ANZ earnings preview: why the interim dividend may be at risk

We examine some of the key things investors should know before ANZ reports its half-yearly results this week.

When is ANZ set to report its half-yearly results?

The Australia and New Zealand Banking Group (ANZ) is expected to hand down its first-half 2020 results to the market this Thursday, 30 April.

Interestingly, heading into the H1, the analyst consensus for the commercially inclined bank is a bullish one.

According to the Wallstreet Journal, ANZ's average analyst consensus rating is Overweight: with eight analysts rating the bank a Buy, four a Hold, one analyst is Underweight, and two have Sell ratings on the bank.

Will ANZ cut its interim dividend?

Though analysts on average may be optimistic about ANZ’s prospects, many analysts nonetheless believe that ANZ will follow the likes of NAB and slash its interim dividend as part of its H1 results.

For example, Bell Potter analysts are currently expecting that ANZ will reveal an interim dividend of 48 cents per share (70% franked), implying a payout ratio of 50%.

ANZ’s 2019 interim dividend came out at 80 cents per share, and was fully franked. Though its 2019 final dividend was franked at 70%.

J.P. Morgan analysts have more aggressively cut their interim dividend forecasts, arguing that ANZ will cut its dividend by 50%, to come in at 40 cents per share and as to imply a 52% payout ratio.

Overall, the investment bank’s analysts said 'While we think most banks will want to pay something, there is a chance that dividend declaration may need to wait until post results once stress tests can be agreed upon.'

Earnings expected to come in lower

Unsurprisingly, both Bell Potter and J.P. Morgan believe that ANZ is set to deliver substantially lower statutory profits when the bank reports its interim results this Thursday.

Bell Potter is currently estimating that ANZ will deliver H1 statutory profits of $2.40 billion. The broker elaborated upon this estimate, noting that when factoring in ANZ’s implied Q1 statutory profit, ‘We estimate 2Q20 statutory profit will be $0.9-1.0bn with the sharp step down largely due to higher credit impairment expenses.

By comparison, J.P. Morgan is estimating a more dour half-year profit of cash profit (NPAT) of $2.208 billion.

Such forecasts hardly seem radical in the coronavirus earnings-era: For example, when the National Australia Bank (NAB) reported its half-year results on Monday, the bank revealed that its H1 cash earnings had declined a staggering 51.4%.

Is there upside potential for ANZ’s share price?

Mind you, although J.P. Morgan and Bell Potter analysts are both expecting lower dividends and interim profits – both firm’s 12-month price targets imply varying degree of upside.

Bell Potter currently has a Buy rating and a 12-month price target of $19.00 per share on ANZ – implying upside potential of around 21% (from ANZ’s Tuesday closing price).

On the other hand, J.P.’s price target of $17.90 per share – though less optimistic – still suggests upside potential for investors from current price levels.

The ANZ share price finished Tuesday's session at $15.70 per share.

How to trade the ASX Financial Index

Not interested in buying or selling the Big Four Banks individually, but still have an opinion on Australia’s financial sector? You can use CFDs to trade the ASX 200 Financials index LONG or SHORT through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) the ASX 200 Financial Index, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘Australia 200 Financials’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.