Why did the ANZ share price plunge 22% in FY22?

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price underperformed the S&P/ASX 200 Index (ASX: XJO) last financial year.

The ANZ share price closed financial year 2022 (FY22) trading at $22.03. That marked a 21.7% fall over the 12 months prior. In comparison, the ASX 200 slipped around 10% over FY22.

So, what dragged on the ASX 200 banking giant last financial year? Let’s take a look.

What weighed on the ANZ share price in FY22?

The ANZ share price suffered amid rising inflation and interest rates in FY22. But it wasn’t all dire for the big four bank.

The good

ANZ announced plenty of exciting news last financial year.

First up, was a $1.5 billion on-market buyback announced as part of its capital management plan. The bank announced the buyback in July and completed the activity in March.

It also stepped into the buy now, pay later (BNPL) space with a new offering available to its credit card customers courtesy of a partnership with Visa.

Finally, the bank underwent a $1 billion capital raise through a capital notes offering in February.

The bad

But, perhaps unsurprisingly, FY22 wasn’t all sunshine for ANZ.

The bank was hit with legal action by the Australian Securities and Investments Commission (ASIC) in May.

The watchdog alleged system errors at the bank saw customers’ bank balances misrepresented. The bank also purportedly charged fees based on the incorrect balances.

Additionally, broader macroeconomic events seemingly weighed on the institution.

The ANZ share price plunged 19.3% over May and June as the Reserve Bank of Australia implemented consecutive rate hikes in an effort to control inflation.

Rising rates generally allow banks the reprice loans, thereby increasing their net interest margins. But it also ups the risk of foreclosures and can weigh on house prices, both of which spell bad news for banks’ home loan books.

And the earnings

Finally, the ANZ share price lifted on the back of the bank’s most recent full and half year results.

ANZ dropped its results for FY21 in October 2021. It posted a 72% increase in statutory after-tax profit and a 65% increase in cash earnings.

Then, in May, the bank released its earnings for the first half of FY22, posting yet another strong result. Its statutory after-tax profits rose 10% over the six months ended 31 March on those of the prior comparable period. It also boasted a 4% increase in cash earnings.

On top of that, ANZ offered shareholders $1.44 in fully franked dividends last financial year – representing a 27% increase on those of FY21.

The post Why did the ANZ share price plunge 22% in FY22? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Visa. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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