Australia and New Zealand Banking Group Limited (ANZ) has announced the termination of the remaining A$800 million (approximately $520 million) of its share buyback program. This decision aims to boost cash reserves, simplify the bank's operations, and reclaim market share. The bank confirmed it will, however, maintain its dividend payout to shareholders.
Key Takeaways
- ANZ stopped its A$800 million share buyback to conserve capital.
- The bank plans A$800 million in pre-tax cost savings this financial year.
- CEO Nuno Matos aims to simplify operations and increase focus on core lending.
- ANZ will increase mortgage and business banker numbers by up to 50%.
- The bank's shares have risen nearly 20% since Matos took over in June.
ANZ's Strategy Shift and Cost Savings
ANZ's CEO, Nuno Matos, is leading a significant strategic overhaul. The halt of the share buyback is a key part of this plan. It allows the bank to build up its cash reserves, which is crucial for funding future growth and managing operational risks. The bank expects to achieve A$800 million in pre-tax cost savings this financial year.
These savings will come from several initiatives. Previously announced job cuts are a major component. Additionally, team restructurings and the divestment of non-core businesses will contribute. One such non-core asset identified for exit is Cashrewards, an online shopping cashback platform.
"Our company has become too complex and at times disintermediated from our customers and we clearly need to improve how we manage our non-financial risks," Matos stated during an investor briefing.
Fact Check
- ANZ's share buyback was initially A$2 billion, but only A$1.2 billion had been completed.
- The remaining A$800 million was cancelled on Monday, October 13, 2025.
- This move is expected to save the bank approximately $520 million (based on a conversion rate of $1 = 1.5389 Australian dollars).
Market Reaction and Shareholder Confidence
ANZ shares initially saw a decline in early trading following the announcement. However, they soon recovered, rising 0.3% by 0017 GMT. This occurred while the broader S&P/ASX200 index was down by 0.6%.
Investors had anticipated that the bank might cut its dividend or halt the buyback to conserve cash. The decision to maintain the dividend was viewed positively by market observers. This suggests confidence in the bank's financial stability despite the strategic changes.
Michael Haynes, an analyst at Atlas Funds Management, which holds ANZ shares, commented: "For the bank to come out that it is not cutting the dividend is a positive result for shareholders and confirms that the bank is in reasonable shape."
Focus on Core Lending and Market Share
A central part of Matos's strategy is to strengthen ANZ's core lending businesses. The bank plans to significantly increase its presence in the mortgage and business lending sectors. This includes expanding its mortgage and business banker numbers by up to 50% in each division.
This initiative aims to regain market share that ANZ has lost to its main competitors. The bank also intends to reduce its reliance on mortgage brokers. Instead, it will focus on writing more loans directly to customers. This direct approach is expected to boost revenue from home lending.
Background Information
ANZ is Australia's fourth-largest bank. Its shares have shown strong performance since Nuno Matos became CEO on June 1. They have risen nearly 20% since his appointment. The bank's year-to-date gains of 24% surpass those of its 'Big Four' Australian rivals: Commonwealth Bank of Australia, National Australia Bank, and Westpac.
Addressing Past Issues and Future Outlook
The strategic reset comes as ANZ addresses significant reputational and regulatory challenges. Last month, the bank announced plans to cut 3,500 jobs. This move is expected to incur a one-off cost of A$560 million. Matos confirmed that about 60% of these job cuts would affect the retail bank and technology division.
The bank has also faced scrutiny from regulatory bodies. The agency responsible for issuing Australian government debt recently stated it would not work with ANZ until improvements in its risk culture were evident. This followed a bond trading scandal in 2023.
Regulatory Fines
- ANZ agreed to a A$125 million penalty with Australia's corporate regulator for "unconscionable" conduct in a 2023 government bond deal.
- This was part of a larger A$240 million penalty.
- Other accusations included charging fees to deceased customers and miscalculating bonus interest payments.
Despite these challenges, ANZ anticipates its final dividend will align with its half-year payout. The bank will also apply a 1.5% discount on its next two dividend reinvestment plans. This indicates a focus on shareholder returns while navigating the strategic changes.
The new CEO's actions signal a clear intent to streamline ANZ's operations, improve its risk management, and sharpen its focus on key growth areas. The aim is to create a more agile and competitive bank in the Australian financial landscape.
