ANZ shares rise as the bank boosts its capital coffers

The bank continues to simplify its balance sheet.

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The ANZ Group Holdings Ltd (ASX: ANZ) share price is up 0.7% in early trading amid news the ASX bank share has sold its remaining shareholding in AmBank. The S&P/ASX 200 Index (ASX: XJO) is up 0.8% in morning trade, so ANZ shares are slightly underperforming the market.

AmBank is one of the largest financial institutions in Malaysia. It has been operating for more than 40 years. The Malaysian bank has more than three million customers and over 9,000 employees. Services include banking, underwriting of general insurance, life insurance, and asset management services.

ANZ sells remaining shares of AmBank

The ASX bank share announced it has agreed to sell its remaining 5.2% of the issued shares of AMMB Holdings Bhd, otherwise known as AmBank, through a block trade at a price of MYR4.10 per share.

ANZ disclosed the sale proceeds will increase its common equity tier 1 (CET1) ratio by approximately 5 basis points. This is in addition to the 16 basis points of capital released from the sale of the initial block of 16.5% of AmBank shares in March 2024. The sale announced in March was done at MYR3.85 per share, so it has risen 6% in two months.

The AMMB share price has risen by 16% in the past 12 months, according to Google Finance. ANZ appears to be capitalising on a price close to the highest level since the onset of the COVID-19 pandemic.

The settlement of this sale is anticipated to occur on 5 June 2024.

The bank said the sale proceeds will have "no material impact" on net profit after tax (NPAT).

ANZ said after the March sale that its capital management considerations would include the capital release from the sale. The ASX bank share did not reference any 'capital management' during today's sell-down announcement.

Management comments

The ANZ chief financial officer Farhan Faruqui said:

The sale of our equity stake in AmBank is a significant milestone in delivering on our strategy to simplify the bank. We have valued our partnership with AmBank and wish the group well for the future.

ANZ share buyback

When the ASX bank share announced its FY24 half-year result earlier in May, it revealed its intention to buy back up to $2 billion of shares as part of its capital management plan.

The bank called the buyback "appropriate", taking into account its "strong capital position". ANZ said the share buyback is expected to reduce ANZ's level 1 and level 2 CET1 ratios at March 2024 by 54 basis points and 46 basis points.

Motley Fool contributor Tristan Harrison 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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