The ANZ Group Holdings Ltd (ASX: ANZ) share price is in the spotlight after the large ASX bank share revealed its HY23 result and dividend.
ANZ’s report is for the six months to 31 March 2023.
ANZ HY23 result highlights
Here are some of the main numbers from the report:
- Cash profit grew 12% to $3.8 billion
- Cash profit / earnings per share (EPS) rose 7% to $1.276
- Statutory net profit after tax (NPAT) fell 1%
- Total lending increased 3% to $693.7 billion
- Dividend per share grew 9.4% to $0.81
ANZ was pleased to tell investors that its Australian retail division grew home loans faster than the market, while also seeing good growth in its deposits.
The ANZ Australian home lending was supported by restored capability and capacity and an improved broker support model.
In New Zealand, ANZ said it was a challenging competitive backdrop, though it achieved margin expansion. It said it continues to lead the market in all target segments.
The institutional division achieved a record half-year result, with strong revenue growth. It’s seeing rapid growth in payments and currency processing, and benefited from servicing other financial institutions.
ANZ’s Australian commercial lending division was a “strong contributor”, generating revenue growth of 30% and the highest return on equity (ROE).
The dividend represented a dividend payout ratio of 68.6% of profit.
Net interest margin (NIM)
This NIM is the lending margin for the bank, which is important for the ANZ share price. It tells investors what profit it’s making on its lending, comparing the funding cost (like savings accounts) to the loan rate (like a mortgage). The higher the NIM, the more profit it’s making. But, a NIM that’s too high could see it miss out on customers, or not win customers.
ANZ’s NIM of 1.75% for HY23 was an increase of 7 basis points (0.07%) compared to the second half of FY22 and a 17 basis point (0.17%) increase compared to the FY22 first half.
Outlook for the ANZ share price
The ANZ CEO Shayne Elliott said that the next six months will be “more difficult than the last”. Elliott said:
Competition in retail banking is as intense as it has ever been, both in Australia and New Zealand. We understand that sustained higher inflation and interest rates create further challenges for some households and businesses across the economy.
We have a robust capital position, credit loss provisions higher than any other time pre-COVID, a strong diverse deposit base and a track-record of execution.
It was a strong result for the bank, but there was a warning for the upcoming period considering lending competition is intense and interest rates have gone up again. Will there be more arrears?
ANZ could pay a lot of dividend income this year, but I’d rather invest in a business where there’s more competition. So, other ASX dividend shares are higher on my watchlist.
