The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be one to watch on Thursday.
This follows the release of the banking giant's first quarter update this morning.
How did ANZ perform in the first quarter?
For the three months ended 31 December, the banking giant reported an unaudited statutory profit after tax of $1,624 million. This was a 59% increase on the average profit it achieved during the final two quarters of FY 2020.
It was a similarly positive story for its unaudited cash earnings from continuing operations, which came in at $1,810 million. This is a 54% jump on the average of the last two quarters of FY 2020.
Another positive is that the bank has followed the lead of Westpac Banking Corp (ASX: WBC) by reversing some of its COVID-19 related provisions. This could go down well with the market and support the ANZ share price today.
According to the release, the total provision result in the December quarter was a net release of $150 million. This comprises an individually assessed provision charge of $23 million and a collective provision release of $173 million.
Management advised that the collective provision release is the equivalent of ~10% of the $1,700 million set aside during FY 2020. It feels this release is prudent when balancing the improvement in the economic outlook at the end of the December quarter with the level of ongoing uncertainty.
At the end of the period, the company had a pro forma CET1 ratio of ~11.8%. This is comfortably ahead of APRA's unquestionably strong benchmark.
Management commentary
ANZ's Chief Executive, Shayne Elliott, commented: "This is a strong performance in volatile trading conditions that again highlights the benefits of disciplined execution of our strategy as well as maintaining a simpler and well balanced portfolio of businesses."
"We're pleased to have achieved these results for shareholders while also helping customers in difficulty and providing the vital lending needed to support the economic recovery. All our major businesses performed well through the quarter with market share gains in our key home loan market in Australia as well as record home loan volumes in New Zealand."
Mr Elliott revealed that its Institutional business also performed well during the quarter.
He explained: "Our diversified portfolio in Institutional delivered again for shareholders with a strong contribution from our international network. Markets had another solid quarter although revenue was down relative to the historic highs we experienced at the end of last year."
Another positive is that ANZ's margins have been improving.
The Chief Executive said: "Margins were up across the group due to higher volume growth in targeted segments and a disciplined and active approach to risk and pricing. The combination drove Group revenue up 4% for the quarter when excluding the impact of our Markets business."
Outlook
Mr Elliott appears optimistic on the future, which could bode well for the ANZ share price today.
He commented: "ANZ is well positioned heading into the remainder of 2021 with good momentum in our core activities. The work done to simplify and de-risk the business over the past five years set us up well and we have the capital, liquidity and operational capacity to continue to support our customers and the broader economy through what remains a volatile period."
