ANZ Shares Near Low in a Year as Home Lending Competition Squeezes Margins | Investment News

(Reuters) – The Australian and New Zealand banking group joined rival Westpac in lower margins on Monday and warned of a first-half hit due to “weaker” performance in its markets business, sending its shares to a nearly one-year low.

ANZ did not disclose a profit figure for the quarter and said the group’s net interest margin fell by 8 basis points, but added that rising interest rates in New Zealand would relieve a some pressure in the second trimester.

Australian lenders are battling margin compression amid stiff competition in mortgage lending, spurred by record-low interest rates in Australia during the COVID-19 pandemic. Westpac warned about its margins last week.

ANZ said “weaker” revenue from its Markets business in October would hit first-half results, although the unit’s performance in subsequent months was in line with trends seen in fiscal 2021 .

Although it wrote off A$44 million ($31.2 million) of bad debt provisions in the quarter, changes to provide Australian retail and commercial customers with lower fee options would reduce profit annual operating revenue of around A$140 million, he added.

“Given the uncertain impacts of reduced activity on asset quality going forward, we anticipate that the bad debt benefit will likely be reviewed and investors will focus on lower-than-expected revenue,” said Citi analysts in a note.

ANZ shares fell 5% to AU$25.73, their lowest level since February 17, 2021, while the broader market was down 0.7%.

In Australian home loans, ANZ said it had made “solid progress” in improving its systems, with application times for simple loans now in line with other major lenders.

The bank, which has steadily lost share of the Australian home loan market since 2019, said in October that it intended to grow its home loan portfolio in line with its larger peers by the end of the year. current exercise.

ANZ also said it would consider extending its A$1.5 billion takeover, as it announced a Common Equity Tier 1 (CET1) ratio of 11.6% as of December 31.

($1 = 1.4136 Australian dollars)

(Reporting by Shashwat Awasthi; Editing by Chris Reese and Diane Craft)

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