0337 GMT - The so-called 'mortgage cliff' where home loan borrowers moved from ultra-low interest rates to higher floating rates, has been greatly exaggerated, ANZ CEO Shayne Elliott says during a media call following the release of the lender's FY 2023 results. "I'm not saying that it was easy, but they managed through it well. Frankly, the number of people who have really struggled is remarkably small," Elliott says, adding that only 2,000 of the million homeowners ANZ has on its books have come to the bank in distress. Elliott says the banking sector looks to be well through the cliff, after around 18 months, and attributes this to strong lending standards, and sufficient notice provided to borrowers. (alice.uribe@wsj.com)

0009 GMT - NIB looks attractive, partly due to its Australian Residents Health Insurance unit reporting stronger growth for the four months ended-October, compared with a year ago period, says Citi analyst Nigel Pittaway in a note. Citi sees "decent momentum" in its International Inbound Health Insurance and NZ units. While the investment bank sees that claims inflation is likely picking up with some out-of-cycle contract renegotiation with hospitals, it reckons NIB should be in a strong position to manage this, at least in the short term. Given that NIB's defensive qualities should appeal in volatile times, Citi raises its recommendation to buy from neutral. (alice.uribe@wsj.com)

0007 GMT - Carnaby Resources is likely to tap the equity market twice for investment before its Greater Duchess copper-and-gold mine begins production, says Macquarie. The bank assumes Carnaby raises A$20 million in 4Q of FY 2024 at A$0.58/share to fund exploration and study work. Carnaby likely then needs another capital raising of A$60 million in 3Q of FY 2025 to fund construction of Greater Duchess. "In addition to the equity we assume A$60 million in debt in 3Q of FY 2025 to fund construction of Greater Duchess," says Macquarie, which rates Carnaby at outperform. (david.winning@wsj.com; @dwinningWSJ)

0003 GMT - Australia's Ramsay Health Care and Malaysia's Sime Darby got a higher price for their Ramsay Sime Darby Health Care JV than RBC Capital Markets was expecting. The companies have announced that TPG-backed hospital operator Columbia Asia has agreed to buy Ramsay Sime Darby for MYR5.7 billion. At current exchange rates, that implies a sale price of A$1.88 billion compared with RBC's A$1.5 billion forecast. In a note, analyst Craig Wong-Pan says the deal boosts Ramsay Health Care's EPS by 0.6%-1.5% between FY 2024-FY 2026. "We consider the sale of Ramsay Sime Darby for A$1.88 billion to be a positive development for Ramsay Health Care as it reduces the company's leverage ratio to a more comfortable level, boosts earnings and could lead to a valuation re-rating," RBC says. (david.winning@wsj.com; @dwinningWSJ)

2350 GMT - Metcash's move to take full control of Total Tools strengthens its bet on a business that has proved to be a great investment, but Jefferies worries the complete exit of Total Tool's founders may indicate near-term challenges. "Channel checks point to some cyclical softening of professional tools demand," analyst Michael Simotas says in a note. Metcash previously owned 85% of Total Tools, and says buying the remaining equity in the business will cost A$101.5 million. "The cash outflow will result in increased interest cost but we have not changed our numbers given we have already allowed for the option exercise in our estimates," says Jefferies, which rates Metcash at hold. (david.winning@wsj.com; @dwinningWSJ)

2343 GMT - Incitec Pivot's announcement of A$1 billion of additional capital management suggests the sale of its Louisiana ammonia facility is imminent, Jefferies says. Incitec said it would launch a A$500 million capital return and a A$500 million share buyback once it completes the sale of its Waggaman ammonia plant. Still, analyst Richard Johnson says the lack of news about a sale of Incitec's fertilizers business may disappoint some investors. "But no news may also mean that the process is nearing an end," Jefferies says. Incitec today said it remained committed to a previously announced A$400 million share buyback, but it is on hold pending a potential sale of the fertilizers business. (david.winning@wsj.com; @dwinningWSJ)

2336 GMT - Incitec Pivot offered positive signals about the outlook for its Australian explosives business, Jarden says in response to the company's FY 2023 result. The explosives business achieved Ebitda growth of 23% in FY 2023. "We think that Incitec has begun to demonstrate to the market that it can take advantage of the strong domestic ammonium nitrate pricing environment through re-contracting with customers," analyst James Wilson says in a note. "This gives us greater confidence in Incitec's ability to return the division to 'peak earnings' by 1H of FY 2025." (david.winning@wsj.com; @dwinningWSJ)

2335 GMT - ANZ's FY 2023 result is likely to get a negative reaction from the market, even as asset quality was much better than expectations, Citi analysts say in a note. Other parts of the result, however, were less positive. For example, net interest income missed market expectations by A$405 million, markets revenues normalized and costs were slightly higher than expectations, they say. At the same time, the investment bank thinks there will be a focus from the market on core net interest margin going forward. "We had forecast a NIM of 1.7% in 2H FY 2023, ahead of the 1.65% that ANZ has printed," Citi says. The stock is down 3.6% at A$24.55. (alice.uribe@wsj.com)

2324 GMT - While ANZ's cash earnings for FY 2023 were broadly in line with expectations, a softening net interest margin raises questions about growth in home lending, says E&P Capital analyst Azib Khan in a note. He expects an around 5% downgrade to consensus cash earnings forecasts for FY 2024, driven by lower NIM and higher costs, and thinks investors may raise questions about margin and volume management in the Australian Retail division. This is particularly due to NIM pressure stemming from ANZ's "relatively aggressive growth" in Australian home lending, says Khan. For 2H, E&P views the reported NIM of 165 basis points as soft, noting it had earlier flagged the risk of ANZ's NIM being weaker than expected. (alice.uribe@wsj.com)

2312 GMT - ANZ's FY 2023 result was disappointing, says Jarden, highlighting that margins were a key miss to market expectations. It adds that the outcome was worse than recent peer results, and reckons that a 33-bps fall in Australian Retail margins could be partly due to ANZ's rapid mortgage growth. For 2H, net interest margin dropped to 1.65%, which Jarden says was well below expectations. As a result of lower NIM, Jarden expects modest market earnings downgrades, adding that ANZ provided limited guidance. (alice.uribe@wsj.com)

2303 GMT - ANZ growing its mortgages during a period of heightened competition and potential irrational pricing may have contributed to an FY 2023 earnings miss compared to consensus, say UBS. The investment bank notes ANZ's Australian Retail net interest margin was down 33 basis points half on half. At the same time, UBS says ANZ's costs were higher, but that the Australian lender offset some of this with a A$112 million credit impairment charge in 2H. Despite a softer than expected FY result, UBS says ANZ's dividend is 15% ahead of consensus. (alice.uribe@wsj.com)

2231 GMT - Suncorp's bank disclosures for 1Q show its business lending portfolio shrunk, but Goldman Sachs analysts Julian Braganza and Brian Kim think this could be a good thing. In a note, they say the portfolio contracted by around 0.9% over the quarter and by an annualized 3.4%, and this reflects the change in the mix of lending away from higher risk business and line of credit. GS considers this to be positive in an uncertain macro environment and that it should also provide some protection to Suncorp's net interest margin. In the 1Q update, Suncorp noted that pricing on both lending and deposits continues to reflect a very competitive environment. (alice.uribe@wsj.com)

2212 GMT - Nib's Australian Residents Health Insurance segment performed well in July-October, which Jefferies reckons will continue through FY 2024. In a note, Jefferies points out that Nib saw ARHI policyholder growth of 4.2% in July-October, versus FY 2024 guidance for net growth of 3%-4%. "Cost of living impacts seem to have been offset by ongoing prioritization of healthcare with public system waitlists a key concern for patients," says Jefferies. At the same time, Jefferies sees tailwinds for Nib Travel, although a contract expiry in that unit dragged sales down. Jefferies keeps its buy call, but cuts its target price 6.5% to A$8.65/share. Nib ended last week at A$7.29. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

November 12, 2023 23:00 ET (04:00 GMT)