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ANZ's momentum solid, Santos slips

Nicholas Grove/Christine St Anne  |  16 Aug 2013Text size  Decrease  Increase  |  

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Nicholas Grove is a Morningstar journalist and Christine St Anne is Morningstar's online editor.


Companies covered in this report:

Australian and New Zealand Banking Group (ANZ)

Santos Limited (AMP)


ANZ confirms "solid momentum"

Australian and New Zealand Banking Group (ANZ) on Friday reported a third-quarter profit of $1.6 billion, in line with Morningstar's forecast.

Third-quarter earnings were moderately higher than the quarterly average for the first half of 2013.

The results confirm the bank's "solid momentum" and that it is on track to meet its full-year 2013 cash profit forecast of $6.4 billion, Morningstar head of banking research Asia Pacific David Ellis said.

"Overall, (there were) no major surprises in the trading update, and in our view, key business performance measures continue to improve," he said.

"Balance sheet settings, including funding and liquidity levels, remain robust and solid profits support attractive dividends. Importantly, strong customer deposit growth of 12 per cent exceeded the 8 per cent growth in loans."

ANZ expects its "jaws" - a measurement of a company's income growth rate against its expenses growth rate - to be positive for the full year.

Expenses were down 0.5 per cent and income was up 5 per cent. Provision charges for bad loans were down 2 per cent.

Ellis said margins are being pressured due to low interest rates and less favourable product mix changes.

Group margins declined 2 basis points in the quarter from 2.25 per cent as at 31 March 2013.

ANZ said it expects group margin to decline several more basis points by the end of the financial year.

"We will likely reduce our 2013 margin forecast from 2.25 per cent to about 2.20 per cent," Ellis said.

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