ANZ (ASX:ANZ) Cops Record $250m ASIC Fine- Is the Stock Still a Buy?

ANZ (ASX: ANZ) closed flat at A$36.03 on Friday after being hit with a record A$250 million penalty by the Federal Court, marking the largest fine ASIC has ever secured against a single company. Justice Jonathan Beach increased the penalty from the agreed A$240 million, finding parts of ANZ’s conduct “inexcusable” with “no redeeming feature whatsoever.” For income-focused investors holding ANZ for its 4.6% dividend yield, the question is whether this signals a real governance problem or just an exaggerated headline about costs the bank has already covered.

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A Pattern of Misconduct: Why the A$250m Fine Signals Deeper Problems

What makes this penalty significant isn’t just the size. This is ASIC’s 11th civil penalty case against ANZ since 2016, suggesting a culture problem that fines alone haven’t fixed.

The A$135 million for institutional misconduct on an A$14 billion government bond deal is particularly damaging. The bank failed to trade transparently, cost taxpayers up to A$26 million, and then misled regulators when concerns arose. This includes a record A$80 million penalty for unconscionable conduct.

The retail failures paint an even uglier picture. The bank ignored 488 hardship notices for up to two years from customers facing unemployment, illness, and family violence, while simultaneously sending some to debt collectors. The bank charged fees to deceased customers and failed to pay promised interest to tens of thousands of accounts.

ASIC Chair Joe Longo was blunt: “Time and time again, ANZ betrayed the trust of Australians.” We believe this pattern of systemic failures across both divisions over many years points to risk management issues that won’t be fixed overnight.

Why the Financial Impact Is Limited But Reputational Damage Lingers

From a financial point of view, the impact is small. ANZ had already set aside A$240 million, so the extra A$10 million is tiny compared to its A$107 billion market value. By contrast, CBA and NAB are valued more highly, partly because they haven’t faced scandals like this recently.

But the damage to ANZ’s reputation is harder to fix. The bank is still under APRA’s enforceable undertaking, which includes a A$1 billion capital add-on due to concerns about its risk culture. At last week’s AGM, more than 32% of shareholders voted against executive pay for the second year in a row. This shows many big investors still don’t believe ANZ has properly dealt with accountability issues.

The Investor’s Takeaway

ANZ pays a 4.6% dividend yield with 70% franking, and the FY25 payout of A$1.66 per share is secure. For income-focused investors, the dividend looks steady with an 84% payout ratio and strong capital reserves.

Analysts value the stock around A$35-A$36, meaning it’s fairly priced. This suggests there’s little room for gains unless ANZ shows real cultural change.
The bank is still a reasonable hold for dividend investors. But its 4.6% yield comes with more governance issues compared to NAB and Westpac, which offer similar yields near 4% but face fewer reputational risks.

For those thinking of buying more, two things matter: how ANZ handles the APRA remediation program and whether the 3,500 job cuts cause problems. Until the bank proves its risk culture has improved, investors should stay cautious.