ANZ Group Holdings said on Monday that cash profit for the year to Sept. 30 rose 31% to A$7.59 billion, as Chief Executive Nuno Matos cut costs harder than he had promised. Excluding significant items booked in fiscal 2025, cash profit rose 10%. Statutory net profit was A$7.27 billion, up 23%, according to AAP.

The result gives investors in Australian bank shares a test of how far a cost reset can lift returns while the Reserve Bank of Australia is raising rates. Cash return on tangible equity rose 109 basis points to 11.56% on the same underlying basis, the bank said.

Costs fall faster than guided

Expenses drove the year. Reported costs fell 7% excluding fiscal 2025 significant items, Chief Financial Officer Farhan Faruqui told investors, against initial guidance for a 3% decline. In constant currency, expenses fell 4%. Productivity benefits reached A$902 million, against the A$875 million of gross cost savings ANZ had foreshadowed at the half year, and the cost-to-income ratio improved by more than 4 percentage points to 49.26%.

Revenue grew more slowly. Faruqui said fiscal 2026 revenue rose 3%, with markets income up 1% to A$2.1 billion. Loans grew 6% over the year and 4% in the second half compared with the first, while customer deposits outside markets rose 8%, or A$51 billion. Institutional lending grew A$19 billion, or 12%.

Margins held up. Net interest margin excluding markets rose 2 basis points to 2.30% in the second half, though it slipped 4 basis points in the fourth quarter to 2.28%. Faruqui said ANZ expects that margin to stay broadly stable in the first half of fiscal 2027, and he guided total fiscal 2027 expenses to remain flat against a pro forma fiscal 2026 cost base of A$11.26 billion.

Matos joined ANZ in May 2025 and released his 2030 strategic plan five months later, AAP reported. The first phase focused on culture, speeding up the Suncorp Bank integration, digital upgrades, cutting duplication and strengthening risk controls. "Our transformation is moving at pace and shareholders are being rewarded," Matos said, according to AAP. Suncorp Bank synergies contributed A$82 million of the productivity gains, Faruqui said, and the bank said the integration remains on track for June 2027.

Bad debts edge up as rate hikes bite

Credit costs rose but stayed low. The total credit impairment charge was A$582 million. Individual provisions rose A$33 million from fiscal 2025 to A$360 million, an annualized loss rate of 4 basis points, while the collective provision charge rose A$108 million to A$222 million. Non-performing exposures held at 0.57% of total credit exposure. ANZ said its collective provision balance of A$4.53 billion sits A$2.1 billion above what its base economic scenario requires.

Matos said financial stress became more visible for some customers in the second half, AAP reported, although most Australian retail borrowers remain ahead of their scheduled repayments. Australia has just had its fifth interest-rate increase since February, according to AAP. National Australia Bank, which reported earlier this month, took a larger bad-debt charge as rates rose, and lenders have passed the latest RBA hike on to mortgage holders.

Matos also pointed to a wider contest for capital. He said competition for money to fund data centers, government spending and the energy transition had intensified, according to AAP.

Dividend held, franking raised

ANZ declared a final dividend of 83 cents a share, matching the interim and taking the full-year payout to A$1.66, unchanged from fiscal 2025. Franking rises to 80% from 75%, which lifts the after-tax value for Australian shareholders. Faruqui put the payout ratio at 66%. The dividend reinvestment plan carries no discount and will be neutralized with on-market share purchases, so it will not dilute holders.

Capital stayed close to flat. The Level 2 common equity Tier 1 ratio was 11.99%, down 4 basis points from a year earlier, including an 8-basis-point hit from the ANZ Worldline Australia acquisition. Organic capital generation in the second half was 80 basis points, up from 71 basis points a year earlier, Faruqui said. ANZ did not announce a share buyback.

Funding needs remain sizable. Faruqui said fiscal 2027 term wholesale issuance should be around A$25 billion to A$30 billion, and that liquidity coverage and net stable funding ratios were stable from a year earlier.

The next deadline sits on the technology side. ANZ said its single customer front end for retail and small business customers is on track for September 2027, three months after the Suncorp Bank integration is due to finish.