ANZ had some big news to share with the market... and it's all about a whopping cash profit.
👉Background: ANZ is the smallest of the big 4 banks by market value and number of customers with around 6 million. So like any smaller sibling, it’s always got a LOT to prove to their siblings and parents (aka investors).
👉 What happened: At the end of this financial year, ANZ had some big news to share with the market. Cash profit was up 5% to over $6.5 billion.
👉 What else: But most importantly its net interest margin (NIM) jumped to 1.8% by September. And this NIM is what gave ANZ a glimmer of hope with its investors.
💡 The net interest margin is the difference between the interest incomegenerated by a bank on loans and the amount of interest paid out to savings customers. And this is the main way that the bank makes its moula.
💡Let’s say the bank lends money at an average interest rate of 4% and it pays 2% on your bank savings, then its net interest margin would be 2%.
💡And now thanks to the Reserve Bank pumping up the cash rate like its going out of fashion, ANZ and other lenders have the chance to expand its net interest margin again - with the hope to bring it back to the 3-4% mark of the early 2000's.
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