ANZ shares smashed the ASX 200 return in FY24

ANZ Group Holdings Ltd (ASX: ANZ) shares performed substantially better than the S&P/ASX 200 Index (ASX: XJO) in FY24. ANZ shares rose by 19% over the 12 months to 30 June 2024, compared to an index rise of around 8%.

Considering ASX bank shares make up a sizeable part of the ASX 200’s returns, it may be surprising to see that ANZ shares delivered outperformance of more than 10%.

ANZ’s financial calendar doesn’t finish in June, it runs to September. So, while the Australian tax year finished on 30 June 2024, there are still a few more months to go for ANZ’s 2024 financial year.

Investors often pay the most attention to the latest six-month result when it comes to valuing a business, so let’s remind ourselves what the bank reported less than two months ago.

Earnings recap

In May, ANZ reported its result for the six months to 31 March 2024 and advised that statutory net profit after tax (NPAT) fell 4% to $3.4 billion compared to the second half of FY23, while cash NPAT declined by 1% to $3.55 billion.

The ASX bank share revealed its total provision charge decreased by 38% to $70 million, with the individual provision charge declining by 69% to $38 million. Arrears are performing better than some investors may have expected in this high interest rate environment.

However, the net interest margin (NIM) fell slightly from 1.65% in the second half of FY23 to 1.63% for the first half of FY24, excluding the impact of ‘markets’ activities. Further declines in the NIM may not be helpful for ANZ shares.

The bank generated productivity cost savings during the period across technology services ($62 million), head office enablement ($59 million), customer service and distribution ($36 million), product management ($29 million), and banking services and transaction processing ($15 million).

The bank also announced that the total dividend per share was hiked by 2% to 83 cents, compared to the FY23 second-half payout.

Management commentary

The ANZ CEO Shayne Elliot had a number of positives to say about the bank’s performance in HY24:

This half’s strong performance is a direct consequence of peer-leading diversification as well as our disciplined focus on productivity and delivery.

Our preparations to integrate Suncorp Bank are well advanced. While the time taken to progress the necessary approvals has taken longer than anticipated, we have used that time productively and we are more confident than ever about the benefits that will follow.

Elliot said the bank’s flagship digital offering, ANZ Plus, had grown to almost 690,000 customers and approaching $14 billion in deposits at the end of April – and the ability to create joint accounts had been introduced. He added:

Net promoter scores are consistently higher than our peers, while attracting on average 35,000 customers every month, around half of which are new to the bank.

Acquisition approved

ANZ has attempted to buy the banking operations of Suncorp Group Ltd (ASX: SUN) for several years.

Federal Treasurer Jim Chalmers recently approved the deal. This stage was one of the main roadblocks to the acquisition’s progress.

A bigger ANZ, particularly with a larger presence in Queensland, could give it more scale benefits, deliver a better growth profile, and, if the integration goes according to plan, generate bigger overall profits and pay larger dividends.

ANZ share price snapshot

Since the start of 2024, the ANZ share price has lifted around 9%, compared to a 1% rise for the ASX 200.

The post ANZ shares smashed the ASX 200 return in FY24 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.