ANZ Group revealed a new $2 billion (US$1.3 billion) share buyback, commencing part of its capital management plan and exhibiting its strong capital position in the market.
The buyback comes amid a reported 7 percent year on year drop in cash profits to $3.55 billion and a 4 percent decline in statutory profit to $3.41 billion in the first six months ended March 31, reflecting a tough trading environment.
The buyback, along with a proposed interim dividend of 83 cents per share, follows ANZ’s sale of its 16.5 percent stake in Malaysia’s AmBank earlier this year.
The buyback news also comes a day after Westpac, one of ANZ’s biggest rivals, announced its $1.5 billion return to shareholders through a dividend surprise and extended share buyback.
National Australia Bank has also announced increasing its ongoing share buyback program to $1.5 billion.
“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 percent for the half,” ANZ CEO Shayne Elliott said.
“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.”
Mr. Elliott expects the challenges in domestic and international retail banking environments to remain over the succeeding months.
“The Australian and New Zealand economies are likely to remain subdued, while geopolitical tensions, electoral uncertainty and the introduction of interventionist trade and industry policies will continue internationally,” Mr. Elliott said.
Mr. Elliott attributes the bank’s delivery success to its implementation of repositioning and restructuring measures over nearly a decade. Due to revenue diversification and productivity boosts, the bank invested more in fostering “long-term, sustainable value creation.”
All four divisions of the bank—Institutional, New Zealand, Australia Retail, and Australia Commercial—played essential roles, providing ANZ with options to deploy capital to these businesses.
On a half on half basis, Mr. Elliott cited the institutional bank as its best-performing division, providing profits of $1.522 billion, up 12 percent. Meanwhile, profits in the commercial bank fell 5 percent to $665 million.
The ANZ CEO also mentioned the growth of its ANZ Plus, which garnered almost 690,000 customers and reached nearly $14 billion in deposits at the end of April, 8 percent more than all retail deposits.
ANZ committed to investing in its commercial bank, which services about 650,000 small businesses nationwide, and in cybersecurity to help bank customers avoid scams and frauds.
Despite the challenges imposed by higher inflation and interest rates, Mr. Elliot said the number of ANZ customers asking for assistance is “remarkably low,” even lower than pre-pandemic levels.
“Despite the stress, there’s still resilience and people are being very prudent in how they manage their money. Still, we expect the number of people under stress to increase somewhat,” Mr. Elliott said.
“The reality is that banks are in a really strong position to help those customers that do find themselves in a difficult position.”
Meanwhile, Mr. Elliott said ANZ will update the market on its plans and how the integration process of 1.2 million Suncorp customers will unfold.
Last March, the Australian Competition and Consumer Commission said it would not propose to seek review of the Australian Competition Tribunal’s decision to approve ANZ’s proposed acquisition of Suncorp.
