Turnaround times still a work in progress
Fierce competition for mortgages led to worse-than-expected margins, pushing ANZ shares down Monday, although a late recovery saw the bank end 1.6% lower at $26.65.
The bank did not announce quarterly profits, but the market recoiled from the eight-basis-point fall in its net interest margin to 1.57%, The Australian reported. The contraction was driven primarily by strong competition and the lower exit margin in 2021 compared to the average for the second half.
Goldman Sachs analyst Andrew Lyons told The Australian that NIM pressures would likely ease in the second quarter.
“But the underlying NIM was down five basis points in the first quarter, which is already more than the three basis points we forecast in the full half,” Lyons said.
ANZ said its efforts to jump-start its troubled mortgage business remain a work in progress.
The bank, which has been plagued by slow home-loan processing times, predicted late last year that it would report some expansion in its home loan portfolio in the first half and match the growth of the other major banks in the second half.
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ANZ reported that the portfolio grew “slightly” in the first quarter, and that improvements in its systems meant that application times for “simple” loans were now in line with other major lenders. The bank was still working to improve turnaround times for more complex applications.
“Given the high levels of refinancing activity in the sector, managing both attrition and margins remain key areas of focus,” the bank said in a statement.
On ANZ’s cost-reduction program, which aims to cut annual running expenses to $8 billion, the bank said it expected flat costs in the first half as it increased the pace of its investment in the business, The Australian reported. Investment would also be expensed – rather than capitalised – at a higher rate than last year.
