ANZ Group (ANZ) - First step in restructure

ANZ Group Holdings provides various banking and financial products and services to retail, individuals and business customers in Australia and internationally. ANZ Group Holdings Limited was founded in 1835 and is based in Melbourne.‍

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ANZ Group flagged it would take a pre-tax charge of $560 million in its second-half FY25 result as it axes 3,500 jobs, or 8% of its workforce, and slashes the use of circa 1,000 contractors, to eliminate “duplication and complexity” as part of a strategic review led by new CEO Nuno Matos. The job cuts, the biggest move thus far under the new regime, have already started and are expected to be completed by the end of FY26.

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ANZ said there would be “limited impacts to frontline customer-facing” staff. In Ord Minnett’s view, it is positive that ANZ, which has underperformed its big-bank peers for a long time, is initiating action to improve operational efficiency and prioritise better customer outcomes. If the strategy is successfully executed, it should boost returns and put the smallest of the big four banks on a path to a valuation rerating. So far, however, there remain unanswered questions although we expect more detailed information on the restructure when the bank holds its strategy day on 13 October. We will be looking for clarity on the size and source of cost savings, the expected impact on revenue, dividends and capital ratios, and how these changes affect the Suncorp Bank integration.

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Post the announcement, we have downgraded our FY25 EPS estimate by 5.2% to incorporate the restructuring charge, but the expected cost savings drive upgrades to our forecasts of 6.5% and 7.3% in FY26 and FY27, respectively. This leads us to raise our target price on ANZ to $30.00 from $27.50, while we maintain our Hold recommendation.

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