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ANZ Group Holdings has reported an annual net profit that remains on par with the previous year's figures, standing at 7.1 billion Australian dollars (US$4.51 billion) for the 12 months ending in September. Despite analysts' expectations of a slightly higher net profit at A$7.21 billion, according to FactSet's consensus estimate, the bank has managed to achieve stability in its financial performance.
Cash earnings, a metric closely monitored by analysts, experienced a robust growth of 14%, reaching A$7.41 billion. ANZ's Chief Executive, Shayne Elliott, acknowledged the challenges presented by the current external environment, emphasizing the impact of higher interest rates, rising costs, and geopolitical tensions.
"We continued to strengthen our balance sheet and closed the year with provisions for potential credit losses higher than prior to the pandemic, and with more capital than ever before," said Elliott. He highlighted the critical nature of these measures as the bank navigates through a period of sustained high interest rates and global uncertainties.
ANZ's Common Equity Tier 1 capital ratio, a key indicator of the bank's resilience to financial shocks, increased by 105 basis points over the year, reaching 13.3%. The bank's credit provision overlays, designed to address increased risks associated with inflation, higher interest rates, and geopolitical tensions, have been largely retained, with a balance of A$4.03 billion at the end of September.
In response to the rising interest rate environment, ANZ has declared a final dividend of A$0.94 per share, representing an increase from A$0.74 in the previous year. The dividend includes an A$0.81 partially franked dividend at 65% and an additional one-off unfranked dividend of A$0.13.
ANZ explained the lower franking credits, citing the "geographically diverse nature" of its business and the timing of the proposed acquisition of Suncorp's bank. To address potential shareholder expectations, the board deemed the one-off unfranked dividend appropriate in light of the bank's strong performance.
The bank remains focused on preparations to integrate Suncorp's bank, awaiting the decision of the Australian Competition Tribunal in February regarding the fate of the deal. Despite the positive financial indicators, analysts caution that ANZ and other Australian lenders may face challenges in sustaining earnings growth as the tailwind from rising interest rates is expected to slow in fiscal 2024 and beyond.
