Australia's ANZ Warns of Coming Iran Impacts as First-Half Profit Rises — Update

By Stuart Condie

SYDNEY--ANZ Group raised first-half cash profit by more than expected, but increased impairments and provisions as its chief executive warned that the Iran conflict's biggest economic impacts may still be in the future.

ANZ on Friday reported a cash profit for the six months through March of 3.78 billion Australian dollars, equivalent to US$2.72 billion. That was up 5.9% on a year earlier and beat the average analyst forecast of A$3.68 billion, according to data compiled by Visible Alpha.

Total operating income rose to A$11.20 billion, up 1.9% from roughly A$11.0 billion a year earlier but missing consensus of A$11.37 billion.

The Iran conflict has already pushed Australian inflation higher, driving increased expectation among economists that the central bank will keep raising interest rates in an effort to rein in consumer spending.

Higher borrowing costs could significantly increase the number of retail and business banks falling behind on loan repayments with lenders including ANZ, which is Australia's fourth-largest bank by market capitalization.

On Friday, ANZ raised credit impairments to A$274 million from A$145 million a year ago. It lifted collective provisions to 1.22% of credit risk-weighted assets, up from 1.13%.

Chief Executive Nuno Matos said ANZ had seen no material increases in customer hardship since global energy prices spiked on the Iran conflict. However, the bank and its corporate customers were prepared for further shocks, he said.

"Much of the potential impact of this crisis remains ahead of us, but the longer the flow of oil is constrained, the greater the chance the crisis shifts from being primarily an inflation challenge, to much more a supply and growth challenge," Matos said.

Larger rivals National Australia Bank and Westpac, which are scheduled to report their first-half results next week, have already flagged increased provisions. The largest lender, Commonwealth Bank of Australia, reports to a different financial calendar.

ANZ held its dividend at A$0.83 a share, where it has been since the first half of its 2024 fiscal year. Analysts had expected a flat dividend despite the lender's decision in October to scrap an on-market buyback with A$800 million still undeployed.

By redeploying capital into its retail and commercial businesses, ANZ is looking to raise its return on tangible equity toward 12.0% by fiscal 2028, from 10.3% in its last full fiscal year.

Excluding significant items, it was at 11.6% for the six months through March, compared with 10.0% in the prior half.

On a statutory basis, ANZ's net profit edged 0.3% higher on year to A$3.65 billion, missing consensus of A$3.68 billion.

Net interest margin slipped by 1 basis point over the half, and by 3 basis points from a year earlier, to 1.53%.

Matos, who took charge in May 2025, is also targeting a cost-to-income ratio in the mid 40s by fiscal 2028. That compares with 49.4 in its most recent half, when operating expenses fell 3.9%.

Last year, ANZ cut about 3,500 employees, or about 8% of its workforce, as part of a drive to remove about A$800 million in gross costs across the whole of the current fiscal year.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

April 30, 2026 19:08 ET (23:08 GMT)