ANZ CFO Farhan Faruqui Remarks, Investor Briefing, ANZ 2025 Full Year Results

Check against delivery

Thank you Nuno, and good morning to everyone joining us today.

This years’ results mark a turning point as we reset our strategic goals and position the bank for sustained future growth.

I will take you through the results focusing on three key areas.

Firstly, these results have been characterised by the inclusion of:

• a full year of Suncorp Bank earnings;
• the impact of regulatory matters; and
• ·significant items pre-released on 31 October.

Secondly, we have been navigating a changing global and domestic environment and in that context, I will share how we have managed balance sheet growth, margins and our operating revenues.

Thirdly, we have focused on simplicity and resilience which includes:

• the cost actions that we announced on Strategy Day which are underway;
• the unwind of some of our non-core businesses that is progressing;
• the steps we have announced and are executing to continue to strengthen our capital position; and
• our ongoing discipline on maintaining a strong portfolio delivering low and stable loss rates.

On an adjusted basis for these items our cash profit was stable year-on-year driven by delivering cost in line with guidance, balance sheet growth, in particular operational deposits, and the continued performance of our Markets business.

As announced at our Strategy Day, we have four key financial drivers for delivering value in our scorecard as shown on this slide. The FY25 metrics shown here will form the baseline from which we will track our progress under our ANZ 2030 strategy.

Cash profit and impact of significant items

We delivered a cash Profit After Tax of $5.8 billion.

We have taken important steps to position the bank for the future and have commenced executing our ANZ 2030 strategy.

As you can see significant items have impacted this result, details of which we released on 31 October, and I will briefly cover them now.

First, a restructuring charge of $585 million for staff redundancies, up $25 million from our announcements in September with the completion of our accounts. This will generate cost savings from 2026 onwards.

Second, $271 million related to ASIC matters within our Australian Markets and Australia Retail businesses. This includes the $240 million in penalties announced in September and a further $31 million in associated costs.

Third, we recognised an additional restructuring charge of $97 million associated with the earlier integration of Suncorp Bank which is now planned to occur by June 2027. Accounting standards require accelerated recognition of costs on a handful of contracts that extend beyond the migration date. Also, as we finalised the acquisition accounting for Suncorp Bank, there was a $141 million increase in goodwill in the second half that impacted capital but not profit.

Fourth, consistent with our decision to exit non-bank activities, we recognised a $78 million goodwill impact from the decision to wind down Cashrewards.

A final item that impacted cash profit was a $285 million impairment of the Group’s equity accounted investment in PT Panin Bank, Indonesia.

When adjusted for these items, cash profit was stable year-on-year at $6.9 billion, generating a ROTE of 10.5%. This included pre provision earnings of $10.3 billion up 2% year-on-year. 

For today’s presentation, I’ll speak largely to the underlying drivers of the result, starting with our revenue performance, excluding the impact of the Panin Bank impairment.

Total operating income/ Revenue

Revenue grew 7% this year largely benefitting from a full year contribution of Suncorp Bank earnings vs only two months of Suncorp Bank income in FY24.

On a more comparable half-on-half basis, second half revenue was up 2%. This was supported by net interest income up 1%, and stable margins ex Markets. It was also supported by continued growth across deposits and lending in the half. 

Other operating income ex Markets in the second half increased by 8% with seasonally stronger income in Australia Retail and higher fees in Institutional.

Our Markets business continued to perform strongly with more than $2.1 billion in revenue highlighting the stable profile of this business. While second half revenue in markets has historically been seasonally lower, this half our customer franchise income was up 1%.

Net Interest Margin

Moving to margins.

Group Net Interest Margin declined by 2 basis points in the half. Excluding Markets impacts, Group NIM was flat. As I have said previously, we manage our Markets business for returns, and not for margins. 

Competition has been persistent in loans and deposits throughout the year across all divisions, however the impact of lower rates was the key driver of NIM decline, impacting customer deposit margins.

We strengthened efforts to improve our deposit profile and optimise pricing in an interest rate easing environment. As a result, three of our divisions, Australia Retail, Business and Private Banking and New Zealand held margins broadly stable this half. In Institutional NIM compression reduced relative to the prior half, as we balanced lower interest rates and competition with operational deposit volume growth. Suncorp Bank margins contracted half-on-half largely due to the positive acquisition accounting impact in the first half.

Capital and Replicating deposits delivered an additional 2 basis points, consistent with our previous guidance. Lower liquids for the half added 2 bps although the NII impact is negligible.  Finally, we experienced a 2bp drag from proportionately higher asset levels in Markets this half. These generate lower margins than the Group average, however contribute positively to returns.

In terms of outlook on margins, there are potential headwinds including the impact of further central bank rate reductions and ongoing competition. We will continue to proactively manage our margins using the levers at our disposal which include pricing, mix and funding optimisation. In addition, we expect our replicating portfolio to remain a tailwind over the next 12-18 months particularly as the Australian portfolio is invested out to 5 years and still rolling off maturities from lower rate periods.

Balance sheet customer deposits

Moving to the balance sheet.

We have grown our customer deposits by $27 billion over the year, excluding Markets. Notably, we grew our Save and Transact deposits by 8% or $31 billion for the year.

While Save and Transact volumes grew in all divisions, Institutional was a highlight with operational deposits up 12% year-on-year and 7% half-on-half.

We were also able to reduce our reliance on lower margin Term Deposits, which declined $9 billion or 5% year-on-year particularly in Australia Retail. 

Overall, our deposit mix and operational deposits outcomes were positive this year. However, both Australia Retail and Business banking deposits grew below system. We recognise we have more work to do and improving performance in these divisions is core to our 2030 strategy.

Balance sheet lending

Lending was up $26 billion for the year, excluding Markets, with all divisions contributing to this growth.

In the second half lending increased $3 billion, or $10 billion on an FX adjusted basis, with growth across both Australia and New Zealand geographies. International lending was down, predominantly due to short-dated trade, which is timing driven.

In Australia Retail, home lending growth was 0.9 times system for the year. However, more recently we have been tracking lower. As Nuno has said at Strategy Day, by mid-year 2026 we want to be in line with System and we are taking decisive actions to achieve this.

Growth in Australia Business and Private Banking loans and deposits was lower than market growth by our estimates at 0.5 to 0.6 times system. We have the ambition to profitably grow this at a higher rate in our target segments.

For Institutional, as I have said before we do not target lending growth. Our focus in this business remains on returns and growing our operational deposits and markets flow products – both of which performed strongly in the year.

In New Zealand our share of home and business lending reduced slightly as we balanced our margin and returns with volume growth. Our market share for home loans and business banking however remains at about 30% and 20% respectively and our divisional margins were higher by 3 bps year-on-year.

Markets revenues

Now to Markets which delivered another consistent result of more than a billion dollars of revenue in each half.

Around 70% of this income came from outside of Australia – highlighting our geographically diverse business, with a strong presence in Asia, the fastest growing economic region globally.

Foreign exchange and rates income were both higher in the second half, more than offsetting softer credit and capital markets. This outcome reflects the continued capability build to increase income diversification.

Operating expenses

Moving to expenses, our full-year outcome adjusted for significant items, was up 3% year-on-year and in line with guidance provided.

Inflation impacts this year were once again largely offset by productivity initiatives. Of the total $400 million cost growth, a significant portion related to increased expenditure in Group Technology and Australia Retail which included:

• rising vendor costs;
• a focus on uplifting retail service levels and non-financial risk; and
• customer remediation costs.

Investment spend, which captures our large-scale change programs, was slightly higher. This was driven by Suncorp Bank Migration, together with an increase in regulatory and compliance programs.

Looking forward, we will remain within an investment envelope of approximately $1.5 billion for large-scale change programs annually as we focus on our strategic priorities and on driving more value per dollar of spend. We continue to pay for our investment upfront, with an expense rate of 82%, which remains higher than our peers.

As noted at Strategy Day, we are focusing on delivering $800 million gross cost savings for FY26 as part of our simplification pillar.

We have already taken decisive actions to remove duplication and simplify the organisational structure, most notably in Australia Retail and Group Technology. As Nuno said 30% of the 3,500 FTE had left the bank, and 1,000 managed service contractors were stood down by the end of October.

We are starting to see cost savings come through with Suncorp Bank synergies. Since completion of the acquisition at the end of July last year, we have realised approximately $30 million of synergies, mainly from removing duplication of project spend, technology vendor efficiencies and property consolidation.

While the synergy benefits are relatively small to date, we expect them to increase modestly in FY26. The majority of the $500 million of synergies will be captured in FY28 with a full year benefit in FY29.

We expect total Suncorp Bank integration costs of $745 million of which we have incurred ~$300 million to date in integration planning, delivery of technology services, provisions for redundancy costs and the initial build of new products on ANZ systems. We expect the remaining spend to be phased across FY26 and FY27 at approximately $200 million per year with only a small residual spend in FY28.

We remain focussed on acting at pace to manage our cost and as we look forward, we expect costs to be down approximately 3% in FY26, off our FY25 cost base, adjusted for significant items, of $11.85 billion.

Portfolio quality

Despite a more complex global environment and ongoing cost of living pressures, our credit portfolio has remained resilient.

While there was a small increase in individual provision charges in the second half, it was driven by lower recoveries and writebacks across most divisions, with new and increased provision charges lower than the first half.

The individual provision loss rate was 4bps, in line with the first half. On a like-for-like basis our loss rate was the lowest of the peers for the 4th consecutive year and remains well below our current portfolio’s long run loss rate of 11 basis points which I will talk to shortly.                                   

Looking now at our 90+ days past due, interest rate reductions have improved loan payment affordability for our mortgage customers in Australia and in New Zealand. We have seen delinquency rates stabilise over the half for Australia mortgages at 86bps, and a reduction of 6bps for New Zealand mortgages also to 86bps.

Non-performing loans stabilised at 79bps, the vast majority of this being fully collateralised exposures. As a result, impaired facilities requiring an individual provision also remained flat and low at 11 bps.

In 2025, customers new in hardship and receiving assistance did not increase. While the overall number is low at 0.4% of Australian home loans and 0.2% of Small Business customers, I am conscious that behind these numbers are individuals and businesses navigating challenging circumstances and we remain committed to supporting them with care and understanding.

Wholesale portfolio quality remained strong, contributing around $60 million of losses for the half with non-performing loan levels stable relative to 1H. Both the number of customers and exposures on our watchlists have reduced this half.

Provisioning

Our Collective Provision balance increased by approximately $100 million this half to $4.38b. Our CP coverage increased by 5bps to 1.18%.

In this period, we have recalibrated aspects of our collective provisions.

This included reviewing our downside scenarios and making some methodology changes for the Australian Mortgage portfolio. Overlays which were no longer required were released including those taken to allow for additional portfolio risks due to a higher interest rate environment.

Our CP balance at $4.38b is the equivalent of ~13 times our FY25 IP charge, and is $2.4 billion above our base case scenario.

Our 2H25 CP coverage of 1.18% is ~14 bps lower than our peer average of 1.32% noting that the gap has narrowed from 24 bps at the first half.

This is reflective of our portfolio with around 2/3rds of the difference driven by our business mix with ANZ less exposed to higher loss rate portfolios particularly SME and unsecured consumer lending. The remainder of the difference is largely from our higher investment grade weighted wholesale portfolio vs our peers.

For results this period, we are providing a new disclosure of long run loss rate which is in the investor pack. This new measure, based on observed historical losses since 2008 and our current book mix, indicates a long run loss rate of 11bps.

Capital

Moving to capital, our balance sheet remains resilient, with a strong funding, liquidity, and capital position.

Wholesale funding conditions remain favorable, and we issued $35 billion of term debt in the year and expect a similar volume of issuance in FY26.

As I mentioned on Strategy Day, we are taking specific actions to address the impact of the significant items and to further strengthen our capital position. There has been no change to these actions from what we previously announced, and our capital strength will continue to provide capacity to support our customers and our ANZ 2030 strategy. 

The CET1 capital ratio increased by 25 basis points this half to 12.03%. Inclusive of the capital for the buy back and Non-Operating Holding Company surplus, the pro-forma ratio is 12.26%.

Credit RWA was ~$4 billion lower this half, driven mainly by the Institutional business which included a reduction in trade finance volumes driven by timing. Again to reiterate what Nuno said on Strategy Day, we will actively manage capital to optimise returns.

In addition, we continue to manage the capital floor, which has reduced from $12 billion to $4 billion over this half. Around half of this floor change relates to active floor RWA management. The remaining movement related to IRRBB RWA increases and therefore is capital neutral, on a net basis.

And finally, the unchanged dividend of 83cps, partially franked at 70%, reflects the board’s confidence in the strategy and the importance of dividend stability.

We will apply a 1.5% discount on the upcoming DRP, which is expected to generate an additional 16 bps of capital. As announced on Strategy Day, we also plan to apply a discount to the 2026 interim dividend, although this does remain subject to our capital position and results and needs at the time.

In closing, I wanted to reiterate the targets we have set for ourselves and these are noted on this slide.

We are disclosing today the FY25 outcomes of our key performance metrics. On this slide are the KPIs for our Customer First pillar.

This next slide provides the baseline metrics for our simplicity, resilience and delivering value strategic pillars.

We will continue to report these consistently at every results going forward.

Our focus is on sustainably improving our performance and as we look ahead our financial priorities are clear:

• maintain a strong balance sheet and capital position;
• simplify our organisation to drive more efficient outcomes; and
• improve returns for our investors.

I am pleased that we leave this year with a resilient capital position, strengthened collective provision coverage and disciplined expense management with the highest expense rate of our investment spend relative to our peers. These, together with the actions that we have already begun to execute, position us well to deliver on our ANZ 2030 growth and return ambitions.

Thank you and I’ll now pass to Kylie for Q&A.

For media enquiries contact:

Lachlan McNaughton
Head of Media Relations
Tel: +61 457 494 414

Alexandra Cooper
Media Relations Manager
Tel: +61 481 464 230

For analyst enquiries contact:

Kylie Bundrock
Group General Manager, Investor Relations and M&A
Tel: +61 403 738 809

Cameron Davis
Executive Manager, Investor Relations
Tel: +61 421 613 819

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