ANZ misses some expectations, warns capital competition to keep rates higher

Sydney's ANZ Bank missed market expectations with a dip in net interest margin and income, leading to a drop in its share price on Monday. CEO Nuno Matos cautioned that global capital competition from AI and other sectors would maintain higher interest rates for an extended period. The bank's net interest margin, a key profitability indicator, dropped to 1.53% from 1.55% in 2025 due to competition across all divisions and the timing of the Reserve Bank of Australia's rate adjustments.

Net interest income for the second half of the year also fell about 2% below analysts' forecasts. ANZ shares declined by 4.2% in afternoon trading, while the broader S&P/ASX200 index remained unchanged. Matos noted a global supercycle of investment in renewables, defense, and AI, creating economic consequences that place pressure on long-term capital.

He highlighted that developed-economy governments are comfortable running budget deficits and taking on debt, while major corporations are increasing borrowing. "Renewables, defence and AI compete for long-term capital which means they compete with the administrations with governments for long term capital," Matos said to reporters.

ANZ anticipates Australia's economy to grow by 1.6% next year, contrasting with the 1.1% projection for the current year. However, Matos also stated that the economy will be resilient in a "benign environment." Operating expenses at ANZ fell by 14% in 2026, thanks to reduced restructuring costs and the absence of the Australian Securities and Investments Commission settlement payment.

The bank's Australian retail division's cash profit rose to A$1.71 billion in 2026, up from A$771 million the previous year, driven by an uptick in home loan volumes.