ANZ (ASX:ANZ) share price on watch after FY21 profit surge

ANZ’s profits jumped in FY 2021…

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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 full year results this morning.

ANZ share price on watch after strong profit growth

  • Statutory profit after tax up 72% to $6,162 million
  • Cash earnings from continuing operations up 65% to $6,198 million
  • Earnings per share up 65% to 218.3 cents
  • Fully franked final dividend of 72 cents per share
  • Full year provision release of $567 million and collective provision release of $823 million
  • CET1 ratio up 100 basis points to 12.3%
  • $6 billion of capital above of APRA’s requirements

What happened in FY 2021?

For the 12 months ended 30 June, ANZ reported a 65% increase in cash earnings from continuing operations to $6,198 million. This was driven largely by a significant reduction in provisions compared to the prior corresponding period, tightly managed expenses, and profit growth in Australia Retail and Commercial, which offset notably weaker Markets income.

ANZ’s Chief Executive Officer, Shayne Elliott, explained: “This year demonstrated the benefits of our diversified portfolio as we provided solid returns for shareholders while also successfully navigating the continuing impacts of COVID-19 on our customers and our people.”

“Australia Retail & Commercial grew lending and customer deposits during the year and delivered good margin performance across the division. Home loan revenue growth was in the low double digits. However, second half volumes were impacted by a competitive refinancing market, customers paying down their loans faster and processing issues. We have been working on a range of improvements and they are already having a positive impact on processing times.”

Mr Elliott was also pleased with the performance of the bank’s Institutional business.

He commented: “Institutional delivered another consistent performance, reflecting the benefits of a simpler, more diversified franchise. This is a business providing sustainable returns well above the Group cost of capital. Markets revenue just below $2 billion in the current environment is testament to its strength and diversity as well as prudent risk settings.”

How does this compare to expectations?

The good news for shareholders and the ANZ share price is that this result appears to have come in ahead of expectations.

For example, a note out of Morgans reveals that it was expecting the banking giant to report cash earnings from continuing operations of $6,017 million. This is broadly in line with consensus estimates.

In addition, the broker was forecasting a fully franked 69 cents final dividend. Whereas ANZ declared a 72 cents per share dividend.

Outlook

No guidance has been provided for FY 2022. However, management spoke optimistically about the future.

Mr Elliott commented: “Experience tells us the real impacts of COVID-19 will not be fully understood until at least the end of 2022, however we’re well positioned financially and culturally to respond. There will be opportunities that arise and we are investing for growth with the mindset and agility to continue to deliver for customers, shareholders and the community.”

The ANZ share price is up 23% in 2021.

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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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