Why is the ANZ share price climbing today?

Posted: 28 October 2021 2:20 pm

Shares in the Big Four bank have risen nearly 45% in the last 12 months.

Shares in Australia and New Zealand Banking Group (ASX: ANZ) are among the top trades on the ASX boards on Monday. ANZ was trading 1.8% higher at $28.87 at the time of writing, far ahead of its major banking rivals.

What is lifting up the ANZ stock price?

The lift in the ANZ stock price comes after the lender reported a 72% surge in full year net profit, ahead of market expectations. The Big Four lender reported net profit of $6.2 billion for the 12 months to 30 September.

Its cash profit also surged 65%, broadly helped by robust lending activity, strong growth in customer deposits and momentum in the key home loans market.

“Australia Retail & Commercial grew lending and customer deposits during the year and delivered good margin performance across the division,” CEO Shayne Elliott said in a statement to the ASX.

“A focus on improving customer outcomes as well as realising the benefits of prior investments helped New Zealand deliver one of its strongest performances ever.”

The bank bolstered its presence in the home loan market, adding 179,000 new home loan accounts in Australia, and another 82,000 new loans in New Zealand. The booming market meant it had some trouble processing applications, resulting in volumes slowing in the second half amid competitive pressure. Still, revenue growth in the home lending business rose in the "low double digits".

Its profits were also bolstered by the unwinding of COVID-related provisions worth $567 million, thanks to the improved economic outlook in the first half of the year.

Strong capital position

The rebound in profits comes after ANZ's profit plunged last year, largely due to the bank being forced to make higher provisions to cover for the potential impact from the COVID-19 disruptions.

On Thursday, the lender unveiled a much improved picture and said it had lifted its Common Equity Tier 1 (CET 1) capital ratio by 100 basis points to 12.3% by the end of September. That means it has a buffer of $6 billion above the banking regulator’s “unquestionably strong” benchmark level.

The importance of this was reflected in the payout for shareholders. ANZ will pay a final dividend of 72 cents a share, compared to just 35 cents last year. The lift in dividend comes despite the bank announcing a $1.5 billion share buyback in August.

“Experience tells us the real impacts of COVID-19 will not be fully understood until at least the end of 2022, however we’re well positioned financially and culturally to respond,” Mr Elliott said.

ANZ shares are up nearly 45% over the last 12 months.

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