ANZ's Transformation Delivers Capital Strength but Revenue Growth Remains the Missing Piece

The Strategic Reset

Just under a year into his tenure, CEO Nuno Matos used the first-half 2026 results to showcase the early fruits of the ANZ 2030 strategy — a two-phase plan that prioritizes 'getting the basics right' before accelerating growth. The market has rewarded the bank with improved returns: “While we are early in our transformation, we are already more focused on our customers, simpler, more resilient and have materially improved value for our shareholders.” — Nuno Goncalo de Macedo E de Almeida Matos, CEO · 2026-05-04 The numbers back this up: return on tangible equity rose 161 basis points to 11.6%, and the cost-to-income ratio fell from 54.6% to 49.4%. The company's capital position also strengthened, with CET1 up 36 basis points to 12.39%, allowing management to neutralize the dividend reinvestment plan and raise the franking rate to 75%.

Cost Discipline and Capital Strength

Chief Financial Officer Farhan Faruqui highlighted a structural reset in the cost base: “We have delivered on each of these with progress across all our key financial metrics.” — Farhan Faruqui, CFO · 2026-05-04 Operating expenses fell 9% half-on-half (8% constant currency), with productivity savings of $392 million in the half. The full-year savings target was upgraded to $875 million, up from $800 million, and FY26 costs are now expected to fall ~5% versus the prior base. The bank also grew operational deposits by 8% (constant currency), a particular strength in the institutional franchise. Capital management was a clear priority: the DRP was neutralized, and the payout ratio moved closer to the target range.

Growth: The Missing Piece

Despite the operational progress, revenue was flat half-on-half (up 1% constant currency, ex markets hedge benefit). Mortgages remain a key battleground — after years of underperformance, ANZ is targeting system growth, but with a disciplined stance. As CEO Matos puts it: “We are not targeting mortgage growth just from a growth perspective. We want to grow in a profitable manner.” — Nuno Goncalo de Macedo E de Almeida Matos, CEO · 2026-05-04 The bank has improved processing times and launched a first-home buyer proposition, while avoiding the aggressive discounting that previously eroded margins. Institutional remains a bright spot, with markets revenue up 8% and the Suncorp Bank migration on track (34% complete, targeting 57% by year-end). However, the single customer front end is still only 13% built, and revenue growth will remain modest until Phase 2 begins beyond FY27.

Risks and Provisions

Against this backdrop, the bank took a collective provision charge of $126 million, lifting coverage to 1.22% of credit RWA and reflecting heightened geopolitical risk. Management explicitly flagged the Middle East conflict as a key uncertainty, with a small but growing impact on working capital needs among corporate clients. The bank's portfolio quality remains strong, with individual provision losses at just 4 basis points annualized, but the longer the crisis persists, the greater the potential spillover. This is a transitional moment for ANZ — the cost and capital transformation is real, but the revenue engine has yet to turn.

We are not here to write tickets to our balance sheet, if they are not profitable, if they're not accretive.