ANZ shares jump after the bank announces another $1.5 billion share buyback

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  • Shares in ANZ are up almost 3% after the bank doubled its buyback program to $3 billion.
  • ANZ is returning capital to shareholders with the cash generated from asset sales.

Shares in ANZ are up strongly in afternoon trade after the company announced that it would double its share buyback program.

In a statement on the ASX, the bank said it had received around $1 billion in proceeds from the first tranche of the $2.85 billion sale of its life insurance division to Swiss company Zurich.

ANZ said the extra cash buffer will allow it to return extra capital to shareholders, in the form of a $1.5 billion share buyback.

A short time ago, shares in ANZ were up more than 2.8% at $28.65. Shares in Australia’s three other major banks were up by around 1%.

It follows the announcement of an initial $1.5 billion buyback in December, which followed the sale of ANZ’s 20% stake in Shanghai Rural Commercial Bank.

“The progress of our transformation means we are able to return this surplus capital to shareholders while retaining appropriate flexibility to invest in our business and maintain unquestionably strong capital levels,” said ANZ chief financial officer Michelle Jablko.

ANZ said that after the buyback is completed in May or June, its Common Equity Tier 1 capital (CET1) ratio will increase to 11.6%.

In July last year, bank regulator APRA confirmed that in order to meet its definition of “unquestionably strong”, Australia’s big four banks need to have a CET1 ratio of 10.5% by January 1 2020.

Since taking the reigns in January 2016, CEO Shayne Elliott has put a renewed focus on ANZ’s domestic operations, scaling back the bank’s Asian expansion strategy that was implemented under predecessor Mike Smith.

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