The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is out of action on Monday.
This follows the announcement of a capital raising to fund the blockbuster acquisition of the banking operations of Suncorp Group Ltd (ASX: SUN) for $4.9 billion.
But that wasn't the only thing the big four bank announced today.
In addition to its capital raising and acquisition announcement, ANZ has provided investors with an update on its performance during the third quarter of FY 2022.
How did ANZ perform during the third quarter?
For the three months ended 30 June, ANZ delivered a 5% increase in revenue over the prior corresponding period. This would have been up 6% excluding foreign exchange headwinds.
Management advised that this was underpinned by strong lending and margin momentum across all its major businesses during the three months. The bank's deposits were flat excluding foreign exchange impacts.
The company's investment in operational capacity and its processing resilience in the Australian Home Loan business has helped deliver consistently faster turnaround times across all channels. This means the bank is now in line with major peers for key customer segments.
Lending volumes grew $2.0 billion (3% annualised) in the third quarter, with particularly strong growth in June. In light of this, ANZ remains on track to grow in line with the Australian major banks before the end of the financial year and is delivering growth with an eye to maintaining margin performance and credit quality.
Margin improvements
Speaking of margins, ANZ's group net interest margin (NIM) increased 3 basis points for the quarter and its underlying NIM was up 6 basis points to 164 basis points. This was largely driven by the impact of rising rates, partly offset by intense price competition in the home lending portfolios in Australia and New Zealand.
Pleasingly, with interest rates projected to increase further in the coming months, management expects this to be supportive for margins in the fourth quarter.
Another positive is that ANZ's costs remain tightly managed, with 'run-the-bank' costs expected to be broadly flat for the second half. This is despite the banking giant facing inflationary pressures. In addition, ANZ continues to invest in the business at record levels, with investment expense expected to be slightly higher in the second half as it finalises its compliance with BS11 in New Zealand.
Also catching the eye was ANZ's continued low level of individual provisions. The bank reported a $14 million credit provision charge for the third quarter.
On a collective basis, ANZ has maintained a collective provision balance of $3.78 billion. It advised that this reflects risks to the domestic and global economic outlook from factors such as higher inflation and interest rates over the quarter.
'A pleasing quarter'
ANZ's chief executive officer, Shayne Elliott, was pleased with the bank's quarter. He said:
This was a pleasing quarter where all our businesses performed, particularly our home loan business in Australia. While rising inflation and interest rates are starting to impact some customers, household and business balance sheets remain strong and with a collective provision balance of $3.8 billion we are well-placed to continue to support economic growth into the future.
