ANZ’s first quarter profit has exceeded expectations, according to Citi analyst Thomas Strong. The bank reported a $1.9 billion profit, which is 8 per cent ahead of the quarterly run-rate implied by Visible Alpha consensus. ANZ is one of Australia’s largest banks, offering a range of financial services to retail, commercial, and institutional customers. The company operates across Australia, New Zealand, and the Asia Pacific region.
Strong attributed the profit beat primarily to faster-than-expected progress on cost reductions. Costs were reportedly 3 per cent below Citi’s expectations for the quarter. Management indicated that as of December, 60 per cent of the planned 3500 full-time equivalent (FTE) reductions had already been realised. The group revenue of $5.7 billion aligned with Citi’s expectations; however, markets income of $557 million was slightly below estimates, suggesting a strong underlying performance.
ANZ’s net interest margin, excluding markets, increased by 3 basis points. This improvement was better than anticipated but consistent with the drivers observed in the Commonwealth Bank’s recent performance. Strong noted the similarities between the two banks’ improvements.
Management has reiterated its full-year cost expectations. Consequently, Strong believes that consensus core earnings expectations are likely to remain largely unchanged. He anticipates low single-digit upgrades to consensus estimates, driven by improved asset quality.
