ANZ (ASX: ANZ) has agreed to pay $240 million in penalties to resolve five Australian Securities and Investments Commission, or ASIC, investigations within its Australian markets and retail banking businesses. The bank admits it made mistakes that had a significant impact on customers.

Why it matters: Poor disclosure, reporting, and processes across multiple divisions are of more concern than the penalty. It equates to just 3% of our fiscal 2026 profit forecast, or 0.25% of the market capitalization of the bank.

  • The regulator has not claimed market manipulation or profiting on confidential information, which we think saves the bank from a much heftier penalty. ANZ still needs to satisfy ASIC with improvements on its savings products, hardship processes, and handling of customer remediation.
  • The focus on fixing problems could take resources away from growth initiatives, but with new management planning large job cuts in a strategic reset, we think our loan growth and operating expense forecasts are still reasonable.

The bottom line: We retain our $32 fair value estimate for wide-moat ANZ, with shares trading close to fair value. Unlike major bank peers, whose shares are expensive, ANZ’s shares trade at a reasonable P/E of under 14 times and offer a mostly franked dividend yield of around 5%.

  • We think uncertainty as to operating costs largely explains the discount to peers, with the share price largely unchanged despite the overhang from regulatory uncertainty diminishing. Our forecasts assume the cost/income ratio falls from a forecast 53% in fiscal 2025 to 49% in fiscal 2029 on cost savings.

Between the lines: We don’t think the penalties put dividends at risk, with the bank reporting $2.1 billion in surplus capital to the top end of its 11%-11.5% target range as of June 30, 2025.

  • Our dividend forecast assumes management treats penalties as one-off and pays out 70% of underlying profit.

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