ANZ Bank(US:ANZGY)2021-05-08 18:47Financial Data and Key Metrics Changes - The company reported a statutory profit of $2.94 billion, with cash profit down by 10% compared to the previous half, reflecting the impact of COVID-19 on results [18][51] - Core banking revenue increased by 3%, while trading revenue normalized after an exceptional 2020 [19][53] - Return on equity (ROE) improved to 9.7%, with a 110 basis point improvement in capital generation during the half [20][51] - The dividend was lifted to $0.70 fully franked, aligning with the targeted long-term payout ratio of 60% to 65% [21][51] Business Line Data and Key Metrics Changes - In Australia, the company regained its position as the third-largest lender, adding over 92,000 new home loan accounts, while in New Zealand, it maintained the 1 position with faster growth than the market [23][64] - Revenue in the Retail and Commercial business in Australia was up 2%, driven by strong home loan growth, while unsecured lending volumes were slightly lower [61][63] - Institutional customer revenue was solid, but trading revenues decreased due to lower market volatility and customer demand [31][68] Market Data and Key Metrics Changes - The economic recovery in Australia and New Zealand is positive, with businesses feeling more confident and airlines reporting a surge in demand [12][13] - The company noted that challenges remain in regions heavily reliant on tourism and businesses catering to international students [16] - The outlook for credit risk-weighted migration has improved, with expectations of only 10 basis points of capital consumption compared to earlier forecasts of 110 basis points [78] Company Strategy and Development Direction - The company is focused on helping customers save for, buy, and own homes, as well as supporting small businesses and facilitating trade [22][27] - A simplification strategy has been implemented to improve financial strength and customer support, resulting in $1.3 billion in cost savings since 2015 [35][36] - The company is investing in technology and automation to streamline processes and improve customer experience [36][73] Management's Comments on Operating Environment and Future Outlook - The CEO highlighted that while economic activity has recovered, many households and businesses are still facing challenges [85] - The management expressed confidence in the company's financial strength and ability to take advantage of future opportunities [48][51] - There is an expectation of moderated growth in the second half as customers pay down debt faster, which is seen as beneficial for the economy [26][110] Other Important Information - The company has set aside $4.3 billion in collective provisions, reflecting a cautious approach amid ongoing economic uncertainty [78][80] - The company has not diluted shareholders with equity raisings during the pandemic, maintaining a strong capital position [81] Q&A Session Summary Question: Market income down 13% on PCP, drivers and outlook? - The CEO indicated that the decline was due to reduced customer activity and lower spreads, particularly in the second quarter, contrasting with global trading banks [91][96] Question: Expenses down 3% on PCP, but expecting 1% to 2% growth for full year? - The CEO clarified that the increase in expenses is related to accelerated investment in key initiatives, not operational costs [92][104] Question: Institutional business margin outlook and asset growth? - The CEO noted that the focus is on customer selection and managing risk, with expectations for a strong M&A pipeline [106][112] Question: Mortgage growth slowing, anticipating below system growth? - The CEO acknowledged processing issues and a potential shift in consumer behavior, with application volumes significantly higher than the previous year [110][111]