ANZ share price on watch amid $3.1bn half-year cash profit

ANZ has released its half-year results…

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Key points

  • ANZ has released its half-year results this morning
  • The banking giant reported a year on year increase in cash earnings
  • ANZ's cash earnings appear to be ahead of estimates by Goldman Sachs

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price will be one to watch this morning.

This follows the release of the banking giant’s half-year results.

ANZ share price on watch amid $3.1bn cash profit

  • Statutory operating income from continuing operation up 14% to $9,542 million
  • Cash earnings from continuing operations up 4% to $3,113 million
  • Net interest margin (NIM) down 7 basis points during the half to 1.58%
  • CET1 ratio decreased 81 basis points to 11.53% during the half
  • Interim fully franked dividend of 72 cents per share

What happened during the half?

For the six months ended 31 March, ANZ delivered cash earnings from continuing operations of $3,113 million. This represents a 4% increase over the prior corresponding period but a 3% decline on the second half of FY 2021.

ANZ’s year on year growth was driven by its Australia Retail and Commercial segment and its New Zealand segment, which offset a poor performance from the bank’s Institutional segment.

For the period, the Australia Retail and Commercial segment reported an 11% increase in cash earnings to $1,986 million. This was driven by positive balance sheet momentum after the bank increased home loan processing capacity by 30%, bringing assessment times in line with major peers.

Over in New Zealand, the bank reported a 2% lift in cash earnings to $787 million. Management revealed that it grew its home loans by 7% half-on-half. This took ANZ’s total home loan book in New Zealand to more than NZ$100 billion and increased its market share by 28bps to 30.66%.

The Institutional segment was the only real disappointment. It recorded a disappointing 23% decline in cash earnings to $730 million.

Nevertheless, this couldn’t stop ANZ from declaring a 72 cents per share fully franked interim dividend. This represents a 2.9% or 2 cents increase on FY 2021’s interim dividend.

How does this compare to expectations?

The good news for shareholders is that this result appears to have come in a touch ahead of expectations, which could bode well for the ANZ share price this morning.

For example, a note out of Goldman Sachs reveals that its analysts were expecting ANZ to report cash earnings of $2,971 million. This compares to ANZ’s actual cash earnings of $3,113 million.

This may have been driven by the bank’s better than expected NIM. Goldman was expecting a NIM of 1.56%, whereas ANZ reported a 1.58% margin.

The broker was also forecasting a fully franked interim dividend of 72 cents per share, which is what the bank declared.

Management commentary

ANZ’s Chief Executive Officer, Shayne Elliott, appears optimistic on the future. He said:

“Looking ahead, the economic environment is likely to be very different and we will continue to adjust our risk appetite, business settings and investment priorities as required. We are already seeing increased demand from our business customers and we are well placed to continue to support them as they manage in a world of higher inflation and interest rates.

“For ANZ, we will continue to focus on the long term – investing for tomorrow and not just running today. We have made good progress in building a resilient, agile bank for the future. Our culture is strong and we have an embedded sense of purpose as an organisation – to shape a world where people and communities thrive.”

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 Scott Phillips.

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