ANZ margin shrinks amid home lending competition, mulls more buyback

[BENGALURU] Australia and New Zealand Banking Group on Monday joined rival Westpac in flagging lower margins, even as its efforts to capitalise on a boom in the Australian housing market helped its loans balance sheet grow.

ANZ also said it would consider expanding its A$1.5 billion (S$1.43 billion) buyback programme, as it deemed a common equity tier 1 (CET1) ratio of 11.6 per cent as at Dec 31 gave it enough flexibility to return further surplus capital to shareholders.

The country's third-largest lender by market value, which did not disclose a profit figure for the quarter, said group net interest margin declined by 8 basis points.

Australian lenders are battling squeezing margins in the face of steep competition in mortgage lending, spurred by record low interest rates in Australia through the Covid-19 pandemic.

Westpac last week beat estimates for first-quarter profit but warned that steep competition in mortgages would further drag margins this year.

ANZ said "softer" revenue in its markets business in October would hit first-half results, even though the unit's performance in subsequent months was in line with trends seen over fiscal 2021.

While costs were expected to be broadly flat in the half, changes to provide Australian retail and commercial customers lower fee options would reduce annual operating income by about A$140 million (S$133.2 million), it added.

In the Australian home loan space, ANZ said it had made "solid progress" to improve its systems, with application times now in line with other major lenders.

The bank, which has steadily lost Australian home loan market share since 2019, said in October it aims to grow its home loan book in line with its larger peers by the end of the current business year. REUTERS