I’m sure you’ve seen the news recently. Australia’s largest banks have been marred by scandal and an ongoing inquiry and settlement process.
The Australia and New Zealand Banking Group Limited [ASX:ANZ], the third largest bank in Australia by market capitalisation, is one of the offenders — and the allegations are troubling.
Therefore today’s stock movements may come as a surprise.
At writing, ANZ is up just over 1.5% to 1.57%, from the previous close of 28.43 to 28.50.
Maybe investors already priced in the expected costs of the scandal? Or maybe some recent news has provided a short-term boon…
Why did this happen to ANZ’s shares?
Amid the proceedings, it was announced this week that ANZ will seek to accelerate the closure of numerous branches. 50 branches have already been closed back in 2017.
The remaining 640 branches face pressure after financial analysts recommended shutting doors to improve the company’s bottom line and profit margins.
This news is likely responsible for today’s jump. What investor doesn’t like profit-enhancing measures?
But CommSec chief market analyst Steven Daghlian warned investors recently not to read too much into banking sector movements:
‘They are just going back and forth at the moment, they are not really heading in one direction or another.’
That may be true for the past few weeks, but I think today’s rise is more than seesawing…
What’s next for ANZ?
If we were judging ANZ solely on stock performance, then today would be cause for celebration. The company is taking action to improve its financial situation and investors took notice.
But since much larger forces are at play — such as the Banking Royal Commission and its findings — any good news should be taken with a grain of salt.
Just today, the commission has concluded two weeks of hearings concerning the bank’s treatment of rural residents, its alleged misconduct, and a lack of empathy.
Clearly, the inquiry is still uncovering troubling practices, which means even more negative coverage for ANZ. We’re definitely going to keep a close eye on them over coming days — check back here for updates.
For Money Morning
PS: If you manage your own money or simply want to learn the most effective strategies to both grow and protect your wealth, this free report on the ‘Three Best Investments of 2018’ is for you. Click here for details.