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ASX 200 rises, Zip (ASX:Z1P) flies, bank ratings upgraded

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The S&P/ASX 200 Index (ASX: XJO) went up by 0.04% to 6,977 points.

These are some of the highlights of the ASX from today:

Zip Co Ltd (ASX: Z1P)

The Zip share price went up by around 17% today in reaction to the buy now, pay later company’s FY21 third quarter update.

Zip revealed record group quarterly revenue of $114.4 million – up 80% year on year. It also saw quarterly transaction volume growth of 114% to $1.6 billion. Zip experienced record transaction numbers of 12.4 million, up 195%.

Customer numbers increased by 88% to 6.4 million, whilst merchant numbers rose 81% to 45,300.

Zip US (Quadpay) was the standout, according to management. Transaction volume grew by 234% to $762 million, revenue grew 188% to $54.4 million and customers went up 153% to 3.8 million.

Zip ANZ saw transaction volume growth of 61% to $837.3 million and revenue growth of 37% to $57.9 million.

Net bad debts fell to 1.78%, down from 1.93% for Australian receivables. Zip said this was a very strong result, further validating the strength of Zip’s proprietary credit decision technology and ability to manage risk.

Zip managing director and CEO Larry Diamond said:

We are extremely pleased with the strong growth and momentum in the business, delivering another exceptional set of numbers…Our focus on unit economics continues to provide a point of difference and points to a strong bottom line at scale. We continue to innovate and deliver new features to our customers in line with our mission to become the first payment choice everywhere, every day.

Fitch rating agency increases outlook for major ASX banks

Fitch has revised its credit rating outlook for the big ASX 200 banks including Australia and New Zealand Banking Group Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

Commenting on the ANZ outlook, Fitch said:

The outlook revision reflects Australia’s improved economic prospects and increased certainty, which gives Fitch greater confidence that ANZ’s financial profile is likely to remain consistent with its current ratings over the next two years.

The stable outlook reflects our view that ANZ has sufficient headroom in its financial metrics to maintain the current rating, even in a scenario that is moderately weaker than our base case. Australia’s good handling of the health aspects of the coronavirus pandemic has allowed the economy to rebound strongly; we now expect GDP to expand by 4.7% in 2021. Downside to this forecast remains, particularly until the vaccination programme is completed, but has reduced significantly since early 2020.

The ANZ share price fell 0.2% today, the Westpac share price dropped 0.2% and the NAB share price declined 0.4%.

Regis Resources Limited (ASX: RRL)

Regis announced that it has entered into a conditional binding asset sale agreement with IGO Ltd (ASX: IGO) to acquire a 30% interest in the Tropicana gold mine, which is located in Western Australia.

In FY21, Tropicana is expected to produce 380,000 ounces to 430,000 ounces of gold. The mine has an expected life of more than 10 years and there are multiple growth opportunities near the mine with attractive regional targets for longer-term upside.

The ASX 200 gold miner is happy with the acquisition because the mine is a high quality, low cost, high margin gold asset.

The CEO and managing director of Regis, Jim Beyer, said:

This is genuinely a transformational transaction for Regis and one that delivers on our strategic objectives to grow as a safe, responsible, reliable, long life, low cost gold producer, generating strong financial returns. Diversifying the company’s robust portfolio through the acquisition of a 30% interest in the Tropicana operation will deliver significant improvements in the company’s resources, reserves and annual production, along with providing additional immediate cashflows, all of which adds to the strength of our platform for undertaking further organic and inorganic growth activities.

Regis intends to fund the acquisition with a capital raising of up to $650 million, as well as a $300 million new loan facility.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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