Buying Suncorp Bank is an expensive and aggravating antidote to ANZ’s seemingly systemic underperformance, at least in the mortgage market.
ANZ and Suncorp announced terms for the sale yesterday - an all cash deal of $4.9 billion, around 1.3 times the target bank’s net assets. ANZ will licence the Suncorp Bank brand for “five to seven years” at an annual fee of $10 million.
Given Queensland legislation dating from the formation of the modern day Suncorp in the mid 1990s, ANZ will be unable to begin to begin to fully realise cost savings until the third year after the takeover.
APRA’s banking statistics for May 2002 show Suncorp Bank has $31.5 billion in household deposits and $46.2 billion in mortgages.
The takeover will lift ANZ’s deposit market share from 13.1 per cent to 15.7 per cent, placing it ahead of National Australia Bank.
ANZ’s share of the mortgage market will rise from 13.7 per cent to 16.1 per cent, and once again push NAB to bottom position in a ranking of the big four banks.
APRA data shows ANZ mortgage share peaked at 15.2 per cent in late 2020. Thanks to its poor service to brokers and slow turnaround times, the bank’s market share has steadily declined over the last 18 months to 13.6 per cent, though in a presentation yesterday the bank said it was making good progress on a turnaround.
Had ANZ maintained its market share, the bank’s mortgage book would be $27 billion greater than it is at present.
ANZ said the acquisition is expected to be EPS neutral, pre synergies, on a pro forma FY2023 basis, and low single digit EPS accretive including full run-rate synergies on a pro forma FY23 basis.
It is expected to be ROE neutral, pre synergies, on a pro forma FY2023 basis, and marginally ROE accretive when including full run rate synergies.
In a trading update, ANZ said it had “strong lending and margin momentum across all our major businesses in the quarter with revenue up five per cent”.
Its net interest margin was up 3 basis points for the quarter, with the underlying NIM up 6 bps.
In October 2008, ANZ was on the verge of buying Suncorp’s banking division, a rescue negated by the announcement by the Rudd Labor government of the deposit guarantee.
ANZ’s last bank takeover was National Bank of New Zealand, in 2003.