ANZ Bank’s shares hit record high on cost cut optimism

Investors pushed ANZ Bank’s shares 3.2 per cent higher to a record close of $37.96 on Monday as they bet on new chief executive Nuno Matos to deliver on his ambitious turnaround plan of cost cuts and a renewed focus on growing its home loan book.

For the 12 months ending September 30, the bank’s cash profit fell 10 per cent to $5.89 billion as regulatory fines and redundancy costs totalled $1.1 billion.

Cash profit tumbled 14 per cent to $5.88 billion, as operating expenses jumped 20 per cent versus the prior year to $12.88 billion.

“We continue to make progress on our immediate priorities at pace, including embedding our leadership team and our culture reset,” said Mr Matos.

Rising costs sink profit

ANZ is targeting cost savings of $800 million in financial year 2026, as it cycles through the redundancies of 4,500 staff from a total base of around 42,000 employees.

The bank’s other strategic priorities include integrating Suncorp Bank after it completed a $4.9 billion deal to acquire the Queensland-based business that sees it gain another 1.2 million retail customers.

“The results we have announced today demonstrate our franchise is strong, but action is needed,” said Mr Matos. “We are absolutely committed to executing ANZ 2030 and are on the right path. As we deliver our strategy, we will accelerate growth and outperform the market, while delivering more for our customers.”

ANZ will pay a final dividend of 83 cents per share for the six months ending September 30, flat on the prior half, to take full year dividends to $1.66 per share.

It will also offer a dividend reinvestment plan at a 1.5 per cent discount and cancel the remainder of its $800 million share buyback to help bolster its capital position.

UBS banking analyst John Storey described the earnings report as “noisy” due to the size of the restructuring costs and their one-off nature.

“Question marks are around the more immediate revenue outlook,” Mr Storey told investors. “[And] senior management are forfeiting parts of variable compensation, which is a positive on cultural change.”

The analyst added that ANZ’s guidance for total costs to reach $11.5 billion in financial 2025, versus the market’s expectations of $11.8 billion was another positive encouraging investors to bid the stock higher on Monday.

UBS last had a sell rating and $30 share price target on ANZ shares, although this may be subject to short-term revision.

Shares gain, executives lose

The bank’s board also said it will cancel $33.4 million worth of cash and bonuses around a dozen members of its former and current senior leadership team were ineligible for as a result of years of regulatory problems and operating blunders.

The biggest financial loser is former CEO Shayne Elliott, who is being forced to give up $13.5 million in bonus payments. While Mr Matos will give up a $975,000 short-term bonus payment for 2025 in a move he said is the right thing to do to set an example as the leader.

“The Board considers that the major reductions are a demonstration of a strong accountability culture and is committed to continuing to clearly link remuneration outcomes to performance,” said Chief People Officer Holly Kramer.

The bank’s shares have now soared 32 per cent in 2025, although professional analysts remain cautious on the outlook given the bank’s equity has a relatively high valuation across a number of operating metrics.

Its cash return on equity - as a measure of loans’ profitability - dropped 157 basis points to 8.1 per cent. While provisions for bad debts over the financial year rose to $414 million, versus $406 million in financial 2024. Mr Matos declined to provide specific financial guidance for 2026.