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Expectations for ANZ centre around four key parts to the report. The market will be listening out for:
1. Strong lending growth coupled with high capital concentration
2. Margin downside limited due to largest room to move on net interest margins
3. Market revenue strength from FX market trading
4. The Asian expansion story
Consensus forecast on the cash earnings line was A$3.437 billion, which is an 8% increase over the period. ANZ has managed to produce an 11% increase over the corresponding period with an A$3.515 billion read. The interim dividend the yield hunters had been looking for has materialised, with a 3 cent beat on consensus at 83 cents.
But it’s the detail in the results that is pleasing; net interest margin was in-line, with estimates at 2.15% versus 2.14% expected. The loss in margin has more than been offset by the loan growth, which improved by 12% over the half, with customer deposits rising by 13%.
Gross impaired assets fell 23% and bad and doubtful debt provisions are at their lowest levels since September 2008. But what is likely to have a smile on CEO Mike Smith’s face is the FX tailwinds, the improved return from the international and institutional bank and the EBIT make-up of the Asian division, which is now at 27%. The results from Asia look very positive and are likely to be championed at the press conference.
The question is, is this enough to push it higher? Initially yes; the results are very positive and the recent pull-back is likely to be corrected. However, as brilliant as it is there are holes that can be seen from the analysts’ side, and it’s likely that the investment world will see this as stock standard and not enough in the short term to leg it higher. My counter to this is the response to CBA – back at record highs with plus $80 in its site.