ANZ’s Share Price above Water Despite Poor 2018 Full-year Results

ANZ’s share price took a hit on the back of its full-year results announcement. Cash profit slipped 16% to $5.805 billion full-year ending 30 September.

Despite this, Australia and New Zealand Banking Group’s [ASX:ANZ] share price is trading at $26.12, up a moderate 1.79%. To date, ANZ dividends are paying 80 cents, but if you want to find out five potentially lucrative income stocks trading on the ASX right now, click here.

A combination of things led to ANZ’s poor full-year results. At the forefront was the royal commission, which left ANZ having to simplify its business model and cut losses. Resulting in $374 million in refunds, remediation, and $55 million legal costs announced earlier this year.

But that wasn’t the only cause…

Soft housing market/royal commission fallout could hurt ANZ’s share price

The downturn in Australia’s housing market could cause concern for ANZ’s share price. In a statement, Chief Executive Shayne Elliott said that as housing growth slowed and borrowing capacities were cut, ANZ stuck with ‘focusing on customers who want to buy and own their own home’ in its new disciplined approach.

While there was much to be pleased about this year, we accept the significant community concern as a result of our failures highlighted by the Royal Commission has impacted our standing in the community,’ he said.

Unfortunately, this saw a sacrifice to short term revenue growth, as well as investor and interest only segments, which was in the best interest of shareholders according to Mr Elliot.

We expect the tough revenue growth environment in retail banking in Australia to continue for the foreseeable future, however we are well positioned to take advantage of growth opportunities in institutional, Asia and New Zealand, he added.

Room for improvement in ANZ’s share price

Despite claiming there were some things to like about this year, the impact of the Banking Royal Commission sure put a dent on ANZ’s community standing, which according to Mr Elliot highlights the bank’s failures.

But for what it’s worth, it appears ANZ has managed to do some damage control, by driving a purpose and values led transformation. Under this transformation, they provided a support package for Australian farmers impacted by droughts — offering discounted loans as well as donating $1 million.

But ANZ, as well as the other big four banks, will have some time until they start to see long sustained growth, which is expected considering Australia’s own economic environment.

In short, there is still room for improvement.

 

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Our income specialist Matt Hibbard reveals five stocks he calls ‘…the best dividend paying stocks on the Aussie market today.’ Find out which stocks he picked here for free in his report: ‘The Top Five Dividend Stocks in Australia for 2018’.


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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