ANZ Reports $1.94 Billion Cash Profit, RoTE Up 173 Basis Points in Q1

• Cash profit rises 75% versus second half FY25 quarterly average
• Return on tangible equity improves by 173 basis points to 11.7%
• Common Equity Tier 1 ratio increases to 12.15%
• Customer deposits grow 5%, net loans up 1%
• Over 60% of planned job reductions completed to simplify operations

Strong Financial Momentum in Q1

ANZ Group Holdings Limited has delivered a striking first quarter performance for the period ending 31 December 2025, with cash profit soaring to $1.94 billion. This represents a 75% increase compared to the average quarterly cash profit in the second half of the previous financial year, even after adjusting for significant items. The bank’s statutory profit also rose to $1.87 billion, underscoring the solid underlying earnings momentum.

Key financial metrics showed marked improvement, with the return on tangible equity (RoTE) climbing 173 basis points to 11.7%, and the cost-to-income ratio dropping below 50%. These figures reflect the bank’s successful efforts to reduce expenses by 8% in the quarter, driven by a productivity program focused on eliminating duplication and simplifying operations.

Progress on ANZ 2030 Strategy

ANZ’s CEO, Nuno Matos, highlighted that the results demonstrate early progress in executing the ANZ 2030 strategy, a five-year plan aimed at transforming the bank into the best for customers and shareholders in Australia and New Zealand. The strategy’s pillars include cost reduction, digital transformation, and cultural reset, with more than 60% of the 3,500 announced job exits already completed by the end of December 2025.

Revenue growth was modest but positive, with a 1% increase overall. Net interest income rose by 0.4%, supported by a 2 basis point improvement in the group’s net interest margin to 1.56%. Other operating income grew 5%, primarily due to stronger markets income, which reached $557 million. Customer deposits increased by $39 billion (5%), and net loans and advances grew by $8 billion (1%), reflecting ongoing demand in institutional lending.

Capital and Credit Quality Remain Robust

ANZ’s capital position remains strong, with the Common Equity Tier 1 (CET1) ratio rising 12 basis points to 12.15%. The bank maintained healthy liquidity ratios, including a liquidity coverage ratio of 133% and a net stable funding ratio of 116%, both comfortably above regulatory minimums. The bank also issued $11.2 billion in term wholesale debt during the quarter, supporting its funding profile.

Credit quality indicators continue to reflect resilience, with portfolio losses remaining low amid a cautious economic outlook. The individual provision charge fell to $64 million, and non-performing exposures decreased slightly to 0.78% of total credit exposure. Australian and New Zealand housing loan delinquencies remained stable at around 81-82 basis points.

Looking Ahead

ANZ is on track to complete the integration of Suncorp Bank by June 2027, aiming to deliver value through a safe and secure migration of customers. The bank is also advancing its digital transformation with plans to roll out a single customer digital front-end for retail and SME clients by September 2027. Meanwhile, a new executive committee is in place to drive the cultural reset and enhance risk management practices.

While the bank’s results are encouraging, management remains cautious given global economic uncertainties and recent interest rate increases. The coming quarters will be critical in confirming whether ANZ can sustain this momentum and fully realise the ambitions of its 2030 strategy.

Bottom Line?

ANZ’s strong start to 2026 sets a promising tone, but sustaining growth amid economic uncertainties will be the true test.

Questions in the middle?

• How will ANZ manage credit risk if global economic conditions worsen?
• What impact will the full integration of Suncorp Bank have on future earnings?
• Can ANZ maintain its cost reduction momentum without compromising service quality?