Australia and New Zealand Banking Group Ltd (ASX: ANZ) has reported its FY20 Q3 result and announced a dividend.
ANZ’s mixed FY20 Q3 result
ANZ reported that it generated $1.3 billion of statutory profit after tax in the third quarter of FY20. This was an increase from the first half’s quarterly average of $773 million.
Continuing operations cash profit was $1.5 billion, almost double the first half quarterly average of $707 million. Excluding large/notable items continuing cash profit was $1.6 billion, up from the first half quarterly average of $1.2 billion.
The major bank revealed that it took a total provision charge of another $500 million for the June 2020 quarter, this followed a $1.674 billion charge taken in the first half. This new charge includes an individually assessed provision charge of $264 million and a collective provision charge of $236 million to strengthen its credit reserves, particularly for deferral packages for small business customers.
ANZ said that in Australia it has approximately 84,000 deferrals in place for home loan accounts at 31 July 2020 valued at $31 billion – this represents 9% of Australian home loan accounts.
The ASX bank also has 22,000 deferred business loans at the end of July 2020 valued at $9.5 billion, representing 14% of Australian commercial lending.
In New Zealand, ANZ said it provided support to 39,000 customers which included deferrals on 24,000 home loans valued at NZ$6 billion, representing 6% of New Zealand’s home loan portfolio.
ANZ announced a fully franked interim dividend of $0.25 per share after deferring it in its FY20 interim result.
The bank said this took into account ANZ’s continuing capital strength and updated regulatory guidance (that their dividends have to be reduced, but they can pay one).
The announced interim dividend represents 46% of ANZ’s first half statutory profit, or 30% of statutory profit adjusted for the impairment of Asian associate investments.
At 30 June 2020 the bank had a CET1 ratio of 11.1%, when including the conversion of the NZ dollar capital notes in 2022 and the announced sale of UDC, the calculated CET1 ratio rises to 11.3%.
Under the circumstances, I thought this was a reasonable update from ANZ. Paying a dividend is an attractive outcome for shareholders because many of them rely on the dividend income. ANZ’s balance sheet remains robust with a healthy CET1 ratio.
The ANZ share price of $18 is still down heavily from the pre-COVID-19 price of $27.24. Perhaps there’s long term potential for dividend investors when COVID-19 passes, but I wouldn’t want to buy it. There are other ASX dividend shares with more consistent dividends like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Make sure you bookmark Rask Media so you can come back for more dividend ideas.