It's been a disappointing day for the ANZ Group Holdings Ltd (ASX: ANZ) share price so far because it has underperformed the other major ASX bank shares.
At the time of writing, ANZ shares are up close to 0.8%. Not bad.
However, the Commonwealth Bank of Australia (ASX: CBA) share price is up 2.8%, the Westpac Banking Corp (ASX: WBC) share price is up 1.7% and the National Australia Bank Ltd (ASX: NAB) share price is up 1.6%.
CBA result
Today's big news for the banking sector is the CBA result. The market may extrapolate some of the trends seen in the FY23 result and apply them to ANZ, Westpac and NAB as well.
Arrears are climbing, but not soaring. The percentage of CBA's home loans that were at least 90 days in arrears was 0.43% in December 2022 and rose to 0.47% in June 2023.
It also said that its total impairment provisions increased to $5.95 billion at June 2023, up from $5.35 billion at June 2022. This reflected the "impact from ongoing cost of living pressures and rising interest rates on both the consumer and corporate portfolios."
The biggest ASX bank share also said that its net interest margin (NIM) worsened by 5 basis points (0.05%) compared to the first half of FY23. However, the 2.07% NIM did represent an increase of 17 basis points compared to FY22.
CBA decided to declare an annual dividend per share of $4.50, which represented an increase of 17% compared to FY22.
Why is the ANZ share price underperforming?
Investors may also be looking at the Suncorp Group Ltd (ASX: SUN) result which was announced today. ANZ is currently in the process of trying to buy the banking operations of Suncorp.
Suncorp said that its bank managed to increase net profit after tax (NPAT) by 27.7% to $470 million thanks to "strong volume growth and higher margin". The NIM increased by 3 basis points to 1.96%, which was a smaller margin rise year over year than CBA.
Suncorp said that its NIM rose because of "strategic deposit pricing", but it was partially offset by "competitive pressures in home lending pricing and increased funding costs."
There was a decrease in the cost-to-income ratio to 51.8%, which was an improvement from 59% thanks to a combination of asset growth and "disciplined cost management".
Suncorp also said that its home lending portfolio grew by $4.6 billion, or 9.1%. The ASX financial share said that its loan book is maintaining "high credit quality and is conservatively positioned." Business lending grew by 5.9% thanks to commercial lending growth across several industries.
In terms of the Suncorp Bank's outlook, growth is expected to slow because of "significantly tighter monetary conditions" and it's aiming for home loan growth of around the same level of the system, meaning slower growth is expected. If this ends up being a future division, then a weaker outlook might impact the ANZ share price.
Suncorp also said that due to competition in the banking space for both lending and deposits, NIM is expected to be at the bottom of its target range of between 1.85% to 1.95%. The cost-to-income ratio is expected to rise to around the mid-50s due to inflation.
Is the ANZ merger still on?
Due to the ACCC not granting merger authorisation, Suncorp says that progress on separating the bank continues. It's expecting separation and other costs to increase from $500 million to between $575 million to $600 million.
Suncorp also said that if all regulatory and government approvals are received, completion is now expected in the middle of the 2024 calendar year.
It'll be interesting to see what happens with this and ANZ shares as the appeal continues.
