The ANZ Group Holdings Ltd (ASX: ANZ) shares are in the green on the release of the bank's earnings for the first half of financial year 2023.
The smallest of the big four banks posted record first-half cash earnings of $3.8 billion for the period, as my Fool colleague James reported earlier today. It also realised a record $10.5 billion in total revenue for the period, helped by its long-term simplification strategy.
However, management expects the tide could turn over the coming six months.
The ANZ share price is flying higher at the time of writing, rising 0.5% to trade at $23.58.
It follows a rough start to today's session, wherein the stock tumbled 2.5% to a low of $22.88.
Today's gains are likely a relief for those invested in the S&P/ASX 200 Index (ASX: XJO) bank stock, particularly as many of its peers have suffered on recent earnings releases.
The Macquarie Group Ltd (ASX: MQG) share price is currently down 3% on its full-year results this morning, while stock in National Australia Bank Ltd (ASX: NAB) plummeted 6% yesterday following its half-year report.
Let's take a closer look at what ANZ reported for the first half and what might face the bank in the second half.
ANZ shares climb as simplification strategy pays off
Those buying shares in ANZ today are investing in a markedly different bank than they were seven years ago, CEO Shayne Elliott says.
Speaking to the bank's own publication, Blue Notes, Elliott dubbed the earnings released today "a great result, strategically and financially". He said:
It's really the culmination of a strategy that we have been executing over seven years … to simply and strengthen the bank.
Let's not forget, over that seven years, we've sold 30 businesses – some quite large like our wealth management businesses – and so we've been able to replace all [lost revenue].
That's come about by a focus: Doing a few things and doing them really well.
The ASX 200 bank reported a slight jump in its net interest margin (NIM) for the first half, coming in at 1.75%, and upped its interim dividend by 9.5% to 81 cents.
Elliott also spoke on whispers of a potential jump in loan defaults, largely driven by interest rate hikes, saying:
There are clearly signs of emerging stress but, to be honest, you have to squint to see them … [while] we'd expect things to get worse, we don't expect them to get materially worse.
Rather, competition in the retail banking space is expected to weigh on ANZ's earnings in the second half – with the period tipped to be "more difficult than the last".
What are brokers saying?
UBS responded to the update weighing on ANZ shares on Friday, noting the bank's earnings were close to consensus expectations, The Australian reports.
The publication quoted UBS analyst John Storey as saying:
We are buy-rated on ANZ but below consensus on earnings and we imagine the street will likely pull forecasts down to reflect the weaker NIM outcome.
