What to expect from Australia and New Zealand Banking Group’s (ASX:ANZ) profit result tomorrow

Australia and New Zealand Banking Group‘s (ASX: ANZ) share price is rising ahead of the bank’s full-year results tomorrow.

It’s a nervous time for shareholders as what the bank reveals tomorrow will determine if the stock has hit a bottom since closing at a two-year low of $24.80 last week.

The stock is currently trading 0.5% higher at $25.33 as the Commonwealth Bank of Australia (ASX: CBA) share price and the Westpac Banking Corp (ASX: WBC) share price gained around 1%.

It’s only the National Australia Bank Ltd. (ASX: NAB) share price that’s trading just below breakeven even as the S&P/ASX 200 (Index:^AXJO) (ASX: XJO) index added 0.5% in after lunch trade.

I’ll talk about NAB’s share price weakness later as ANZ Bank is the one in the spotlight as it will kick off the bank reporting season (only CBA won’t be reporting as it has already done so in August).

It’s just as well that ANZ Bank is going first as its results are arguably the least risky of the three. Here are some key things that brokers will be watching for:

  • ANZ Bank is probably the only one of the three that’s able to do a capital return and that’s the biggest chance for the bank to give its share price a kick
  • Net interest margins (NIM) will be closely scrutinised for signs of further funding pressure
  • Management’s ability to cut costs will be a key driver for margins and profits given the subdued lending environment
  • Bad debt provisioning could tick up although brokers are divided on this
  • Bank profitability had been bolstered in the past several reporting seasons from lower provisioning but the accelerating drop in home prices leads me to believe we won’t get another free earnings kick
  • News on further customer remediation and write-downs following the $697 million in charges the bank announced early this month
  • Updates on its asset sales

The good news for income investors is that ANZ Bank is unlikely to cut its 80 cents a share final dividend although I don’t think yield alone is enough to stop the stock from testing new lows.

Meanwhile, NAB’s share price underperformance is probably due to worries about its profit growth – or lack of.

Macquarie Group Ltd (ASX: MQG) is forecasting underlying profit growth of 2% to 4% for Westpac and ANZ Bank but is tipping a circa 2% drop for NAB due to rising operating costs.

There are also more doubts around NAB’s ability to sustain its dividend and that can’t be helping the stock.

I wouldn’t be buying any bank shares ahead of the result despite arguments that the de-rating in the sector reflects all the bad news afflicting the sector.

The thing is, we don’t know if there will be new bad news from the property market and the impact of falling house prices on over-leveraged consumers.

Look for value elsewhere.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Macquarie Group Limited, National Australia Bank Limited, and Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!