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What Are The Key Points From The ANZ AGM Today?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

ANZ (ASX: ANZ) is one of the largest banks in Australia and New Zealand and is one of the largest publicly listed company in Australia. ANZ has a market capitalisation of A$71.00 billion.


What are the key points from ANZ’s AGM today (17 December 2019)?

ANZ has endured a rough 2019 that consisted of low interest rates, increased regulatory pressures, increased competition and worrying findings from the Royal Commission.

ANZ announced that Statutory Profit for the year was down 7% compared with the previous year. However, a positive was that cash earnings was up slightly by 2% compared with the previous year.

A major cost for ANZ in 2019 was the A$682 million remediation work that was in response to the findings of the Royal Commission. This contributed to the Net Profit loss the bank suffered this year. It is important to note, that this cost should be a one off, and with ANZ’s remediation work these failures are less likely to occur in the future.

ANZ paid a final dividend of 80 cents being franked at 70%. ANZ Chairman David Gonski said:

The decision to reduce franking to anew base for now was difficult but appropriate given the changing mix of our business.


What is the outlook for ANZ?

ANZ Chairman David Gonski said:

despite the tough conditions we are facing, your Board believes we remain well placed to navigate these challenges given the strong progress we have made in transforming our business. We have the right strategy and a strong balance sheet. Perhaps most importantly, we believe we have the right people in place to maximise our opportunities in this complex environment.

The major banks such as ANZ, National Australian Bank (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation (ASX: WBC) face significant headwinds of slow credit growth (also reflecting weak economic growth as shown from the national accounts in the June and September quarters), pressures on net interest margins (which could lower profitability) and increased regulatory requirements (both capital and lending requirements). That is, in the short term at least, the major banks may have lower growth prospects than other sectors of the market.

Overall, the Australia’s banking sector is on a double-edged sword. On one edge, availability of credit to consumers and businesses should increase due to low interest rates and an easing in lending regulations and capital requirements. However, on the other edge, the net interest margins for each bank could be squeezed even more. It is clear that ANZ fell this year on one side of the sword, where the squeezing of the net interest margin had a greater negative effect than the positive of an increase in potential borrowers.

What is the market reaction to ANZ AGM?

The initial market reaction to ANZ share price is slightly negative. ANZ share price is down 0.3% and is currently trading at A$24.95, ANZ has a forward P/E ratio in the low-teens and an annual dividend yield of 6.4%.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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