The Australia and New Zealand Banking Group (ASX: ANZ) share price will be one to watch this morning after the banking giant provided the market with a first-quarter trading update for the three months ending December 31 2016.
Key highlights from the release include:
- Statutory net profit up 8% on the prior corresponding period to $1.6 billion.
- Cash profit of $2 billion. Up 31% thanks to a good performance from its retail and institutional businesses and the sale of 100 Queen Street.
- Expenses down 4%, driven by productivity initiatives and tight cost management.
- Net interest margin fell several basis points.
- Common Equity Tier 1 (CET1) ratio up 40 basis points to 9.5%.
Overall I think this was a solid result. Whilst it is still early days in the bank's transformation, I've been pleased with what I've seen so far.
CEO Shayne Elliott certainly appears confident in the transformation. He stated that:
"We're really pleased with how the year has started. We're getting growth in right areas – the areas that we committed to, the areas where we want to grow and we're seeing the performance, even in global markets, are coming through exactly where you would expect them to be. There's been a little bit more volatility, a little bit more customer activity, and so that is I think a really pleasing way to start the year."
Pleasingly Mr Elliott believes that the outlook on provisions has improved. Based on the first quarter and the first six weeks of its second quarter, he thinks that the credit environment is marginally better than previously expected.
Should you invest?
Although I think it was a positive result, I'm still not a buyer of ANZ shares at the current share price.
I think the shares of ANZ, Westpac Banking Corp (ASX: WBC), and Commonwealth Bank of Australia (ASX: CBA) all look fully priced now and offer limited upside potential.
Because of this I would suggest investors hold off an investment and wait for a reasonable pull-back before snapping up shares.
