Shares of the ASX-listed ANZ Group Holding Limited (AU:ANZ) fell by 2.3% after the Australian Prudential Regulation Authority (APRA) hiked the bank’s capital add-on by AU$250 million. According to a statement issued by the APRA, ANZ’s capital requirements have now increased to AU$750, mainly due to concerns over the bank’s non-financial risk management practices.
ANZ ranks among the top four banks in Australia, with operations in around 30 markets.
APRA Raises Concerns on ANZ’s Risk Management
In 2019, APRA had concerns about ANZ’s non-financial risk management and added a $500 million operational risk capital requirement. Since then, the bank has worked on a program to repair its risk management. However, APRA has not seen substantial progress in ANZ’s non-financial risk management.
Speaking on the latest issues, ANZ acknowledged misreporting bond trading data in its Markets division to the Australian Office of Financial Management (AOFM) in 2022-23. As a result, APRA has instructed ANZ to hire an independent party to investigate the root cause of recent problems and assess risk governance in its Markets business.
APRA further stated that the capital add-on will stay in effect until APRA is satisfied with the remedial actions.
ANZ Reports Increase in Loan Arrears
Earlier this week, ANZ released an update on its third-quarter performance. The update revealed rising home loan arrears due to inflation and high interest rates. By the end of June, the bank’s provision for bad debts was around AU$45 million, reflecting a cautious stance amid economic uncertainties.
Meanwhile, ANZ’s common equity tier 1 (CET1) ratio, a key indicator of core capital, was reported at 13.3% at the end of June, a slight decrease from 13.5% at the end of March.
Following the Q3 update, analysts from Goldman Sachs and CLSA confirmed their Buy ratings on ANZ stock.
Is ANZ a Good Share to Buy Now?
According to TipRanks’ analyst consensus, ANZ stock has received a Hold rating based on three Buy, two Hold, and three Sell recommendations. The ANZ share price forecast is AU$28.48, which is 2.7% below the current trading price.
Year-to-date, ANZ stock has gained almost 13%.
