With new management reviewing priorities, ANZ Group is set to axe around 3,500 employees by September next year and reduce its use of external consultants. A restructuring charge of AUD 560 million is expected in the fullyear results.

Yes, this is partly a new CEO taking the axe to costs, but also a review of strategic priorities to improve customer experience and support growth. A reliance on consultants has led to ANZ Group’s digital offerings and operating efficiency lagging peers, warranting a fresh approach.

We think this update increases the likelihood that the migration to a new banking platform, ANZ Plus, will be pulled. Despite billions of dollars sunk into the project, it still lacks functionality, and if the strategy needs to pivot, it is likely in the best interest of shareholders.

Changes to the front end will likely be rolled out, but changes to the back end, which were intended to deliver material cost savings, seem unlikely. We expect earnings to benefit from redirecting investment spending to smaller projects, which will improve consistency and speed of approvals.

Holding our Fair Value estimate steady

We retain our AUD 32 fair value estimate for wide-moat ANZ Group (ANZ), with shares trading close to fair value. Unlike its major bank peers, which are expensive, ANZ trades on a reasonable P/E of under 14 times and offers a partially franked dividend yield of around 5%.

We think uncertainty regarding operating costs largely explains the discount to peers. Our forecasts assume that the cost/income ratio falls from a forecast 53% in fiscal 2025 to 49% in fiscal 2029, benefiting from the removal of duplicated system costs, greater automation, and lower system maintenance costs.

Accounting for around 8% of group employees, and we estimate around 5% of operating costs, we expect the changes announced today to help keep expense growth modest over the medium term. We expect cost savings to be outpaced by inflation, more lending staff, and greater focus on nonfinancial risks.

A strategy update scheduled for Oct. 13, 2025, should provide insight into medium-term ambitions. Ripping costs out is one thing, but ensuring it has a competitive service level across its key products is even more critical to long-term success

ANZ Group (ANZ)

  • Fair Value Estimate: $32 per share
  • Morningstar Rating: ★★★
  • Moat Rating: Wide
  • Uncertainty Rating: Medium

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