ANZ Group Holdings Limited engages in the provision of banking and financial products and services to retail and business customers in Australia and internationally. The company operates through three segments: Personal, Business & Agri, and Institutional. It offers banking and wealth management services to consumer and private banking customers; banking services to small and medium enterprises, and the agricultural business.
ANZ, a holding in both the ASX Growth Portfolio and the ASX Starter Pack, kicked off fiscal 2026 with a strong first quarter, reporting cash profit of $1.94 billion and statutory profit of $1.87 billion for the three months ended 31 December 2025. The headline numbers look exceptional, with cash profit surging 75% compared to the second half of FY2025’s quarterly average, but investors should look past that figure. The prior half was weighed down by significant one off items that depressed earnings, making the comparison flattering. The more meaningful measure is the 17% increase after stripping out those items, and even a 6% gain over the same quarter last year. Both represent solid, if not spectacular, underlying improvement.
The real story this quarter is cost discipline. Operating expenses fell 8% on a like for like basis, driven by ANZ’s productivity program under the ANZ 2030 strategy. The bank has already exited more than 60% of the 3,500 roles it flagged for removal, and that restructuring is flowing directly to the bottom line. The cost to income ratio dropped to 49.5%, falling below the psychologically important 50% mark for the first time in recent memory. That efficiency improvement is doing the heavy lifting here, because revenue growth was a modest 1%, with net interest income barely budging at 0.4% growth. Net interest margin ticked up just 2 basis points to 1.56%, suggesting competitive pressures and rate cuts are limiting pricing power.
On the balance sheet, the capital position remains robust with a CET1 ratio (a key measure of a bank’s financial buffer) of 12.15%, comfortably above regulatory requirements. Customer deposits grew a healthy 5% to $787 billion, while loan growth was a more tepid 1%. Credit quality stayed strong with delinquency rates actually improving and provisioning charges declining.
Morgan Stanley upgraded ANZ to overweight following the result, citing improving productivity prospects and the stock’s discount to peers. The new price target of A$41.30 sits only marginally above where shares currently trade near A$40.35, which suggests limited near term upside even with the bullish call.
Investors have good reason to be optimistic. The cost cutting is genuinely impressive and still has further to run, with more than a third of planned role reductions yet to come. The Suncorp Bank integration is on track for completion by mid 2027 and should unlock additional scale benefits and cross selling opportunities across retail and SME banking. Importantly, this is just the opening chapter of the ANZ 2030 strategy, meaning the productivity gains visible today represent early wins rather than a mature program running out of runway. With a strong capital position providing flexibility for dividends and investment, improving returns on equity, and a share price still trading at a discount to major bank peers, ANZ appears well positioned for a re-rating as execution continues. Morgan Stanley’s upgrade reflects growing confidence that management can deliver on both efficiency and growth over the coming years.
| Profit & Loss | 2H25 Qtr Avg | 1Q26 | Movement (vs 2H25) | 2H25 Qtr Avg (ex sig. items) | Movement (ex sig. items) | Movement (vs 1Q25) |
| Operating income, $b | 5.5 | 5.7 | +4% | 5.6 | +1% | +3% |
| Operating expenses, $b | (3.6) | (2.8) | -21% | (3.1) | -8% | -1% |
| Profit before provisions, $b | 1.9 | 2.9 | +52% | 2.5 | +12% | +7% |
| Provision charge, $b | (0.1) | (0.1) | -39% | (0.1) | -39% | +93% |
| Income tax expense, $b | (0.6) | (0.8) | +32% | (0.7) | +13% | +4% |
| Cash Profit, $b | 1.1 | 1.9 | +75% | 1.7 | +17% | +6% |
| Cost-to-income ratio, % | 65.5% | 49.5% | -1,593bps | 54.6% | -505bps | -194bps |
| Return on Tangible Equity, % | 6.6% | 11.7% | +505bps | 10.0% | +173bps | +49bps |
| Return on Equity, % | 6.1% | 10.8% | +465bps | 9.1% | +160bps | +42bps |
