ASX:ANZ
ANZ Group Holdings Ltd
Investment Summary
The fund managers believe that ANZ Group Holdings Ltd presents a solid investment opportunity, particularly given its underappreciated upside stemming from strategic initiatives to reshape its institutional division into a higher-returning, lower-risk business. Since 2015, management has focused on de-risking its customer base and reallocating capital towards higher-returning businesses like Payments and Cash Management. In their opinion, the rise in global interest rates has markedly improved ANZ’s return and expected loss profile. Historically, ANZ's underweight position in retail banking has affected group returns; however, regulatory changes are now favoring institutional businesses, allowing both retail and institutional returns to converge. Additionally, the deposit-heavy nature of its corporate banking reduces the necessity to compete aggressively in the retail market. The potential of the new digital banking service, ANZ Plus, to enhance customer experience and efficiency further solidifies their positive outlook. Overall, these factors should contribute significantly to ANZ's relative performance.
Commentary From The Managers
Cooper Investors
30 Sept 2023
$25.49
- Cooper Investors added Australia and New Zealand Banking Group (ANZ) to the portfolio this quarter.
- ANZ is viewed as a Stalwart investment due to underappreciated upside from strategic initiatives in its institutional division.
- The fund manager initiated a position because ANZ’s management has focused on redirecting the division from growth to returns since 2015.
- This includes measures such as de-risking the customer base and optimizing the lending book.
- ANZ has allocated more capital to higher-returning businesses like Payments and Cash Management (PCM).
- Global interest rate increases have contributed to a vastly improved return and expected loss profile.
- While ANZ’s underweight position in retail banking has historically affected group returns, recent changes are causing returns to converge.
- Intense mortgage competition and regulatory capital changes are gradually benefiting institutional businesses.
- ANZ's deposit-heavy corporate and institutional banking reduces aggressive competition for retail funding.
- Successive improvements in a competitive sector are expected to support ANZ’s relative performance.
- Long-term opportunities from ANZ’s digital banking service, ANZ Plus, are anticipated to enhance customer experience and cost efficiency.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.