ANZ.NZX - Anyone holding?

[winner69]

Snoopy ....biggest issue with any analysis of financial institutions is no one knows whats off balance sheet

[Snoopy]

Snoopy wrote:

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Ratios have changed significantly:

Level 2 Common Equity Tier 1 ratio: 8.5% (Sept 30th) vs 7.9% (Dec 31st)
Level 2 Total Tier 1 ratio: 10.4% (Sept 30th) vs 9.6% (Dec 31st)
Level 2 Total Tier 1 & 2 ratio: 12.2% (Sept 30th) vs 11.2% (Dec 31st)

I note with annoyance that the September 30th figures have been slightly revised (not sure why). But the volatility between the September quarter and December quarter is still noticeable using like with like figures supplied. The December quarter is showing the bank's capital is a little more stretched

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I am not sure that you are aware that what you now referring to are the figures for the ANZ Bank in Australia. These are not figures for ANZ NZ.

Ah yes thanks for correcting that PT. Must make a mental note to myself that just because I have retrieved figures from the NZX website for ANZ bank, that doesn't mean those figures apply to ANZ in NZ!

However, that doesn't invalidate my point because the figures I have quoted are like with like. The quarterly variation in asset cover can be significant across the seasons. One might expect the December quarter to carry less cover because:

1/ Farmers will be maxed out on their borrowings while the cashflow from the farmed product has yet to hit their bank statements.
2/ Retailers will be maxed out on their borrowings because the cashflow from the Christmas season has not yet come on stream.

I wonder if the same might also apply to Heartland? IOW the December half year might actually be a 'worst case' as far as the books of Heartland bank are concerned?

SNOOPY

[robbo24]

Hi all,

New member here (and recent arrival to these shores).. and I wanted to know if anyone else here has any holdings in ANZ? I bought in a couple of weeks ago and am since already down 8%... but I cannot figure out why the price has been dropping. There hasn't been any news that I have seen or any particular reason for the price to decline.

Any opinions would be appreciated.

Thanks.

How you feeling now champ?

[blueswan]

ANZ ASX just reported higher Cash Profits up by 11%. And it is the typical sell on news after a good profit report. Next week NAB and WBC reports and most likely a sell off will occur after the announcement .ANZ just made 3.5B 1H profir and looks like another bumper year for Australian Banks.

[Schrodinger]

Love all that hard earned NZ money flying out of the country to bolster the Aus economy. Keep it up folks.

[macduffy]

Well, if you can't beat 'em, think about buying a few.

The Aussie banks, held over the years have proven to be the best of my income stocks, despite offering little by way of dividend imputation for NZ taxpayers. Steadily increasing dividends along with strong capital gains. Not all that money flies over to the Aussie economy!

[blueswan]

Wow, always sell on news when tey announce bumper profits. I bought some ANZ today (ASX ones) and I should have bought some MQG Macquaire as well when it dropped more than a dollar with a 49% increase in profits. ANZ only up small but MQG has recovered to up 61 cents.

[macduffy]

Yes, the ANZ raw numbers were good but there's a caveat there - boosted by lower provisions and trading profits that may or may not be repeated. Some concern too that the DRP wasn't offset by equivalent on-market buyback of shares so there's a dilution effect there.

My own view is that the market is priced for anticipated growth which will take some doing in current conditions. Priced for perfection - or disappointment, perhaps?

I hold.

[Snoopy]

From the ANZ New Zealand statement to the reserve bank on 30th September 2013, page 46, the loan book break down is like this:

ANZ (New Zealand) Loan Book FY2013
Agriculture	$18,842m
Forestry, fishing and mining	$1,850m
Business and property services	$11,334m
Construction	$1,748m
Entertainment, leisure and tourism	$1,389m
Finance and insurance	$18,412m
Government and local authority	$9,910m
Manufacturing	$5,051m
Personal lending	$63,492m
Retail trade	$2,859m
Transport and storage	$2,147m
Wholesale trade	$2,704m
Other	$4,577m
Total	$144,315m

UDC is a wholly owned subsidiary of ANZ New Zealand. So what we need to do is subtract out the UDC figures from those listed above. Then we can compare the loan book make up of 'Underlying ANZ New Zealand' with UDC.

One year later (30th September 2014) we compare the break down of the loan book. From the ANZ New Zealand statement to the reserve bank on 30th September 2014, page 48, the loan book break down is like this:

ANZ (New Zealand) Loan Book FY2014
Agriculture	$18,811m (+0%)
Forestry, fishing and mining	$2,049m (+10.8%)
Business and property services	$12,051m (+6.3%)
Construction	$2,154m (+23.2%)
Entertainment, leisure and tourism	$1,294m (-6.9%)
Finance and insurance	$20,254m (+10.0%)
Government and local authority	$11,363m (+14.6%)
Manufacturing	$5,312m (+5.2%)
Personal lending	$70,098m (+10.4%)
Retail trade	$3,026m (+5.8%)
Transport and storage	$2,264m (+5.4%)
Wholesale trade	$2,695m (+0%)
Other	$4,093m (-11.6%)
Total	$155,174m (+7.5%)

SNOOPY

[Snoopy]

On page 40 of the ANZ NZ September 30th Reserve Bank disclosure, there is a table listing the class of loans (0-9) , along with their probability of default. '9' is default, so the probability for a grade 9 loan defaulting is 100%. However of more interest is the other grades of loan and their probability of default.

	For retail mortgages: 30-09-2013
Grades 0-3:	0.2%
Grades 4:	0.46%
Grade 5:	0.93%
Grade 6:	2.11%
Grade 7,8:	5.4%

	For other retail: 30-09-2013
Grades 0-2:	0.1%
Grades 3-4:	0.29%
Grade 5:	1.12%
Grade 6:	2.67%
Grade 7,8:	11.25%

Allowing for the fact that the grading groupings do not quite match up grades 0-6 are surprisingly similar. It is the loans in category 7 and 8 that are twice as likely to default in finance companies, given that in general finance companies have very low (or no) exposure to retail mortgages.

One year on and we look at the chances of default for ANZ.NZ mortgages and ANZ.NZ other retail loans. (page 41 of the ANZ NZ September 30th 2014 Reserve Bank disclosure).

	For retail mortgages: 30-09-2014
Grades 0-3:	0.2%
Grades 4:	0.46%
Grade 5:	0.93%
Grade 6:	2.04%
Grade 7,8:	5.24%

	For other retail: 30-09-2014
Grades 0-2:	0.1%
Grades 3-4:	0.30%
Grade 5:	1.13%
Grade 6:	2.60%
Grade 7,8:	9.56%

Overall observation? A small risk reduction from year to year in the higher risk categories (Grade 6 and above).

SNOOPY