ANZ’s profit jumps 23% to $7.3 billion, but the bank is quietly setting more aside for borrowers feeling the rate rises

ANZ has posted a $7.27 billion full-year profit, up 23%, in the first full year under chief executive Nuno Matos, as the job cuts and savings drive he launched in 2025 lifted the bank’s returns.

The result, released to the ASX on Monday morning, covers the year to 30 September. Cash profit, the measure banks prefer, rose 31% to $7.59 billion. Both figures sit close to market expectations: analysts surveyed by Visible Alpha had forecast cash profit of $7.55 billion and statutory profit of $7.39 billion, so the bank beat on one and fell slightly short on the other.

The final dividend is unchanged at 83 cents a share, taking the full-year payout to 166 cents. It will be franked at 80%, up from 75% on the interim dividend, a small extra benefit for shareholders who can use franking credits, including many self-managed super funds and retirees.

“Our transformation is happening – and we have momentum,” Matos said.

Why is the jump so big?

Much of the headline growth comes from a weak comparison. A year earlier, ANZ’s statutory profit fell to $5.89 billion after it took a $585 million charge to cut 3,500 roles, along with costs linked to legal penalties. Strip those one-off items out of last year’s figure and cash profit rose 10%.

That 10% is still a solid result for a big Australian bank. ANZ said its productivity program delivered $902 million in benefits, above the $875 million in gross cost savings it promised at the half-year result in May. The cost-to-income ratio, which measures how much of every dollar of income goes on running the bank, improved by more than four percentage points to 49.26%.

Cash return on tangible equity, a measure of how efficiently the bank uses shareholders’ money, rose by 1.09 percentage points to 11.56%.

What does it say about borrowers?

The more telling number for households sits further down the result. ANZ’s total credit impairment charge was $582 million. Of that, the collective provision charge, money set aside for loans that could go bad in future, more than doubled from $114 million to $222 million.

The bank said the increase reflected the growth of its loan book and emerging risk from higher interest rates and cost-of-living pressure. It now holds $4.53 billion in collective provisions, $2.1 billion more than its base economic forecast would require.

So far the stress is showing in the bank’s caution rather than in actual defaults. Non-performing exposures held at 0.57% of total credit exposure, unchanged on a year ago, and the loss rate on individual loans stayed at 0.04%.

That buffer matters because rates are still rising. ANZ lifted its variable home loan rates last week after the Reserve Bank’s latest increase took the cash rate to 4.85%, the fifth rise this year.

How big is the bank now?

Customer deposits grew 9% to $814.6 billion and gross loans and advances rose 4% to $865.4 billion. ANZ’s core capital ratio, a measure of its safety cushion, was 11.99%, down 0.04 percentage points.

The bank is still absorbing Suncorp Bank, which it bought in 2024. It is targeting June 2027 to finish moving Suncorp Bank customers on to its systems, and September 2027 for a single customer app and website for retail and small business customers. ANZ said 2027 would be a pivotal year for both projects.

Matos said the bank was “on track to deliver all five immediate priorities on time”.

Why does it matter beyond ANZ?

ANZ’s result is one of the first full-year readings from a major bank since this year’s run of rate rises began. Its decision to put more aside for bad debts, while actual arrears stay steady, is a signal of how the banks see the next year: households under strain, but not yet falling behind in large numbers.

For the millions of Australians whose super funds hold bank shares, the steady dividend and higher franking are the immediate payoff.