Australia and New Zealand Banking Group (ASX: ANZ) delivered a strong result today withcash profit hitting $1.33 billion in the third quarter, with its Institutional Markets division enjoyed a tailwind of activity.
View Rask Media’s coverage of ANZ 3Q report here.
ANZ: the new bank dividend stock?
ANZ’s 3Q result beat the entire first half profit of $1.54 billion as impairments and loan write-downs began to slow.
Management saw sufficient strength to declare a 25-cent dividend, a cut of 70% on 2019, but a surprise given Westpac’s (ASX: WBC) decision to cut its own dividend on Tuesday.
ANZ incurred another $500 million in provisions in the June quarter, some of which were specific to individual loans and others were a collective adjustment to their overall risk-weighted assets on account of COVID-19.
The Markets division, which offers various trading and hedging services for institutional clients, grew 60% in the third quarter.
Meanwhile, ANZ grew their home loan book well above the rest of the market, with some $10 billion in new loans written during the quarter.
The biggest concern for me is the continued reduction in their net interest margin, now at 1.59% and the lowest among the major banks. This is possibly due to ANZ’s struggling Asian businesses.
One of the more interesting insights came from the bank’s deferred mortgage book, where deferred mortgages are clearly higher risk, with an average LVR of 68% compared to 56% for the rest of their accounts. These loans also have outstanding balances which are substantially higher at $371,000, compared to $272,000 for non-deferred mortgages.
Summary: the result is welcome relief for investors evidencing the growing divergence between the Big Four.