This week's hot stock pick is ANZ
8/09/15 closing share price: $27.530 52 week high: $37.250
Most recent dividend: 86c Annual dividend yield: 6.78%
Australia and New Zealand Banking Group (ASX: ANZ) shares were impacted by the Australian Prudential Regulation Authority (APRA) decision to increase common equity tier 1 (CET1) ratios to above 10%. As a result, the stock tumbled over 16% during the year to date. On the other hand, the bank has been raising capital to boost its capital position and meet the recent minimum capital regulatory specifications proposed by APRA.
ANZ's CET1 ratio stood at 8.6% during the nine months to June 30. With a $2.5 billion institutional placement, the CET1 ratio for 2015 improved to 9.2% on a pro forma basis. Additionally, ANZ raised $500 million under a share purchase plan, consequently enhancing the CET1 ratio by 0.13% to 9.3%. ANZ is heavily focusing on its Asian business growth and launched a "super-regional strategy" to build a solid presence in Asia compared with its Australian peers.
Management has also addressed investors' concerns over China growth, by reaffirming an outlook of 7%-7.5% a year. ANZ recently entered into a $450 million technology deal with IBM for five years, through which IBM would offer technology to support the bank's Asian strategy. The bank managed to deliver a decent performance despite the CET1 ratio impact: the group's cash profit rose 4.3% year on year to $5.4 billion in the nine months ending June 30, while the profit before provisions surged 5.1% compared with the corresponding period in the previous year.