ANZ Updates Capital Position Following Suncorp Acquisition

Highlights:

• Mortgage Risk Weight Adjustments: Approved by APRA and RBNZ, resulting in a ~$22 billion reduction in Advanced Internal Ratings-Based Risk Weighted Assets.
• New Capital Framework: Implementation of APRA's revised capital framework (APS 112) effective September 30, adding ~30 basis points to Level 2 CET1 by September 2024.
• Suncorp Acquisition Impact: Expected reduction of 105 basis points in Level 2 CET1, an 18 basis point improvement from earlier pro-forma estimates.

ANZ Group Holdings Limited (ASX: ANZ) provided a significant update on its capital position today, detailing adjustments to its Common Equity Tier 1 (CET1) following the acquisition of Suncorp and other regulatory changes.

Mortgage Risk Weight Adjustments

Recent reviews of mortgage risk weights, approved by both the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ), will result in a substantial ~$22 billion reduction in Advanced Internal Ratings-Based Risk Weighted Assets. These adjustments are a critical component of ANZ's strategy to streamline its capital framework and improve financial stability.

New Capital Framework Implementation

On June 26, APRA released amendments to its capital framework, set to take effect on September 30. ANZ's application of this revised framework, known as APS 112, has been approved by APRA. The combined benefits of these methodology and prudential changes are expected to yield approximately 30 basis points (bps) of Level 2 CET1 by the end of September 2024.

Impact of Suncorp Acquisition

The acquisition of Suncorp Bank is anticipated to reduce ANZ's Level 2 CET1 by 105 bps. This represents an improvement of around 18 bps compared to the pro-forma estimate announced during ANZ's half-year results in May. This acquisition is part of ANZ's broader strategy to enhance its market position and expand its customer base.

Analyst and Investor Briefing

Due to the complexity of these disclosures, ANZ will hold an analyst and investor briefing at 2pm AEST. This session will feature ANZ's Group Treasurer and the Group General Manager of Risk Metrics & Measurement, providing further insights into the capital position adjustments. Detailed information for joining the briefing will be distributed separately to interested parties.

These updates reflect ANZ's commitment to maintaining a robust capital structure and adapting to regulatory changes to ensure long-term financial health and operational efficiency

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