Faruqui: focused on shareholder returns

Speaking with bluenotes on video, Faruqui said all four of the bank’s businesses – Institutional, Australia Commercial, Australia Retail and New Zealand - performed well and delivered returns above the cost of capital and “exited the half with strong momentum.”

" This places us amongst the best capitalised banks in the world. That's very important to us because it allows us to serve our customers. It allows us to access accretive growth opportunities across our businesses.” – Farhan Faruqui.

“We've delivered stable outcomes both in terms of revenue as well as net profit after tax,” Faruqui said. “At the group level, we've grown both customer lending and customer deposits.”

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 per cent on the previous half. The interim dividend is 83 cents per share, partially franked at 65 per cent.

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Enduring benefits

Faruqui said the bank’s performance, backed by a strong balance sheet, meant the board was comfortable in undertaking the on-market share buyback.

“That has an enduring benefit to our shareholders because it reduces the share count and effectively, over time, improves our return on equity as well.”

“This is a good outcome for our shareholders and a good outcome in terms of the best use of capital available to us today.”

The bank’s capital ratio – or the CET1 ratio – was still a robust 11.8 per cent. This was achieved while funding the share buyback and setting capital aside for the completion of the proposed acquisition of Suncorp Bank.

“This places us amongst the best capitalised banks in the world,” Faruqui said. “That's very important to us because it allows us to serve our customers. It allows us to access accretive growth opportunities across our businesses and therefore places us in a very strong position going into an uncertain environment.”

Faruqui said while the financial results were pleasing, the bank also made significant strategic progress during the half - including continued customer growth for ANZ Plus, ongoing planning for the proposed Suncorp Bank acquisition and the sale of part of its stake in AMMB Holdings Bhd.

“In the simplification journey we've been on for a few years, we've made yet more progress with the sale of a large part of our Ambank equity position,” Faruqui said.  “That freed up about $668 million of capital, which in turn has allowed us to announce a $2 billion on-market share buyback today.”

“It's basically a story of delivering what we have promised.”

Cost discipline

Faruqui noted efficiency would remain important amid stubbornly high inflation. But he added ANZ had one of the strongest track records for managing costs among major Australian banks.

“The productivity doesn't necessarily come from a restructuring perspective only. It comes from what work we do around automation, around improving and streamlining our processes in terms of digitising our service propositions,” Faruqui said.

“Even in this half we've delivered $200 million of productivity. Our focus is to continue to make sure we offset inflationary impacts as much as possible. Thus effectively allowing us to continue to invest in productivity and growth initiatives and ensuring our businesses are investing in technology where appropriate.”

While the external outlook remained uncertain the bank had a diversified set of businesses and was well positioned to help customers navigate the environment.

“All four are performing well and delivering returns above the cost of capital. So we are in a good spot in terms of our diversification to deal into that uncertain environment. We feel we have the risk settings, the balance sheet strength and the strategy to be able to cope with the uncertainty that lies ahead.”

Brett Foley is the Managing Editor of bluenotes.