As the dust settles on the cases brought against ANZ by the Australian Securities and Exchange Commission (ASIC), investors and prospective buyers will be watching ANZ shares closely.
For context, ANZ Group Holdings Ltd (ASX: ANZ) has admitted to misconduct. This includes misleading the Australian Government on a $14 billion bond deal, ignoring customer hardship pleas, underpaying savings interest, and charging fees to deceased customers, impacting nearly 65,000 people.
ASIC and ANZ will ask the Federal Court to approve $240 million in penalties.
According to a media release from the bank, under the agreement, which requires Federal Court approval, ANZ is subject to the following penalties:
- $85 million for ANZ's role as duration manager in the execution of a 2023 issuance of 10-year Treasury Bonds by the Australian Office of Financial Management (AOFM)
- $40 million for submitting inaccurate monthly secondary bond turnover data to the AOFM over almost a two-year period.
- $40 million for its failure to pay acquisition bonus interest on certain Online Saver accounts and displaying inaccurate rates;
- $40 million for breaching its obligations in relation to its handling of customer hardship notices; and
- $35 million relating to breaches of its obligations concerning deceased estates.
ANZ Chairman Paul O'Sullivan said:
While we have worked hard to get regulatory certainty on these matters, the reality is we made mistakes that have had a significant impact on customers. On behalf of ANZ, I apologise and assure our customers we have taken the necessary action, including holding relevant executives accountable.
What does it mean for the ANZ share price?
Unsurprisingly, ANZ shares fell following the news in mid-September.
Macquarie modified its FY25-FY26 earnings projection by -4%/-1%, after the $240m fine.
However it would appear in the week or two since the announcement, ANZ shareholders have avoided any panic selling.
ANZ shares are down 0.48% since the ASIC announcement on September 15.
What does Ord Minnett think about ANZ shares?
Post the announcement, the broker said it has cut FY25 EPS estimate by 3.7% to incorporate the penalties.
FY26 and FY27 forecasts were unchanged.
The broker believes the outlook hinges considerably on the new CEO Nuno Matos' strategy.
Matos appears to be making the difficult decisions early in his tenure and is plotting a path to higher returns from ANZ, which has underperformed its big four rivals for quite a few years.
If the new CEO can offer the market a realistic strategy, and successfully execute it, then investors should be convinced to re-rate the valuation multiple of the smallest of the big banks towards those of its larger peers.
Based on this, the broker maintains a Hold recommendation on ANZ shares with a price target of $30.00.
Based on this guidance, it would seem ANZ shares are slightly overpriced.
The bank shares closed last week at $32.83.
