ANZ.NZX - Anyone holding?

[winner69]

You could say that ANZ is more leveraged than Heartland Winner. But what if you take into account all the Tier1 and Tier 2 'bond' type capital that ANZ has, and Heartland does not?

SNOOPY

So if you pretended all this 'bond type capital' was actual equity what would ANZ ROE be - closer to that of that NZ owned bank?

Bear in mind doing the comparison that if Heartland goes down this bond path their profit reduces by the amount of interest (after tax) and on same basis as above ROE would be less than the 12.2% you stated.

[Snoopy]

So if you pretended all this 'bond type capital' was actual equity what would ANZ ROE be - closer to that of that NZ owned bank?

Good question. Substituting the 'Total Capital' ( (G) in my post 269 ) for both years, so that we can calculate the average capital over the FY2015 year, gives the answer

ANZ Group - ROE ('Total Capital')

($7,216m + 0.7($1,179m)) / (0.5 x($74,091m+$62,891m)) = 11.7%

That is spookily close to the 12.2% ROE that I calculated over their respective FY2015 year. Is an ROE figure of 'about 12%' so theoretical bank sweet spot?

Bear in mind doing the comparison that if Heartland goes down this bond path their profit reduces by the amount of interest (after tax) and on same basis as above ROE would be less than the 12.2% you stated.

Yes quite true. Or, looking at it the other way, I could imagine that ANZ doesn't have all of those special bonds on issue. Then add on the interest that ANZ are paying on those bonds to ANZ's profit, working on the theory that if ANZ didn't have all those 'back up capital bonds', then they would be earning more. That would be the other way to equalise things.

This business of having 'fake capital' which is really debt but magically transforms into capital if needed, so should really be regarded as capital after all does my head in!

SNOOPY

[Bobdn]

I see in the SMH business section an analyst from UBS is predicting more bad debt provisioning. The good news is, he doesn't think dividends will be cut.

ANZ's divided is a monster at the current price. Sure it has modest imputation credits but it's so juicy who cares.

[babymonster]

JP Morgan has a pretty good result yesterday and helped the us market and helped us too. All the banks in Australia and NZ are up. Tonight will be Bank of America. Fingers crossed.

[tim23]

Sold 1/2 my ANZ bonds last week and traded them for ordinary ANZ shares - happy move so far!

[macduffy]

This morning's AFR has a headline to the effect that ANZ has "put UDC Finance on the block".

Behind the paywall, of course. Is anyone able to access?

[Tomtom]

This morning's AFR has a headline to the effect that ANZ has "put UDC Finance on the block".

Behind the paywall, of course. Is anyone able to access?

This AFR article?

[Lewylewylewy]

Hahaha, the photo at the top of that link would make a great caption contest...

Here's what I've been thinking recently... Are established banks capable of growing? In other words, are they worthy of being in a shared portfolio other than to return a stable dividend? I own a small portion of anz in my portfolio for exactly that, but I'm wondering if I'm better off ditching them and using them as a buy when low, sell when high strategy, (mid to long term trading) rather than as part of an investment strategy?

[Tomtom]

Given a good kicking today after WBC announced. ANZ publish HY results tomorrow I think.

If you where happy to hold through the Mike Smiths tenure while they where basically throwing money into a fire why get out now they are showing slightly more contrition to shareholders? Unfortunately there are very few Jamie Dimons in this world but good businesses don't need them to deliver consistent results. Hopefully ANZ have endured that period and there will be a watershed moment soon when they can revert to a historic mean in terms of performance. Back to business as usual.

[longy]

Yes... 1/2 year announcement is tomorrow. Although the SP fell 4.2% today but I thought the volume was really small.