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Highlights
- ANZ shares up 20% in 2024, but lagging behind other major ASX banks.
- Despite challenges, analysts remain optimistic about the bank’s long-term growth.
- Outlook for 2025 is positive as Australia’s property market remains resilient.
Despite the overall flourishing of banking stocks in 2024, ANZ Group Holdings Ltd (ASX:ANZ) shares have seen a mixed performance this year. While the broader banking sector has rallied, ANZ shares have failed to keep pace with its major banking peers. However, with 2025 on the horizon, the outlook remains optimistic for the financial giant. Let’s break down what’s been driving ANZ’s performance and what experts are forecasting for 2025.
ANZ’s 2024 Performance
Although ANZ shares are up by 20% so far in 2024, they have underperformed compared to some of their ASX banking peers. For context, Westpac Banking Corp (ASX:WBC) has seen a 43% increase in share price, while the Commonwealth Bank of Australia (ASX:CBA) is up 41% this year. The strong recovery in home loan demand, which surged by 30% over the past year, has been a key factor fueling the broader rally in banking stocks.
However, despite the positive performance, ANZ has faced challenges that have contributed to its relative underperformance. The bank reported net profits of $6.5 billion for its FY24 earnings, a decline of 8% compared to the previous year. While the decline in profits is a concern, ANZ did manage to pay dividends of $1.66 per share, providing some relief to shareholders.
Even with the strong share price increase, some investors may be questioning why ANZ is lagging behind other major players in the banking sector. The answer lies partly in investor sentiment and the broader market's response to the bank's performance in key areas such as home loan growth and overall profitability.
What’s Driving ANZ’s Underperformance?
While ANZ has still managed to deliver a solid return of 20% in 2024, it hasn’t captured the same level of enthusiasm as its peers. The decline in net profits in FY24, which was largely attributed to increased operational costs and a slowdown in certain revenue segments, has caused some hesitation among investors.
Moreover, home loan demand, while up significantly across the sector, didn’t translate into comparable growth for ANZ. This, along with some of the challenges faced by the bank in managing its costs, has contributed to its relative underperformance. On top of that, ANZ’s earnings per share in FY24 fell short of investor expectations, which may have dampened confidence compared to the more robust growth seen by Westpac and CBA.
2025 Outlook for ANZ Shares
Looking ahead, 2025 presents a potentially brighter future for ANZ shares. According to Creditor Watch, the financials sector in Australia is well-positioned for continued growth due to the strength of the country’s property market. Over the past few years, Australian households have significantly deleveraged, bolstered by rising house and share prices. This, coupled with the rebound in property demand, could provide a stable backdrop for the bank's future growth.
For many households still relatively unaffected by financial difficulty, the 20-40% rise in house prices since the pandemic could mean that any potential financial troubles can be mitigated by selling property at a profit. This strengthens the bank's position, as the risk of loan defaults remains low and profits from the mortgage sector continue to rise.
Despite the challenges in FY24, analysts remain optimistic about ANZ’s long-term prospects, with many predicting the bank to capitalize on the continued strength of the Australian housing market and its ability to maintain a strong foothold in the financial sector.
Conclusion
While 2024 may not have been an exceptional year for ANZ shares, the bank has still delivered solid returns of 20%. With analysts projecting positive growth in the Australian property market and the financial sector, 2025 could see a rebound for the bank. ANZ’s ability to manage costs, grow its mortgage book, and adapt to market dynamics will be critical in shaping its performance going forward.
