ANZ Bank announced an 18% fall in FY16 profits to $5.9 billion, which included the $360 million one-off charge reported last week. In response, the bank is considering selling off key parts of its wealth management and insurance divisions.
In releasing its full-year earnings, the lender said it will pay a final dividend of 80 cents per share, inline with what it paid in the first half of 2016. The dividend will be fully-franked and paid on December 16th. This will take the bank’s dividend payout ratio to 67% after removing the one-off charges.
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The return on equity now stands at 12.2% down from 13.8% during the same period last year and represents the lowest of the big four banks. The bank’s tier one capital ratio, the size of its capital buffer in relation to its assets, stands at 9.6% which is in line with the year ago percentage.
The current earnings report includes a total provisions charge of $1.95 billion, equal to a loss rate of .34% of outstanding loans. The bank said charges for bad loans had risen during the year due “pocket of weakness” in the economy, especially in the mining and resource sectors.
We’re watching ANZ as a buy on the dip, it’s the only one of the four majors that has a breakout or bullish higher high structure. We now wait for the pullback and the algorithm engine will soon flag the buy on the dip set up. The chart below illustrates where we think the signal is most likely to occur.
Neil Keenan says:
The BUY level on the chart is blurred – please advise what the level is
Thanks
Leon says:
ANZ could trade back to $25.50 before creating a structural higher low formation. It’s interesting that ANZ is the only one of the four major banks that has broken out into a bullish chart pattern. Recent bank earnings suggest the sector is still struggling with top line growth.