Australia and New Zealand Banking Group Limited (ASX: ANZ) announced its full-year results of FY 2018 on 31 October 2018. The company reported a Statutory Profit of $6,400 million in FY 2018. The earnings per share of the company decreased by 4 percent to 223.4 cents and the Dividend Per Share was flat at 160 cents. The net tangible asset per share increased by more than 5 percent to $18.47 Mn. Following the release of the results, the share price of the company increased by 0.974 percent as on 31 October 2018.
Despite facing tough challenges, the company managed to produce good results in FY 2018. As per the ANZ CEO Mr. Shayne Elliott, the actions taken by the company in the recent years to simplify the business have allowed the company to reduce cost, rebalance capital and better remediate issues which have placed ANZ in a stronger position to meet the challenges facing the industry.
In FY 2018, the retail banking in Australia faced strong headwinds due to slow growth in housing and lower borrowing capacity. ANZ maintained its disciplined approach to home loan growth by focusing on customers who want to buy and own their own home. And by doing this, ANZ sacrificed its short-term revenue growth and higher margins in Australia, particularly in the investor and interest-only segments but as per ANZ management, it was the right thing to do for shareholders.
ANZ New Zealand again delivered a strong performance and composition of its Institutional results provided improved and diversified earnings. Both of these businesses have undergone significant transformations in recent years with diversification becoming even more important as housing credit slows in Australia.
ANZ was able to maintain strong capital position with CET ratio of 11.4% at 30 September 2018, driven by organic generation 28 bps higher than historical average and proceeds of asset sales. ANZ is expecting that the tough revenue growth environment in retail banking in Australia will continue for the foreseeable future, however, ANZ is well positioned to take advantage of growth opportunities in Institutional, Asia and New Zealand.
With respect to the ANZ’s strategy of simplifying the business, ANZ announced a sale of ANZ New Zealand’s life insurance business to Cigna Corporation for NZ$700 million, as well as announced the sale of ANZ’s retail and commercial business in PNG and ANZ’s Joint-Venture in Cambodia. This year, ANZ provided significant support package for Australian farmers which were impacted by drought including reducing business rates by 1% pa, donating $1 million and offering $130 million in discounted loans to support impacted farmers. While the company is pleased with its performance in FY 2018, it also accepts the significant community concern as a result of its failures highlighted by the Royal Commission has impacted its standing in the community. On 31 October 2018, ANZ also announced that it will not be pursuing an initial public offering (IPO) of UDC Finance, following the completion of a strategic review of the business.
In the last six months, the share price of ANZ decreased by 4.40 percent as on 30 October 2018. ANZ shares traded at $25.910 with a market capitalization of circa $73.74 billion as on 31 October 2018 (AEST 1:47 PM).
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