ANZ's Capital Position Update

ANZ (ASX: $ANZ) provided an update on its capital position, revealing adjustments to its Common Equity Tier 1 (CET1) due to the acquisition of Suncorp and other model and prudential changes. The adjustments are expected to result in a ~$22bn reduction in Advanced Internal Ratings Based Risk Weighted Assets and a net benefit of ~30 basis points (bps) of Level 2 CET1 by 30 September 2024. Additionally, the impact of the Suncorp Bank acquisition is anticipated to lead to a reduction of 105 bps in Level 2 CET1, representing an improvement of approximately 18 bps relative to the pro-forma estimate announced at ANZ's half-year results in May.

ANZ's Executive Commentary

ANZ's capital position has been positively impacted by the approved model reviews of mortgage risk weights and the amendments to APRA's capital framework. These changes are expected to result in a significant reduction in Advanced Internal Ratings Based Risk Weighted Assets and a net benefit of ~30 bps of Level 2 CET1 by 30 September 2024. Furthermore, the Suncorp Bank acquisition is anticipated to have a lesser impact on Level 2 CET1 than initially estimated, reflecting an improvement in ANZ's capital position.

Summary of ANZ's Capital Position Update

ANZ's update on its capital position reflects the favorable impact of the approved model reviews and APRA's amendments, leading to a reduction in risk-weighted assets and an improvement in Level 2 CET1. The acquisition of Suncorp Bank is also expected to contribute to this improvement, with a reduction in Level 2 CET1 that surpasses the earlier pro-forma estimate. ANZ's proactive approach to capital management and prudential changes demonstrates its commitment to maintaining a robust capital position and adapting to evolving regulatory requirements. The company's outlook appears optimistic as it continues to navigate through these adjustments and aims to sustain its capital strength in the future.