ANZ (ASX:ANZ) share price higher after beating expectations in FY21

This banking giant’s shares are rising on Thursday…

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The market may be in the red today, but the same cannot be said for the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price.

In late morning trade, the banking giant’s shares are up 1.5% to $28.80.

Why is the ANZ share price outperforming today?

Investors have been bidding the ANZ share price higher today following the release of its full year results for FY 2021.

For the 12 months ended 30 September, the bank reported a 72% jump in statutory profit after tax to $6,162 million and a 65% increase in cash earnings from continuing operations to $6,198 million.

This strong profit growth was underpinned by significant reduction in provisions compared to the prior corresponding period, tightly managed expenses, and profit growth in Australia Retail and Commercial.

Also potentially giving the ANZ share price a boost was its strong capital position. The bank finished the period with a CET1 ratio up 100 basis points to 12.3%. This means the bank has $6 billion of surplus capital above of APRA’s requirements, which could bode well for potential share buybacks in the future.

In light of its strong performance, the ANZ Board was able to declare a fully franked final dividend of 72 cents per share, bringing its full year dividend to 142 cents per share. This is up from 60 cents per share in COVID-impacted FY 2020.

How does this compare to expectations?

The team at Goldman Sachs responded positively to the release, noting that ANZ’s results came in ahead of its expectations.

The broker commented: “ANZ reported 2H21 cash earnings (company basis) from continued operations of A$3,208 mn, which was up 37% on pcp and 11% ahead of GSe, with the beat driven by higher revenues and a lower BDD charge. As such, 2H21 PPOP came in 6% higher than GSe, with the better-than-expected result driven by higher trading income and a better-than-expected performance on NIMs, partially offset by higher expenses. We note that even adjusting for the better than expected trading income, 2H21 revenues were still c. 1.5% better than GSe.”

“The proposed final DPS of A72¢ was slightly higher than GSe A70¢ and implies a payout ratio of 63% and will come with a non discounted DRP that will be neutralised by acquiring shares on market. The 2H21 CET1 ratio of 12.3% (18.35% globally-harmonised) was 13bps stronger than GSe,” it added.

Goldman currently has a buy rating on the ANZ share price with a price target of $30.71. Though, this recommendation and target could change once it has fully absorbed the result.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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