Category: Economy

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ANZ to buy-back up to $2 billion of shares

Source: ANZ statements

Capital impact

Australia and New Zealand Banking Group Limited’s (ANZBGL) reported Level 1 and Level 2 Common Equity Tier 1 capital (CET1) ratios as at 31 March 2024 were 13.4% and 13.5% respectively.  After taking into account the impact of the Suncorp acquisition and the buy-back, ANZBGL’s pro forma Level 1 and Level 2 CET1 capital ratios as at 31 March 2024 would be 12.2% and 11.8% respectively.

The on-market share buy-back is expected to reduce ANZ’s Level 1 and Level 2 March 2024 CETI ratios by approximately 54 and 46 basis points respectively.[1]

Retail shareholders can contact Computershare for further information on 1800 11 33 99 or +613 9415 4010.

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2024 Half Year Result & Proposed Dividend

Source: ANZ statements

  • ANZ today announced a Statutory Profit after tax for the half year ended 31 March 2024 of $3,407 million. Cash Profit was $3,552 million, down 1% on the previous half.
  • ANZ’s Common Equity Tier 1 Ratio increased to 13.5% and Cash Return on Equity excluding capital retained to purchase Suncorp Bank was 10.7%.[3]
  • The proposed Interim Dividend is 83 cents per share (cps), partially franked at 65%.
  • ANZ intends to buy-back up to $2 billion of shares on-market as part of its capital management plan.

CEO COMMENTARY[4]

ANZ Chief Executive Officer Shayne Elliott said: “This half’s strong performance is a direct consequence of peer-leading diversification as well as our disciplined focus on productivity and delivery.

“Coming off a record 2023, each division delivered for the Group and we’ve made good progress on the things we said we would: preparing for the integration of Suncorp Bank, growing ANZ Plus, leveraging our Institutional processing platforms, and further driving productivity.

“Our preparations to integrate Suncorp Bank are well advanced. While the time taken to progress the necessary approvals has taken longer than anticipated, we have used that time productively and we are more confident than ever about the benefits that will follow.

“Our flagship digital offering, ANZ Plus, has grown to almost 690,000 customers and approaching $14 billion in deposits at the end of April – and we have just introduced the ability to create joint accounts. Net promoter scores are consistently higher than our peers, while attracting on average 35,000 customers every month, around half of which are new to the bank.

“ANZ Plus is already having an impact on the financial wellbeing of customers, with around 47% using at least one of our financial wellbeing features and the introduction of controls to better protect customers from scams.

“Our Institutional payment platforms business is a clear differentiator with the facilitation of around $164 trillion in payments each year. As a result, payments revenue for the half was up 4%, while international payments grew 8.5% year on year. We further extended our leadership in this space, becoming the first major bank to go live with a natively built, API-enabled, PayTo service for billers in Australia.

“Our diversification continues to serve us well. In a world where retail banking in Australia and New Zealand is more competitive than ever, our International business performed strongly, with revenue up 16% for the half. We also continued to further simplify the bank, including completing the partial sale of our stake in Malaysia’s AmBank, releasing $668 million in capital, which will be returned to shareholders via our $2 billion on market share buy-back.

“Across the Group, we continued to invest in the franchise while maintaining a disciplined approach to costs, unlocking $200 million of savings through productivity measures during the half. These initiatives delivered simpler, more robust processes that will have enduring benefits for the bank. This included further automation across home loan application processing and simplifying our technology.

“Finally, this strong financial performance means we have never been better placed to support customers doing it tough. While generally they have remained resilient, we know there are many who are challenged by rising cost-of-living and my message to them is that we are here ready and willing to help them navigate through this challenging period,” Mr Elliott said.

DIVISIONAL PERFORMANCE[5]

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ANZ encourages customers to be aware of online shopping scams when spoiling mum this Mother’s Day

Source: ANZ statements

It’s important for Australians to be aware of online criminals preying on people’s generosity around special events such as Mother’s Day, through fake links to legitimate-appearing websites, travel and holiday deals and marketplace listings on social media.

Recent ACCC data shows a 30.6 per cent increase in reports made about social media scams, with losses of more than $93 million in 2023, up 16.5 per cent from the previous year while ANZ customer data reveals more than 74 per cent of scams originate on social media platforms.

ANZ Senior Manager, Customer Protection, Jess Bottega said: “Scammers on social media can mask as legitimate brands, or other people, to trick victims into scams of many shapes and forms.”

“Be aware of any brand advertising unusually low prices, and always conduct an independent search for retailers’ websites to ensure legitimacy,” she said.

 

Tips to avoid an online shopping scam:

  • Be wary of clicking links on social media as they may direct you to a fake site to mine your personal information.
  • Always check the URL of a link, do independent research if possible.
  • Search for independent reviews of an online trader to ensure legitimacy, particularly if it’s a brand or site you haven’t seen before.
  • Be wary of uncommon payment methods, such as direct transfers or gift card payment when shopping online.

Last year, ANZ prevented more than $106 million in total losses to cyber criminals – a 38 percent increase on the previous year. According to ScamWatch, online shopping scams claimed more than $650,000 from Australians in the first two months of 2024, down 36 per cent on the same period in 2023.

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HY24 Results: Resilient result in subdued economic environment

Source: BNZ statements

Bank of New Zealand (BNZ) today announced a statutory net profit of $762 million for the six months to 31 March 2024, a decrease of $43 million or 5.3% on the prior year.

This reflects continued growth in BNZ’s lending and deposits, and an increase in operating expenses, up $64 million or 11.1%, as BNZ invested in its people and digital capability.

BNZ CEO Dan Huggins says this is a resilient result in a subdued economic environment and the bank is in a strong position to continue supporting its customers.

“High interest rates and cost of living pressures continue to impact business and household finances.

“While easing inflation is encouraging, it is expected to remain outside of the Reserve Bank’s target band until the end of year. Economic conditions are likely to remain challenging until there is a material reduction in interest rates.

“Supporting our customers through these challenging times remains our top priority.

“Our teams continue to proactively contact customers who we have identified as potentially needing additional support. For customers feeling under pressure, our message is get in touch.”

Revenue for the first six months was broadly flat at $1,770 million, while Net Interest Margin dropped by eight basis points on the prior year, reflecting strong competition across the banking sector and a change in deposit mix as customers shifted funds into term deposits to take advantage of higher interest rates.

Mr Huggins says despite the challenging operating conditions, the bank has maintained momentum across the business.

“Our team is focused on serving our customers brilliantly every day and supporting their ambitions, whether that’s investing in their business or buying their first, or next, home.”

“This focus is paying off with more New Zealanders choosing to bank with BNZ.”

BNZ’s total lending increased $2.4 billion or 2.4% in the first six months, with home lending up $1.1 billion or 1.9% and business lending up $1.3 billion or 3.0%. Total customer deposits increased by $1.5 billion or 1.9%.

Innovating to make banking simpler and easier

“We are always looking for new ways to integrate the latest technology into the way we work and how our customers’ bank to enhance their experience and make banking simpler and easier,” says Mr Huggins.

“We continue to invest heavily in protection measures to help keep our customers safer online, while also delivering digital solutions designed to free up time in their busy lives.

“Initiatives like our digital onboarding process which makes switching banks easier and faster for new customers by enabling them to open accounts digitally without having to go into a branch.

“Similarly, Open Banking, which will allow customers to share their data safely with third parties and enable more personalised products and innovative services for customers.”

BNZ has been leading the market in developing Open Banking APIs, with more than 250,000 BNZ customers already benefiting from secure budgeting and reconciliation tools and alternative payment options.

“We’re committed to continuing to drive innovation across our business to provide more value to our customers,” says Mr Huggins.

An unaudited summary of financial information for the six months ended 31 March 2024 follows:.
.

The post HY24 Results: Resilient result in subdued economic environment appeared first on BNZ Debrief.

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Australian Beef: now versus then – more volatility, more opportunities and more exports

Source: ANZ statements

Australian Beef: The Carve Up – which will be launched at Beef Australia 2024, in May – provides a look ahead for the cattle industry, and the changing landscape of the last two decades. The report highlights the international market as a key driver behind the welcome increase in demand for domestic producers.

Another key driver is the changing nature of demand in the domestic industry, and the shift from predictable saleyard returns, to marked price jumps, and falls.

ANZ Head of Agribusiness, Mark Bennett said: “As we see more complexity in the supply chain, and more volatility in pricing, there are more opportunities for producers to diversify, reduce risk and take advantage of seasonal upswings.

“There have been significant changes in the last 20 years, and they’re coming to a head now. Beef isn’t what it was even just five ago, when demand was driven by too few cattle on the ground, it’s now the opposite. The high herd number and a gap in the market left by the US, is leading to higher demand for exports and continued upward pressure on domestic prices, he said.”

With the EYCI currently trading around 25 per cent below trend, there is certainly an expectation that strong export demand will put upward pressure on domestic saleyard and retail prices.

The breakdown of division of profit at after the farm-gate show the whole supply chain is absorbing the relatively stable beef prices being passed on to consumers.  It shows that strong export prices are proving a useful offset for an industry seeking to maintain lower prices at the retail end.

“Today’s cattle industry might be more volatile, but there are big opportunities for the agile and responsive producer to make the most of any prevailing conditions through various sales channels on offer, and a strong export demand for Australian beef.”

ANZ is a principal partner of Beef Australia 2024. “It’s a once in 3-year opportunity to access key decision makers and peers in the industry and have important conversations about the future of the industry,” Mr Bennett said.

Download Full Report 

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Unemployment data shows need for the Government to act now

Source: Council of Trade Unions – CTU

NZCTU Economist Craig Renney said new data released by Statistics New Zealand shows the need for Government to act now, with unemployment rising from 3.4% to 4.3%.

“There are now an additional 31,000 people unemployed since this time last year. Unemployment rose more quickly for women, kaimahi Māori, and for Pacific Peoples. The number of young people not in education, employment or training jumped 17%. This is a tough time for working people,” said Renney.

“Unemployment is a lagging indicator, meaning changes in the economy take time to fed through to labour market. The weakness in the economy is catching up with workers. The unemployment rate rose in 10 out of 12 regions of New Zealand. 119,000 Kiwi workers wanted more hours but couldn’t get them – a rise of nearly 30% from a year ago.

“This information should be a wake-up call to the Government. Unemployment is rising, but there is no plan to deal with the increase in those who will need help. Cuts to public services that would have helped the newly unemployed will likely make this situation worse.

“Workers wages are also showing signs of strain, with the increase in average hourly earnings (5.2%) rising at the slowest rate since March 2022. The Labour Cost Index is showing its lowest rate of increase since December 2022 at 4.1% – almost the same as inflation which is at 4%. Workers wages are barely keeping up with inflation.

“The NZCTU doesn’t accept that job losses and families being thrown into poverty are the right way to manage the economy. Add to this real term cuts to the minimum wage, and cuts to welfare payments, and there are all the ingredients needed for worker exploitation and increasing child poverty.

“The Government has a chance to act now before unemployment rises further and help make sure that workers and their whānau don’t bear the costs of their changes,” said Renney.

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ANZ’s Hydrogen Handbook 2.0 highlights Australias competitive position in global hydrogen industry

Source: ANZ statements

The handbook said Australia is well-positioned to produce, use and export hydrogen due to the country’s land capacity and accessibility to wind and solar power resources.

Hydrogen’s competitive advantage is a result of lower costs of production, storage and transportation, as well as anticipated strong demand for the low carbon fuel source by existing trade partners.

ANZ Head of Research & Analysis, Resources, Energy & Infrastructure Australia, John Hirjee said: “Australia’s hydrogen export opportunities to Japan and South Korea, paired with an ability to produce green hydrogen could help position Australia as a leader in the global hydrogen market.

“While still a nascent industry, continued investment such as the Federal Government’s Hydrogen Headstart program will help to ensure Australia’s competitive position in the global hydrogen industry and as an exporter.

“With our global footprint, ANZ is in a unique position to support our customers in their low carbon transition and to finance projects which reduce emissions and support economic growth,” he said.

Australia’s suitability for utilising renewable electricity to produce hydrogen further demonstrates the opportunity at hand, Mr Hirjee said.

ANZ launched its first Hydrogen Handbook in 2022 after observing a growing need for up-to date, insightful and practical information on the emerging hydrogen economy. The second edition provides an update on the global market for hydrogen and its adoption as both an energy source and feedstock into industrial processes.

Of the 11 AA rated Banks globally, ANZ is the only AA rated Australian bank with an on the ground presence in 13 markets in Asia, as well as the UK, Europe, US, Pacific and the Middle East.

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Consumer confidence: down to a 2024 low

Source: ANZ statements

• Consumer confidence decreased 3.2 pts to 80.3pts. The four-week moving average fell 0.7pts to 82.1pts.

• ‘Weekly inflation expectations’  fell 0.2ppt to 5.0%, however the four-week moving average remained unchanged at 5.2%.

• The financial conditions subindices both declined. ‘Current financial conditions’ (over last year) dropped 4.2pts and ‘future financial conditions’ (next 12 months) fell 4.6pts.

• Household confidence in the economic outlook also dropped. ‘Short term economic confidence’ (next 12 months) decreased 3.7pts and ‘Medium term economic confidence’ (next five years) declined 3.6pts.

•The ‘time to buy a major household item’ subindex was stable.

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Climate Stress Test assesses resilience of major NZ banks

Source: Reserve Bank of New Zealand

Director of Financial Stability Assessment & Strategy Kerry Watt says each year we run stress tests to assess banks’ resilience. The key stress-test for New Zealand’s five largest banks in 2023 featured a scenario called ‘Too Little Too Late’ that tested their ability to withstand severe but plausible long-term climate-related challenges.

“We deliberately designed the climate stress test scenario to be challenging. It included high physical and transition risks over a prolonged period of 28 years. Our aim was to assess the financial impact of the scenario on the banks’ balance sheets and uplift their capability in managing climate related risks,” Mr Watt says.

“The results show that the Too Little Too Late’ scenario did not threaten bank solvency, as all banks were able to maintain their capital ratios. However, it did highlight that climate-related risks have the potential to significantly reduce bank profitability, raise risk-weighted assets and reduce shareholders’ returns over the medium to long term. This tells us that climate related risks need to be actively managed to protect the resilience of the system to other shocks.

“The stress test also improved banks’ capability in managing climate-related risks in several areas. These include modelling, sourcing of climate relevant data, informing insurance retreat impacts, embedding climate expertise widely across the organisation and identifying strategic actions to mitigate the risks.”

We have released a number of recommendations with our findings that include banks addressing significant remaining data gaps, continuing the development of credit risk modelling using climate-risk variables, and considering cost-effective ways of tracking the insurance status of mortgages. We expect all banks to reflect on these recommendations and are considering how we might support banks that did not participate in this stress test to incorporate them into their risk monitoring and management activity.

“It’s important to recognise the Too Little Too Late scenario represents only one way New Zealand’s climate scenario could play out. Banks will consider others as part of their own internal risk management and to feed into mandatory climate-related disclosures. We would like to express our thanks to the banks that participated.”

The Reserve Bank will continue to play an active role in monitoring this work undertaken by entities as they draw on the learnings from our stress testing activities, our guidance on managing climate-related risks, and related supervisory discussions. 

Questions and answers

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Inflation data shows need for a plan on climate and population

Source: Council of Trade Unions – CTU

Data today shows headline CPI inflation at 4%, continuing the fall begun in March 2023. Rises are concentrated in particular sectors – especially services. This data also shows that that the minimum wage increase will be half the rate of inflation this year, taking money out of the pockets of those with the least.

“Inflation was being generated by rents, (4.7%), rates (9.6%), and insurance (14%). Rents are rising at the fastest rate since they were recorded in 1999. Housing & vehicle insurance increased more than 20%. These are all in areas that working people can’t avoid,” said CTU Economist and Director of Policy Craig Renney.

“Pricing for goods that in the past have generated inflation such as food are now much more subdued. Vegetable prices have fallen nearly 15% annually according to this report.

“However, petrol prices rose by 12% from last year. This is worrying as petrol pricing tends to lead inflation data. The faster we can transition to an electric vehicle fleet the better.

“Inflation is now in sectors that don’t respond well to interest rate changes in New Zealand – such as insurance. This should give the Reserve Bank a reason to pause and reflect on its future interest rate path.

“Overall, this data suggests that inflation is continuing its long road back to the Reserve Bank rate. In the last three months, inflation was well within the 1-3% band being targeted.

“Inflation is still higher in New Zealand than it is in other comparable countries such as Australia or the USA, where economic and employment growth is also stronger on the back of strong infrastructure spending, government investment, and higher wages.

“Prices in New Zealand are responding to pressures such as population growth and climate change. The absence of both a plan and investment from government in these areas suggests an absence of action on future price rises,” said Renney.