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The turnaround of Australian bank ANZ under former HSBC executive Nuno Matos has shown early signs of promise after strong first-quarter results sent shares soaring to a record high.
ANZ on Thursday reported net profit in the quarter to the end of December rose to A$1.9bn ($1.4bn). It said the figure was 17 per cent higher than the average over the second half, when excluding charges it booked last year related to restructuring.
Revenue in the quarter increased to A$4.9bn, compared with an average of A$4.7bn over the previous two quarters. Shares surged as much as 10 per cent to an all-time high following the results.
Matos was appointed chief executive of ANZ in May after a series of scandals including accusations that the bank had rigged the pricing of a government bond sale and that it had a culture of drinking on its trading floor.
The Portuguese executive quickly moved to settle cases with regulators and enacted a strategic revamp to improve the company’s performance. That included the elimination of 3,500 jobs and 1,000 contractor roles.
Matos said the first-quarter results highlighted “early progress” in his five-year plan to transform Australia’s fourth-largest lender by market capitalisation into the country’s “best bank”.
“Our productivity program aimed at removing duplication and simplifying the bank is well under way, delivering a significant reduction in expenses while increasing revenue,” he said in a statement.
Andrew Lyons, an analyst with Jefferies, said in a research note that ANZ “deserves some credit” in how it has managed its balance between growth and improving profit margins, but the “real test” will be how that mix is maintained over time.
“Looking ahead, we see execution risk and think its risk/reward is finely balanced,” he said.
ANZ’s earnings report followed a first-half update from Commonwealth Bank of Australia on Wednesday that showed a 5 per cent rise in net profit to A$5.4bn on the back of strong mortgage demand, sending shares sharply higher.
The company, the largest of Australia’s “big four” banks, had been in danger of losing its mantle as the country’s largest listed company to miner BHP before a 12 per cent rise in its share price over the past week.
