ANZ has released its Pillar 3 disclosures for the quarter ending June 30, 2022, and provided an update on trading conditions. ANZ's Chief Executive Officer Shayne Elliott commented on the performance: “This was a pleasing quarter where all our businesses performed, particularly our home loan business in Australia. While rising inflation and interest rates are starting to impact some customers, household and business balance sheets remain strong and with a collective provision balance of $3.8 billion we are well-placed to continue to support economic growth into the future.”
The bank reported strong lending and margin momentum across its major businesses during the quarter, with revenue increasing by 5% (6% when adjusted for foreign exchange impacts). Deposits remained flat when excluding FX effects. In Australia, operational improvements in the Home Loan business have resulted in faster processing times across all channels. Lending volumes grew by $2.0 billion (3% annualized) in the third quarter, showing particularly strong growth in June.
The Commercial business has seen benefits from recent restructuring efforts, resulting in an annualized lending growth of 11%. In New Zealand, disciplined growth was observed across core products. The Institutional business also performed well with customer lending focused on sustainable and diversified balance sheet growth.
Markets revenue reached $435 million for the quarter, marking a 7% increase; however, market conditions remain volatile and challenging. The Group Net Interest Margin (NIM) increased by three basis points for the quarter with underlying NIM up six basis points to 164bps compared to 158bps in the first half of FY22.
Despite inflationary pressures, costs across ANZ remain tightly managed with 'run-the-bank' costs expected to stay broadly flat for the second half of FY22. Investment expenses are projected to rise slightly as compliance with BS11 is finalized in New Zealand.
A low level of Individual Provisions led to a $14 million credit provision charge for Q3 (IP $14m, CP $0m). The Collective Provision balance remained stable before FX adjustments due to portfolio credit quality improvements offsetting minor increases related to economic uncertainties.
ANZ remains cautious about risks posed by higher inflation and interest rates but maintains a Collective Provision balance at June 30, 2022, of $3.78 billion—$403 million above pre-COVID levels as of September 30, 2019.
The Group’s Common Equity Tier One ratio stands at Level Two: 11.1% (Level One: 10.4%), factoring in impacts from interim dividends (-41bps), broad-based lending growth (-17bps), and IRRBB RWA including associated DTA impacts (-14 bps).
Approved for distribution by ANZ’s Continuous Disclosure Committee.