 ratio stood at 12.15% at 31 December, up 12bps from September and above regulatory minimums, supported by quarterly earnings and the decision to cease the remaining ~$800 million share buy‑back.
The update comes as major banks signal a firmer NZ outlook for 2026 and warn the risk around RBNZ rate hikes is shifting towards earlier moves, not later.
Productivity drive cuts costs, lifts returns
ANZ chief executive officer Nuno Matos (pictured) said the quarterly result highlighted the early progress the bank is making in executing its ANZ 2030 strategy.
“Our productivity program aimed at removing duplication and simplifying the bank is well underway, delivering a significant reduction in expenses while growing revenue. There was an improvement across our key financial metrics, including the return on tangible equity which rose to 11.7% and cost to income ratio to below 50%,” Matos said.
“Looking ahead, we continue to be fully engaged in executing our ANZ 2030 strategy. This is the beginning of our five-year journey to become the best bank for customers and shareholders in Australia and New Zealand.”
Low losses and easing arrears
On credit quality, portfolio losses remain low, with a 1Q26 individual provision charge of $64 million, $20 million lower than the 2H25 quarterly average and equivalent to a 3bps annualised loss rate.
Housing arrears edged lower in both markets. Australian housing 90+ days past due fell to 81bps at 31 December 2025, while NZ housing 90+ DPD eased to 82bps (from 86bps for both at 30 September). Non‑performing exposures were 0.78% of total credit exposure, and the collective provision balance remained stable at $4.38 billion, with coverage of 1.19% of credit risk‑weighted assets.
Liquidity and funding metrics also remained robust, with an average liquidity coverage ratio of 133% and a net stable funding ratio of 116%, both above regulatory minimums.
See ANZ's 2026 First Quarter Trading Update for more details.
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