ANZ: Positive AGM Outlook

Submitted by Share Trading on 19 December, 2005 - 19:03

[ANZ] UBS Buy 1– A$23.26 Target: A$27.00: More positive outlook commentary

At ANZ's AGM it stated "We are seeing a similar rate of growth in earnings in the first two months of 2006 to that which we experienced in 2005 and our current expectation is that this will continue for the balance of the year". Management appears more comfortable with the earnings outlook than with its previous FY result comments of "continued good results in the year ahead".

Growth expected in NZ. Margin contraction less than 2005

AGM take-aways: (1) NZ - given the recent easing of the mortgage price war and integration benefits, ANZ expects to see NZ earnings improve in 2006 (we expect flat NZ profits). (2) Solid earnings growth is expected in Personal & Corporate Banking. (3) Group margin pressure is expected to be lower in 2006 than 2005.

NZ risks now in the price

Concerns about the slowing NZ economy and impact from the mortgage price war have led to some weakness in ANZ's price. Recent NZ mortgage repricing is likely to help support margins, while asset quality has not deteriorated in NZ. We believe NZ risk in now fully in ANZ's price unless a deep recession materialises.