ANZ full-year earnings snapshot

Nicholas Grove  |  25/10/2012Text size  Decrease  Increase  |  

Nicholas Grove: ANZ has announced its results for the 2012 financial year and here to give investors his initial impressions of the bank's earnings, I'm joined by Morningstar's David Ellis. David, thanks very much for joining us.

David Ellis: Pleasure Nick.

Grove: First of all, David, were ANZ's earnings and dividend above, in line with, or below what you were expecting?

Ellis: $5.66 billion, that's a touch higher than what we were expecting but pretty much in line. The surprise was the dividend, which was a solid increase. They are 4 per cent higher but we were looking for about 5 per cent higher. So, the final dividend was just a touch under what we were expecting.

Grove: David, what were the key drivers of this result?

Ellis: Good top-line revenue growth made up of interest income, about 4 per cent, 5 per cent growth in interest income, 3 per cent growth in non-interest income, so it was good to see some top-line revenue growth, particularly in the economic conditions that we're in with relatively modest credit growth. Cost control was good, particularly in the second half. Second-half costs were flat on first half, and so the equation of pretty solid revenue growth with lower cost growth means good upside, uplift in underlying earnings.

Grove: Finally David, was there anything about the result that surprised you or that will alter your outlook for the bank?

Ellis: The dividends were a little bit lower than we were expecting and also there was guidance from ANZ that they're going to maintain their payout ratio at round about 65 per cent. We were forecasting a little bit higher than that, so we've had to pull back our forecast a bit to account for that. Credit growth, also credit quality, loan quality, ANZ guided for some weakness there and with expectations of higher bad debt - not much higher but a little bit higher bad debts in the next few reporting periods. So, we've increased our bad debt provisions, we've pulled back our dividend forecast a touch, but importantly, we still maintain that ANZ and all four major banks are going to continue to grow dividends and maybe in 2013 or 2014 we might see some capital management initiatives, which could be special dividends or share buybacks for the major banks.

Grove: David, thanks very much for your time.

Ellis: Pleasure Nick.

Video Archive...

Introducing star ratings to Morningstar Australasia equity research
27/04/2017  What investors can expect from Morningstar's roll-out of its star rating methodology across Australian and New Zealand equity research, as explained by the regional director of equity research, Adam Fleck.
French elections: Macron versus Le Pen
26/04/2017  Following the first round of the French Presidential elections, the 7 May vote is now between Emmanuel Macron and Marine Le Pen. What does it mean for investors?
How climate change will impact your portfolio
20/04/2017  Ignore climate change at your portfolio's peril, says Jeremy Grantham, founder of asset manager GMO.
How dwindling resources will push up commodity prices
13/04/2017  Jeremy Grantham, renowned investor and founder of GMO, explains how a growing population is putting a strain on global resources.
How retirement spending affects withdrawal rates
10/04/2017  Data shows that the withdrawal rate gets higher as spending decreases in retirement, says Michael Kitces, a US-based financial planning expert.
What lies ahead for mining and materials
10/04/2017  Iron ore, coal, lithium, and uranium: some end-markets will rise and others will fall behind, says Morningstar commodities and resources analyst David Wang.
The evolution of multi-asset investing
07/04/2017  More difficult market conditions in a rising interest rate environment highlight the value of active management across your portfolio, says Simon Doyle, Schroders' head of fixed income and multi-asset.
When is the right time to buy stocks?
29/03/2017  Davis' Associates Chris Davis says the best time to invest is when you have the money, and to ignore market "noise".
How misinterpreting risk impacts financial returns
28/03/2017  Dr Gerd Gigerenzer says fund providers need to invest in education so that savers are better equipped to deal with risk--and can make better financial decisions.
Are European stocks overvalued?
27/03/2017  Isabel Levy of French asset manager Metropole Gestion explains how she uses fundamental industrial analysis to avoid value traps and identify the fair value of European equities.
Which funds are worth paying for?
23/03/2017  High active share funds--that is, those managers who take off-benchmark bets--outperform those which are low active share. So, ban closet trackers from your portfolio.
Bond market wobbles no cause for panic
21/03/2017  Australian bonds see only a slight tremor in response to the Fed's rate rise, says John Likos, Morningstar's senior credit analyst, who also provides insights on the new, and anticipated, hybrids from Australian banks.
ESG: Essential steps for successful long-term investing
21/03/2017  Want sustainable long-term returns? Morningstar UK reveals the essential components and the fund providers who are getting it right.
Few values left in global stock market
20/03/2017  Morningstar's directors of equity research think investors need to be cautious in the market today and offer some of their best investment ideas.
Why the time is right to invest in emerging markets
20/03/2017  Hilde Jenssen from Norwegian fund manager Skagen admits that emerging markets have disappointed investors over the past three years--but says valuations are attractive and reforms are boosting returns.
Johnson: Fed's path may not be smooth
16/03/2017  The Fed's plan for stair-step rate hikes in the coming years will likely be derailed by economic reality, says Morningstar's Bob Johnson.
First-half 2017 earnings season insights
15/03/2017  Companies produced reasonably good results overall with only a few standouts, even as a cost-out theme dominated, says Peter Warnes, head of equities research, Morningstar.
The growing appeal of LICs
06/03/2017  The popularity of listed investment companies is on the rise once again, but there are several things investors need to be aware of before buying in, explains Michael Malseed, Morningstar senior analyst, manager research.
Earnings season wrap: BHP exercises good cost control
27/02/2017  As the curtains close on the 1H17 reporting season, BHP books earnings that are slightly softer than expected, while Woolies takes market share at the expense of margins.
Possible $2.5bn tailwind to drive hybrid demand in 2017
22/02/2017  Strong supply dynamics and ongoing economic stability should create significant opportunities for hybrid investors in 2017, according to John Likos, senior credit analyst, Morningstar Australia.