ANZ Completes Buyback and Adjusts Strategy
SYDNEY, Oct 13 – Australia’s ANZ Group announced it is halting the final A$800 million ($520 million) of its share buyback program, yet will continue to pay dividends. CEO Nuno Matos is focusing on increasing cash reserves, simplifying operations, and regaining market share from competitors.
The bank revealed plans to achieve pre-tax cost savings of A$800 million this fiscal year through planned job cuts, restructuring, and exiting non-core sectors, like the online shopping cashback service CashRewards.
“We need to enhance how we handle our non-financial risks. Our current structure has become too complicated, and we’re losing touch with our customers,” Matos shared in a briefing aimed at investors.
Following the announcement, shares of the bank dipped initially but then rose by 0.3%. In contrast, the broader S&P/ASX200 index fell by 0.6%. Many investors expected that the bank might cut dividends or suspend share buybacks to conserve cash flow.
Michael Haynes, an analyst at Atlas Funds Management, which holds ANZ shares, commented that not cutting dividends is a promising sign for shareholders and indicates the bank is in a stable financial position.
Matos also mentioned plans to boost the number of mortgage and business bankers by up to 50% to reclaim lost market share from larger competitors. The aim is to focus more on direct lending, thus reducing reliance on mortgage brokers and increasing income from home loans.
Although ANZ’s share price has lagged behind its main competitors, it has still gained nearly 20% since Matos took the helm in June. Year-to-date, the bank’s stock has risen by 24%, outperforming the share prices of major rivals like Commonwealth Bank of Australia.
ANZ recently announced plans to cut 3,500 jobs incurring a one-time cost of A$560 million, with about 60% of these cuts expected to come from its retail banking and technology sectors. Matos, a former HSBC executive, has initiated this reset as the bank tackles serious reputational challenges and regulatory hurdles.
Last week, Australia’s government debt regulator stated it would not engage with ANZ until the bank improves its risk management culture after a bond trading scandal in 2023. ANZ agreed to a A$125 million penalty with the corporate regulator due to allegations of unethical conduct in bond trading. This penalty is part of a larger A$240 million settlement after the bank was also charged with erroneously collecting fees from deceased customers and miscalculating interest bonuses.
Moving forward, ANZ anticipates that its final dividend will align with previous half-year dividends and plans to introduce a 1.5% discount for two forthcoming dividend reinvestment schemes.
In May 2024, the bank had announced a A$2 billion share buyback after achieving nearly forecasted cash profits in the first half of the financial year, but it had only completed A$1.2 billion of that buyback before the recent suspension.
