ANZ Bank launches $1.5b share buyback
ANZ Bank has unveiled a share buyback worth up to $1.5 billion, declaring it has the financial strength to support pandemic-affected customers while also returning surplus capital to investors.
Amid a debate among investors over whether the lockdowns in NSW and Victoria could cause banks to delay capital management plans, ANZ chairman Paul O’Sullivan announced the buyback on Monday night.
ANZ chief executive Shayne Elliott: ‘The strength of our business means we are well placed to fulfil needs of our customers and the broader community while still actively managing our capital.’Credit:Alex Ellinghausen
“Despite the very real challenges being experienced by many of our customers, we have the financial strength to continue to support our customers, while also returning surplus capital to shareholders,” Mr O’Sullivan said.
“Our capital position may allow future capital returns to be considered, however, we will continue to focus on balanced and prudent outcomes for all stakeholders,” Mr O’Sullivan said.
All of the major banks are sitting on billions of dollars in capital in excess of regulatory requirements after banks suspended dividends last year and took provisions for bad debts that ended up being overly cautious.
The announcement came hours after the Australian Prudential Regulation Authority said it would provide regulatory relief to banks that offered pandemic-hit customers loan repayment deferrals.
At its half-year results in May, ANZ said it had common equity tier 1 capital of 12.4 per cent of risk-weighted assets, compared with the banking regulator’s “unquestionably strong” requirement of 10.5 per cent standard. ANZ said the “modest” on-market buyback would reduce its capital by 35 basis points.
ANZ chief executive Shayne Elliott, who joined other bank CEOs over the weekend in saying said the lender would offer support pandemic affected customers, said ANZ was “ready and able to provide assistance to those that need it”.
“After taking into consideration the ongoing pressures in some parts of the economy due to COVID, including the current lockdowns in parts of the country, the strength of our balance sheet and ongoing financial performance means we are in a position to return a modest amount of surplus capital to shareholders through a buy-back of shares on-market,” Mr Elliott said.
“The strength of our business means we are well placed to fulfill the needs of our customers and the broader community while still actively managing our capital,” Mr Elliott said.
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