ANZ Group ANZ CEO Shayne Elliott is retiring after nine years in the job, with his replacement, Nuno Matos, commencing on July 3, 2025. Matos was formerly at HSBC as CEO of wealth and personal banking, and held executive roles in retail, commercial, and wholesale banking over his 30-year career.

Why it matters: The change at the top is not a surprise given Shayne Elliott's long tenure for an Australian bank CEO. Westpac and National Australia Bank also appointed fresh CEOs this year, where predecessors were in the job for less than five years.

  • We don’t think the leadership change is related to the bond trading scandal, but bringing in an external candidate may help appease regulators that new leadership and perspective are being brought in to help address concerns around management of nonfinancial risks.
  • More changes within the leadership ranks are possible, if internal candidates overlooked for promotion seek opportunities elsewhere, or the new CEO restructures and brings in ex-colleagues. This could affect the execution of the current strategy, but is unlikely to change it in the short term.

The bottom line: We retain our AUD 32 fair value estimate for wide-moat ANZ, with shares fairly valued. Unlike major bank peers, which are expensive, ANZ trades on a reasonable P/E of 13 times and partially franked dividend yield above 5%.

  • With Suncorp Bank recently acquired, and ANZ in the middle of building and consolidating to a new banking platform, we expect management's focus to be on completing and extracting cost savings from these investments. A sudden change in strategy is unlikely.
  • Uncertainty about operating costs largely explains the discount to peers. Our forecasts assume cost/income falls from 51% in fiscal 2024 to 48% in fiscal 2029, benefiting from the removal of duplicated system costs, greater process automation, and lowering system maintenance costs.

Business strategy and outlook

ANZ Group is the owner of ANZ Bank, the smallest of Australia's four major banks by market value and the largest bank in New Zealand and the Pacific, offering a full range of banking and financial services to the consumer, small business, and corporate sectors. Like the other major banks, ANZ Bank has a well-recognized and trusted bank brand, large advertising and marketing budget, and customer fulfilment capacity (branches, systems, funding capacity) to capitalize on this brand equity. We see the firm’s strategy to simplify and focus on its highly profitable core banking operations as logical. The acquisition of Suncorp Bank came as a surprise but provides an avenue to leverage benefits of recent investment in its retail banking platform. Integration risk can not be ignored, but overall we believe the acquisition makes strategic sense.

Tight underwriting standards, lender's mortgage insurance, low average loan/valuation ratios, a high incidence of loan prepayment, full recourse lending, a high proportion of variable rate home loans, and the scope for interest-rate cuts by the Reserve Bank of Australia, or RBA, combine to mitigate potential losses from mortgage lending.

The main current influences on earnings growth are modest credit growth, with households and businesses adjusting to lower borrowing capacity after a sharp increase in rates and slowing economic growth. Businesses are expected to be more cautious on making large investments as households rein in discretionary spending. Margins fell as banks competed aggressively in a low credit growth and high refinance market, but margins have stabilized, and we expect competition to be rational in the medium term. Despite productivity benefits, operating expenses are increasing as investments to make the bank more efficient and competitive across its digital offerings—namely home loans and savings.

In Asia, ANZ Bank targets large clients and has walked away from lending to small business. Given ANZ Bank would have no competitive advantage against local (and much larger) lenders, we support the revised strategy.

ANZ bulls say

  • ANZ continues to win back market share in home loans and retail customer deposits after rolling out an improved digital offering.
  • A large institutional client base and geographic footprint leaves ANZ well placed to support customers transitioning to net zero.
  • Nonbank lenders and even nonmajor banks reliant on wholesale funding and equity markets cede market share back to the major banks in a rising rate environment.

ANZ bears say

  • ANZ Bank remains subpeer for returns on equity, cost efficiency, and net interest margins.
  • Sourcing more funding from institutional customer deposits, which are more price-sensitive, ANZ has less margin upside from higher interest cash rates than major bank peers.
  • After acquiring Suncorp Bank, issues with loan processing and integration result in the bank ceding market share and spending more than originally guided on integration.

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Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company's future cash flows, resulting from our analysts' independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.