Owners of ANZ Group Holdings Ltd (ASX: ANZ) shares had a great time in 2024, experiencing both capital growth and pleasing dividends. However, the S&P/ASX 200 Index (ASX: XJO) also saw a solid performance that was stronger than average.
The last few years have seen many changes in the Australian economy, including RBA interest rate hikes and volatility in the iron ore price.
ANZ shares and the wider ASX bank share sector have benefited from the rise of Australian house prices and the ability of borrowers to largely continue making loan repayments in the last three years.
So, did ANZ outperform the ASX 200, and how was its financial performance in 2024?
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Market-beating performance
In 2024, the ANZ share price increased by 9.8%, which is a fairly impressive rise for such a large business. The ASX 200 climbed around 7.5%, finishing the year at 8,159 points.
But there's more to a company's performance than just the share price growth. There's also the passive income paid by the investments.
In FY24, the ASX bank share paid an annual dividend per share of $1.66. This added an extra 5.5% return for owners of ANZ shares, taking the total shareholder return to approximately 15.3%. This doesn't include franking credits.
The ASX 200 also had a good year, but not as good as ANZ, with a total return of approximately 11.4%.
In other words, owning ANZ shares delivered a stronger return by approximately 4%. Past performance is not a reliable indicator of future performance, though.
Let's look at what the bank actually reported in its FY24 result.
FY24 result
The market is usually focused on profit, so the ANZ share price rise may have surprised some investors, considering what it reported in the 12 months to 30 September 2024.
ANZ revealed statutory net profit after tax (NPAT) declined 8% to $6.5 billion, while cash earnings per share (EPS) dropped 9% to $2.243. Total cash profit fell 8% to $6.7 billion.
The bank highlighted that 7% growth in home loans and customer deposits, combined with "historically low credit impairments reflecting customer resilience", helped its result.
However, ANZ saw its banking net interest margin (NIM) – a measure of lending profitability on its loans – decline amid competition in the lending sector and higher costs for customer deposits.
Bond trading
In 2024, the bank also suffered from the reputational damage caused by the alleged bond scandal.
As my colleague Mitchell Lawler reported in July, the Australian Securities and Investment Commission (ASIC) was investigating whether ANZ manipulated the bond market in a $14 billion bond deal that it handled for the Australian Federal Government. If ANZ's bond traders increased the cost of the government's borrowing, it may have cost Australian taxpayers tens of millions of dollars.
Time will tell how this ultimately plays out for the ASX bank share, but the ANZ CEO has decided to leave the bank since this news broke.
The ANZ share price fell close to 10% between mid-July 2024 to early August 2024.
What next for the ANZ share price?
The broker UBS currently has a price target of $34 on ANZ shares, which is where the analysts believe the bank's valuation will get to in 12 months from the time of the investment call.
The price target implies a possible rise of almost 18% within the next year.
