ANZ (ASX: ANZ) has announced a big asset sale this morning. Is it now a safer bank?
What is ANZ?
ANZ is a leading Australian and New Zealand banking institution, with a presence throughout the oceanic region. ANZ is one of the Big Four Aussie banks and derives much of its revenue from mortgages, personal loans and credit.
What has ANZ sold?
ANZ has announced the sale of its asset finance business in New Zealand, called UDC Finance, for NZ$762 million to Shinsei Bank.
This sale follows on from the ANZ strategy to simplify its business with a strategic review of UDC Finance. The sale price represents a price to book ratio of 1.2x the net tangible assets of the business of NZ$637 million as at 31 March 2020. The net profit after tax of UDC at 31 March 2020 was NZ$24.5 million with net loans and advances of NZ$3.437 billion.
UDC Finance’s sale will provide around AU$439 million of CET1 capital, which equates to around 10 basis points. The sale will also release more than NZ$2 billion of funding provided by ANZ New Zealand which will strengthen its balance sheet position.
ANZ Bank New Zealand CEO Antonia Watson said: “With a strong outlook for infrastructure and agriculture projects as the New Zealand economy rebuilds post-Covid-19, there is a significant role for UDC Finance to play. As such, it needs an owner that can invest in and grow the business.”
The sale is expected to complete in the second half of the 2020 financial year.
I think this was a good move by ANZ, it’s good to increase capital during these times. It’s safer than it was before. But I don’t think banks can create consistently returns in the future, I think I’d rather be invested in shares like Pushpay (ASX: PPH).
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
