ANZ’s Profit Falls Short Amid Stiff Mortgage Competition, CEO Highlights Tech Solutions

ANZ Group Holdings Ltd. reported a lower-than-expected profit, as CEO Shayne Elliott noted intense competition in the mortgage market. For the year ending September 30, ANZ’s cash profit declined to $4.5 billion, down from $4.9 billion the previous year.

The results underscore the challenges facing Australia’s major banks, which are feeling the diminishing benefits of a high-interest rate cycle. With rates in Australia possibly set to decline next year, the pressure on margins could escalate, further fueling the competitive struggle for home loans.

Elliott described consumer banking as facing a “massive profit challenge” and stressed that simplifying technology—such as through ANZ’s app, ANZ Plus—would be crucial to helping the bank remain agile and cost-effective in a competitive environment. He emphasized that uncertainties in the rate cycle and ongoing competition continue to test the sector.

Additionally, ANZ is navigating an investigation by Australia’s securities regulator regarding government bond trading activities following the departure of some traders earlier in the year amid misconduct allegations. Elliott stated that the bank is expediting efforts to strengthen non-financial risk management and fostering a “speak-up culture” across the organization as part of his focus as CEO.

In August, the Australian Prudential Regulation Authority imposed a higher risk buffer on ANZ’s capital, citing weaknesses in the bank’s non-financial risk practices. Elliott mentioned that he does not expect this buffer to be reduced in the upcoming financial year.

Within its Australian retail division, ANZ reported a 7% increase in both home loans and customer deposits. The institutional division saw a 4% increase in market revenue, reaching almost $1.5 billion, supported by growth in operational deposits.

Analysts have pointed out potential risks to ANZ’s margins and dividend in the coming year, with forecasts suggesting profit could decline by another 15%. Despite these challenges, ANZ’s shares rose 0.9% as of early afternoon in Sydney, marking a 24% increase year-to-date.

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