The ANZ Group Holdings Ltd (ASX: ANZ) share price is under the spotlight after the ASX bank share reported its FY26 first quarter update.
ANZ is one of the largest banks in Australia and New Zealand with large consumer and business bank operations.
ANZ FY26 first quarter update
The ASX bank share reported that compared to the quarterly average of the second half of FY25, operating income grew by 4% to $5.7 billion, while operating expenses dropped 21% to $2.8 billion. Excluding significant items, the operating expenses declined by 8% to $3.1 billion.
This led to profit before provisions rising 52% to $2.9 billion, or a 12% rise to $2.5 billion excluding significant items.
The ASX bank share also reported that the provision charge reduced by 39% to $0.1 billion.
This helped cash profit surge 75% to $1.9 billion, or there was a 17% increase to $1.7 billion of cash profit excluding significant items.
What happened to the profit?
The significant items impacted the result in the previous financial year, so the fact that it hasn’t been repeated in the first quarter of FY26 means the business delivered a huge increase in profit.
But, excluding that effect, the underlying 17% rise in profit growth was still very strong thanks to an 8% increase in operating expenses.
ANZ CEO Nuno Matos said that its productivity program that’s aimed to remove duplication and simplify the bank, led to the significant reduction expenses while growing revenue.
This led to improvements in financial measures including the return on tangible equity (ROTE) rising to 11.7% and the cost to income ratio falling below 50%.
Operational performance
The underlying net interest margin (NIM) increased by 3 basis points, meaning lending profitability strengthened thanks to the benefit of a “favourable funding mix shift towards operational deposits and higher earnings on replicating portfolios, offsetting the impact of central bank rate reductions and asset competition.”
Customer deposits increased by 5% ($39 billion) at 31 December 2025 compared to 30 September 2025. Excluding markets, deposits rose $12 billion with growth across all divisions.
Net loans and advances increased $8 billion, up 1% over the quarter, including institutional lending up $5 billion.
Credit quality
The ASX bank share revealed that portfolio losses remain low, reflecting “strong overall credit quality and customer resilience”. It’s cautious on the outlook considering global uncertainty and the recent increase in the cash rate.
Its percentage of Australian home loans that were at least 90 days overdue reduced to 0.81% at December 2025, down from 0.88% at 30 September 2025.
Outlook for the ANZ share price
Cutting expenses and growing revenue is a great combination, though I’m not expecting the bank to be able to cut expenses forever.
But, it’s calling this a five-year journey, so if ANZ can continue growing earnings then it could excite the market and help dividend growth.
Time will tell if ANZ can continue delivering profit growth, but it has been a good start.
I think there are better ASX dividend share opportunities out there, so I’d rather buy other ideas.
