ANZ turns cost cuts into a 27% cash profit rise

Profit growth arrives with a larger credit bill

ANZ finished 2026 with a stronger earnings profile, but not an entirely carefree one. Statutory profit attributable to shareholders rose 20% to $7.221 billion, while cash profit increased 27% to $7.542 billion. The latter is ANZ’s preferred measure of core performance, although it is a non-IFRS measure and is not audited as a standalone figure.

Operating income on a cash basis rose 3% to $22.421 billion, while cash operating expenses fell 13% to $11.084 billion. The result was a sharp improvement in profit before credit impairment and tax, up 24% to $11.337 billion. Net interest income was broadly flat at $17.866 billion as a one basis point decline in net interest margin offset a 1% increase in average interest-earning assets.

$902 million of savings changes the earnings mix

The clearest operational story was cost control. ANZ reported $902 million in gross cost savings for 2026, with cash operating expenses reduced across personnel, premises, technology, restructuring and other costs. Full-time equivalent staff fell 7% to 39,157, while technology expenses declined 7% to $2.054 billion.

The cost-to-income ratio fell to 49.4%, from 58.2% in 2025, while return on tangible equity rose to 11.6% from 9.2%. Some of the comparison benefited from substantial 2025 costs, including staff redundancies and a $271 million ASIC settlement. Even so, the report attributes part of the improvement to productivity initiatives, technology simplification and tighter external spending.

Housing weakness pushes impairment higher

Credit costs moved in the opposite direction. ANZ’s credit impairment charge rose 34% to $585 million, driven by deterioration in the economic outlook, geopolitical disruption, housing market weakness and higher individual impairments in several portfolios. Total expected credit loss allowances increased 3% to $4.903 billion, while non-performing exposures rose 7% to $9.048 billion.

The annual report says Australia’s housing market experienced one of its deepest downturns in a decade during the six months to 30 September, with higher interest rates, oil prices, tax changes and affordability pressures weighing on prices and auction activity. ANZ’s base case assumes Australian residential property prices fall 3.4% in calendar 2027 before recovering in 2028. Its severe downside scenario would produce a collectively assessed ECL allowance of about $9.980 billion, or $5.450 billion above the reported level, although that scenario is not presented as the bank’s central forecast.

Suncorp migration remains the major execution test

ANZ said the Suncorp Bank integration remains on track for customer migration to be completed by June 2027. The bank reported $82 million in Suncorp cost synergies during 2026 and expects the migration to simplify its operating model, although Suncorp Bank’s lending volumes declined during the year and its cash profit was $546 million.

The bank is also targeting delivery of a single customer front-end for retail and small-business customers by September 2027. Those projects sit at the centre of ANZ 2030, alongside the acquisition of Payment Acceptance Australia, formerly Worldline Australia, which completed on 31 July 2026 for $55 million. ANZ provisionally recognised $178 million of goodwill from that acquisition while its purchase price allocation continues.

Risk remediation has improved, but is not finished

ANZ reported a 12.0% Common Equity Tier 1 ratio, an average liquidity coverage ratio of 132% and a net stable funding ratio of 116%. The balance sheet expanded, with net loans and advances up 4% to $861.9 billion and customer deposits up 9% to $814.8 billion. The bank’s capital position remained above regulatory requirements, although total risk-weighted assets increased 6% to $485.9 billion.

The more difficult qualification sits in non-financial risk. ANZ said its Root Cause Remediation Plan under the 2025 court enforceable undertaking with APRA was proceeding substantially in line with schedule, with independent reviewer Promontory providing assurance. Customer remediation within the ASIC Matters Resolution Program was completed ahead of schedule, but broader compliance uplift remained behind the Board-approved plan and event-management measures were below target. The report also records a NZD 125 million estimate of maximum potential borrowing-cost liability in New Zealand loan-information litigation, with ANZ Bank New Zealand appealing the High Court judgment.

Final dividend proposed as ANZ moves into 2027

Directors proposed an 81 cents per share final dividend, with payment scheduled for 18 December 2026. The ANZBGL final dividend is described as an amount equal to the external dividend paid by ANZ Group Holdings, excluding the amount participating in its Bonus Option Plan, and remains subject to applicable approvals and conditions.

The next phase will test whether ANZ can turn a year of unusually strong cost improvement into durable earnings growth while housing losses, regulatory obligations and the Suncorp migration continue to compete for management attention. The key question is less whether the first year of ANZ 2030 produced a better number, and more whether the bank can preserve that efficiency once the exceptional cost benefits and prior-year comparisons fade.