ANZ share price on watch after record result beats expectations

ANZ has delivered record half-year cash earnings this morning.

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Key points

  • ANZ has released its half-year results for FY 2023
  • The banking giant appears to have outperformed the market's expectations
  • ANZ's cash earnings have hit a first-half record high

The ANZ Group Holdings Ltd (ASX: ANZ) share price will be one to watch closely today.

That's because this morning it has become the latest big four bank to release its half-year results.

ANZ share price on watch amid record half-year cash earnings

  • Statutory profit after tax down 1% from the prior half to $3,547 million
  • First-half cash earnings from continuing operations up 12% to a record of $3,821 million
  • CET1 ratio up 89 basis points to 13.2%
  • Net interest margin (NIM) up 7 basis points to 1.75%
  • Fully franked interim dividend up 9.5% to 81 cents per share

What happened during the half?

For the six months ended 31 March, ANZ reported record first-half cash earnings of $3,821 million, up 12% on the second half of FY 2022.

Pleasingly, unlike with National Australia Bank Ltd (ASX: NAB) on Thursday, this result has come in ahead of the consensus estimate. The market was expecting cash earnings of $3,769 million for the half.

ANZ CEO, Shayne Elliott, revealed that all four divisions contributed to its earnings growth. He said:

This was a strong financial performance in which all four divisions made a material contribution. The record result was driven by solid revenue growth across the board and the benefits of having a well-diversified business. It was also a direct outcome of our deliberate strategy to simplify, reshape and de-risk the bank, which has allowed us to replace revenue following the disposal of non-core assets.

Elliott also highlighted its home loans growing faster than the market, its record half-year result from the institutional business, an improvement in New Zealand, and a particularly strong performance from the Australia Commercial division. In respect to the latter, the CEO said:

Australia Commercial was a strong contributor to Group revenue, generating the highest return on equity of our divisions and delivering revenue growth of 30%5 compared with the prior comparable period.

In light of this solid earnings growth, the ANZ board elected to increase its fully franked interim dividend by 9.5% to 81 cents per share. This was ahead of the 80 cents per share that Goldman Sachs was forecasting.

Outlook

One thing that could potentially hold back the ANZ share price was management's outlook commentary. Elliott warned that the second half will be harder than the first due to "intense" competition in retail banking. He said:

The next six months will be more difficult than the last. Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand. We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy. While the number of ANZ customers in difficulty remains low, we stand ready to help in these potentially challenging times.

We enter the next half with a business structure that brings the benefits of geographic and product diversification. We have a robust capital position, credit loss provisions higher than any other time pre-COVID, a strong and diverse deposit base and a track-record of execution. We are seeing continued momentum and high employee engagement across all four divisions, each with a clear strategy and a funded roadmap for growth.

The ANZ share price is down 12% over the last 12 months.

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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