ANZ Group Holdings Ltd (ASX: ANZ)Share Price and News
Introduction to ANZ (ASX:ANZ)
ANZ Bank (ANZ Group Holdings Ltd) is one of Australia's largest banks (one of the so-called Big Four), offering a wide range of financial services, including retail, business, and institutional banking. Headquartered in Melbourne, ANZ operates in more than 30 markets in the Asia-Pacific region, as well as in Europe and the Americas.
The bank's core operations focus on providing banking services such as lending, deposits, wealth management, and insurance. ANZ's competitive edge lies in its strong international footprint, particularly in emerging markets, and its focus on digital banking to enhance customer experiences.
ANZ's History
ANZ was founded in 1835 as the Bank of Australasia in London, with its first Australian branch opening in Sydney later that year and it expanded into Tasmania a year later, acquiring the Cornwall Bank in Launceston. Its early operations focused on facilitating trade and financial services within the Australian colonies which until federation were effectively separate countries.
The 1951 merger between the Bank of Australasia and the Union Bank of Australia, led to the birth of the name 'Australia and New Zealand Bank Limited' and the present organisation came to be in 1970 when ANZ Bank merged with English, Scottish and Australian Bank Ltd. Over the 2nd half of the 20th century, it slowly expanded overseas including into the US, Europe and Asia. The bank has been a pioneer in many respects including being the first bank in the world to introduce EMV-secure 'Tap & Pin' ATM technology and the first Australian Bank to offer Apple and Android Pay.
The last decade or so under the tenure of Shayne Elliot has been challenging for the bank. Like its Big Four peers, it faced the pandemic and the so-called Mortgage Wars. But ANZ has also had challenges of its own as it sought to acquire Suncorp, and while it was ultimately successful, it took multiple years to satisfy regulators. It has also been slow to roll out its digital ANZ Plus platform.
Future Outlook of ANZ (ASX: ANZ)
For the first time in a decade, ANZ will undergo a CEO transition in the 2nd half of the year with Nuno Matos succeeding Shayne Elliot.
The outlook for ANZ will depend on two things. First, ANZ Plus, and Second, the integration of Suncorp's retail arm. ANZ Plus has taken longer than investors anticipated to roll out, but there is hope that it could give the bank a 'leg up' compared to its peers. ANZ Plus is 35% cheaper to run compared to older technology systems - savings that can be passed on to customers.
By 2029, it is anticipated that the entire retail bank will be on Plus which should be at least 7m customers (6m with ANZ today and 1m with Suncorp). ANZ has copped flack over the slow roll out and the expenses incurred ($8.9bn in FY24) vs the benefit received (which will take some time to accentuate).
Onto the acquisition of Suncorp's retail arm, the reason for this was simple - it wants to turn things around. ANZ was the only Big Four bank to shrink its mortgage book during the height of low interest rates in 2021 and had only 13.1% of the market at that time. The deal saw the onboarding 1.2m customers, 3,000 employees and A$54.6bn in a day.
There are other things for investors to consider too including inflationary pressures - which increased expenses by 6% - and that the bank has the biggest exposure of the Big Four to the New Zealand economy which isn't in the best shape right now.
Is ANZ a Good Stock to Buy?
Whether ANZ is a good stock to buy depends on individual investment goals and risk tolerance. For dividend investors, it might seem like a no-brainer. After all, ANZ has a strong history of paying regular dividends, making it appealing to income-focused investors. Its next dividend will be for 1H25, payable on July 1, 2025 and it will be 83c per share - a yield of 5.8% at the current price and the biggest of the Big 4. That said, it doesn't pay out as much per share as CBA does.
As a major player in the banking sector, ANZ carries the inherent risks associated with big banks generally, including exposure to economic cycles and interest rate changes. The company is also subject to intense regulation and scrutiny.
It's true that its strong balance sheet and diversified operations help reduce these risks. That said - as we saw with the GFC, COVID and Trump's tariffs - all these crises can emerge without warning and have an impact.
The bank's P/E is a reasonable 12.6x, but its PEG is 3.5x - although in both instances, the company has the lowest multiples of any of the Big 4. CBA's P/E is 26.6x and its PEG is 6x for comparison's sake.
All things considered, we think ANZ has the most growth potential of any of the Big Four right now, but investors should always be aware of the risks of investing in banks specifically, and of course stocks generally.
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Frequently Asked Questions
ANZ Group Holdings Ltd offers a competitive 5.8% dividend yield, accounting for its current share price and half-yearly dividend of 83c per share on an annualised basis. Investors can expect steady dividend payments, which have historically been reliable.