ANZ Bank Shares Climb After Profit Tops Analyst Estimates

(Bloomberg) --

Australia & New Zealand Banking Group Ltd. shares opened higher after first-half profit topped analyst estimates and the nation's economic recovery progresses from the pandemic.

The stock was up 1.9% as of 10:03 a.m. in Sydney. Cash profit from continuing operations rose to A$3.1 billion ($2.2 billion) in the six months through March 31, beating the A$2.89 billion estimate of six analysts surveyed by Bloomberg. The Melbourne-based firm will pay an interim dividend of 72 Australian cents per share.

With Australia's economic recovery gathering steam and benchmark interest rates beginning to increase, banks still face fierce competition for home loans despite some pressure easing on margins.

Australian lenders are lifting variable mortgage rates after the Reserve Bank of Australia on Tuesday delivered a bigger-than-expected interest-rate hike.

“This is quite a big pivot -- we are now talking about a new world, a world of inflation,” Chief Executive Officer Shayne Elliott said in an interview on Bloomberg TV. “It's a significant shift in the conditions.”

What Bloomberg Intelligence Says

ANZ might hit consensus for 2022 profit despite growth that still trails its four biggest peers. ANZ expects “slightly positive” fiscal 2H22 margins, and what it anticipates will be a 2% RBA cash rate by March 2023 will add about A$800 million to revenue -- Matt Ingram, senior industry analyst. Read report here.

Elliott also noted the improvement in his bank's ability to handle home-loan applications. “Investments in our home loan processing capacity in Australia drove positive balance sheet momentum while processing times are comparable to our major peers,” he said in the statement.

ANZ Bank also said it intends to lodge a formal application with regulators to set up a non-operating holding company. This will allow it to create distinct banking and non-banking groups within the firm, according to the statement.