ANZ Delivers Strong First Quarter as Cost Discipline Lifts Returns

About ANZ Group Holdings Limited

ANZ Group Holdings Limited (ASX: ANZ) is one of Australia’s major banking institutions, providing retail, business, institutional and wealth services across Australia, New Zealand and selected international markets. With a long history dating back to 1835, ANZ remains a core pillar of the domestic financial system, supporting households, small and medium enterprises, and large corporates across the region.

In its 2026 First Quarter Trading Update, ANZ delivered a materially stronger result compared with the second half of FY25, reflecting early progress under its five-year ANZ 2030 strategy. The quarter was characterised by lower operating expenses, steady balance-sheet growth and improved returns on tangible equity, highlighting management’s focus on simplification, productivity and capital discipline.

Chief Executive Officer Nuno Matos described the result as an encouraging start to the Group’s long-term transformation, noting that cost reduction and revenue improvements are beginning to translate into stronger financial metrics.

Financial Performance and Earnings Momentum

ANZ reported unaudited statutory profit of $1.87 billion and cash profit of $1.94 billion for the quarter ended 31 December 2025. Compared with the 2H25 quarterly average, cash profit increased 75%, although the prior period was impacted by significant items. Excluding those items, profit still rose 17%, demonstrating genuine underlying momentum.

Operating income increased 4% to $5.7 billion, supported by growth in other operating income, particularly Markets activity. Net interest margin improved modestly, benefiting from a favourable funding mix shift toward operational deposits and stronger earnings on replicating portfolios.

Operating expenses declined materially to $2.8 billion, representing a 21% reduction compared with the 2H25 quarterly average. Even when excluding prior significant items, expenses were down 8%, reflecting the early impact of productivity initiatives and organisational simplification.

The cost-to-income ratio improved significantly to 49.5%, falling below 50% for the first time in several reporting periods. Cash Return on Tangible Equity rose to 11.7%, an increase of 173 basis points excluding significant items, reinforcing the leverage embedded in cost reduction efforts.

Balance Sheet and Capital Strength

ANZ’s capital position strengthened further during the quarter. The Common Equity Tier 1 (CET1) ratio increased to 12.15% at 31 December 2025, up 12 basis points from September 2025. The improvement largely reflected quarterly earnings and the return of surplus capital following the cessation of the remaining share buy-back program.

Customer deposits rose 5% to $787 billion, while net loans and advances increased 1% to $837 billion. Institutional lending was a key contributor to loan growth.

Liquidity metrics remained comfortably above regulatory minimums, with an average liquidity coverage ratio of 133% and a net stable funding ratio of 116% at quarter end.

Credit Quality and Risk Profile

Credit performance remained resilient despite broader macroeconomic uncertainty. Portfolio losses stayed low, supported by relatively stable employment conditions and easing interest-rate pressure. The individual provision charge declined to $64 million, representing a 3-basis point annualised loss rate.

The collective provision balance remained stable at $4.38 billion, providing a prudent buffer against potential downside risk. Australian and New Zealand housing arrears declined modestly during the quarter, while non-performing exposures remained below 1% of total credit exposure.

Management noted that while economic conditions remain uncertain globally, customer resilience continues to underpin credit quality across key portfolios.

ANZ 2030 Strategy Execution

The quarter marked early implementation of ANZ’s multi-year ANZ 2030 transformation strategy. A major component involves removing duplication and simplifying the organisation. More than 60% of the 3,500 announced roles had exited the bank by December 2025, contributing directly to expense reduction. ANZ also remains on track to integrate Suncorp Bank, with migration expected to be completed by June 2027. The Group is accelerating delivery of a unified digital front-end for retail and SME customers, scheduled for completion by September 2027. In parallel, the bank continues to enhance non-financial risk management frameworks to strengthen operational resilience and governance.

 Outlook

Looking ahead, ANZ expects continued progress under its cost and simplification agenda, while remaining cautious regarding global economic uncertainty and competitive lending conditions.

The improved cost base, strengthened capital metrics and stable asset quality provide a solid foundation as the Group advances its five-year strategic transformation. If productivity initiatives continue to translate into sustained operating leverage, ANZ appears positioned to improve returns further while maintaining balance-sheet strength.

With the ANZ 2030 strategy now underway, the first quarter result signals an early but meaningful step toward restoring profitability momentum and delivering long-term value for customers and shareholders alike.