Australia's ANZ halts buyback to save $520 million for strategy overhaul

By Scott Murdoch SYDNEY (Reuters) -Australia's ANZ Group said it would stop the remaining A$800 million ($520 million) of a share buyback but maintain its dividend as investors applauded CEO Nuno Matos' moves to build cash levels, simplify the bank and win back market share. ANZ on Monday also outlined plans for A$800 million of pre-tax cost savings this financial year that would come from previously announced job cuts as well as team restructurings and exiting non-core businesses like online shopping platform Cashrewards. The bank also now expects to double its cost savings from its 2024 acquisition of Suncorp Bank to A$500 million a year. Matos said ANZ had become too complex and disconnected from customers, and the bank's priority would be to improve its non-financial risk management. "The opportunities to rationalise the company in the first year are so obvious," he said at an investor briefing. Shares in Australia's fourth-largest bank closed 3.3% higher as investors reacted to Matos' plan, while rival major bank shares fell. ANZ's shares have surged 24% since Matos took the helm on May 12, outperforming its "Big Four" peers. ANZ said it would now target a 12% return on tangible equity by 2028, up from 10.3% in the past financial year, and aimed to achieve a target of 13% by 2030. "With a clear strategy, strong leadership and this simple execution, we are well placed to deliver meaningful value for our shareholders," Matos said. Investors had expected the bank would announce plans to cut its dividend or stop the share buyback to help conserve cash. The bank said on Monday it expected its final dividend to be in line with its half-year payout. "For the bank to come out that it is not cutting the dividend is a positive result for shareholders and confirms that the bank is in reasonable shape," said Michael Haynes, analyst at Atlas Funds Management, which holds ANZ shares. CHASING HOME LOANS Matos said the lender said it would increase its mortgage and business banker numbers by up to 50% in each division as it bids to win back market share it has lost to major rivals. The bank will also reduce reliance on mortgage brokers and aim to write more loans directly to boost its revenue from home lending. ANZ's mortgage market share stands at about 13.5%, lagging its major rivals National Australia Bank at 14%, Westpac at 21% and market leader Commonwealth Bank at 25%, according to recent regulatory data. ANZ last month unveiled plans to slash 3,500 jobs at a one-off cost of A$560 million. Matos said on Monday about 60% of the job cuts would come from the retail bank and technology division. The former top HSBC executive has launched the reset at ANZ at a time when it is tackling major reputational issues and regulatory wrangles. The agency in charge of issuing Australian government debt said last week it would not work with ANZ until the bank improved its risk culture, after a 2023 bond trading scandal. ANZ agreed with Australia's corporate regulator to an A$125 million penalty after it was accused of acting "unconscionably" during a syndicated government bond deal in 2023. The fine was part of a A$240 million penalty the bank agreed to pay after it was also accused of charging fees to thousands of dead customers and miscalculating bonus interest payments. ANZ unveiled a new A$2 billion share buyback in May 2024, but it had only completed about A$1.2 billion of share purchases before cancelling the buyback on Monday. ($1 = 1.5389 Australian dollars) (Reporting by Rishav Chatterjee in Bengaluru and Scott Murdoch in Sydney; Editing by Diane Craft, Jamie Freed and Sonali Paul)

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