ANZ to buy back up to (A$1.5bn) of shares as it has more than doubled its cash profit in the first half in 2021.
Australia and New Zealand Banking Group (ANZ) has unveiled plans to buy back up to $1.1bn (A$1.5bn) of shares, as it marked a sharp rebound by more than doubling its cash profit in the first half.
The on-market buyback, part of its capital management plan, is planned to commence next month.
At the end of March this year, the bank’s Level 2 CET1 ratio stood at 12.4%, which surpasses APRA’s requirement of 10.5%.
The lender expects the buy-back to lower its CETI ratio by nearly 35 basis points.
ANZ chairman Paul O’Sullivan said: “After reviewing options, we consider an on-market buy-back to be the most prudent, fairest and flexible method to return capital in the current environment.”
O’Sullivan further stated that its capital position may enable it to consider returning more capital in the future.
ANZ’s cash profit from continuing operations surged to A$2.99bn for the six months to 31 March 2021, compared to A$1.41bn in the prior year.
This was supported by the release of A$491m in total loan provisions against the A$1.67bn charge it took a year ago.
The bank also increased its interim dividend to 70 cents per share but said that it would retain a capital cushion of $4.3bn due to uncertain conditions.
ANZ CEO Shayne Elliott said: “After taking into consideration the ongoing pressures in some parts of the economy due to COVID, including the current lockdowns in parts of the country, the strength of our balance sheet and ongoing financial performance means we are in a position to return a modest amount of surplus capital to shareholders through a buy-back of shares on-market.”
The stock buyback announcement comes shortly after the bank announces financial relief measures for business customers, with business lending of less than A$3m and a turnover of below A$5m.
Among the measures include up to 60 days repayment ‘deferral’ on Australian business loans, and waiving off merchant terminal rental fees for three months
The bank will also offer the customers access to funds held in Business Notice Term Deposit and Farm Management Deposit accounts, without notice periods or break fees.
The bank reported interest income of (Australian Dollars) AUD24,426 million for the fiscal year ended September 2020 (FY2020), a decrease of 21.4% over FY2019. The net interest income after loan loss provision of the bank was AUD11,311 million in FY2020, compared to net interest income after loan loss provision of AUD13,545 million in FY2019. In FY2020, the bank recorded a net margin of 11.9%, compared to a net margin of 16.1% in FY2019.