Is It Time to Take Profits on ANZ (ASX: ANZ)?

ANZ Bank (ASX: ANZ): Time to Cash In or Stay the Course?

Riding the Momentum: ANZ’s Stellar Run

2024 and early 2025 have been kind to ANZ investors. With its share price rallying close to A$30, ANZ has jumped nearly 15% in the last six months alone. Solid earnings, a strong balance sheet, and a resilient Australian economy have helped lift investor sentiment.

But after a strong rally, questions are now emerging: Has the stock run too far too fast? Or is there more upside left in the tank?

In this blog, we break down ANZ’s latest financials, examine market risks, and help you decide whether it’s time to take some profits—or keep collecting dividends.

Big Numbers, Balanced Growth: ANZ’s 1H FY25 Performance

ANZ delivered a stable performance in the first half of FY25, supported by growth in lending and decent cost control.
Here are some key highlights from the H1 FY25 results:

Total Revenue: $35.63 billion

Net Profit After Tax (NPAT): $3.64 billion

Net Interest Margin (NIM): Down to 1.56%

Loan Impairments: Rose 48% YoY

Dividend: $0.83 per share (70% franked)

While earnings remained strong, the squeeze on margins and a sharp rise in loan impairments are causing some discomfort. Margin pressure is mainly driven by competitive home loan pricing and rising deposit costs.

Still a Dividend Magnet

One of ANZ’s major attractions is its reliable dividend yield of ~5.4%, placing it among the most attractive income-generating stocks on the ASX.

The bank’s capital position remains robust, with a CET1 ratio above 11%, meaning it has more than enough buffer to continue paying dividends—even if conditions worsen.

If you’re an income investor, ANZ still ticks the boxes for yield, reliability, and long-term dividend stability.

Warning Signs on the Radar

Despite the strong topline, some concerns are beginning to surface beneath the numbers:

Margin Pressure

ANZ’s net interest margin slipped to 1.56%, the lowest in several years. Fierce competition in mortgages and rising deposit rates are compressing profits, a trend that could persist if the RBA begins cutting rates.

⚠️ Rising Bad Debts

Loan impairment charges spiked 48% YoY, especially within the retail segment. This signals that households are starting to feel the pinch of elevated interest rates, potentially leading to higher defaults ahead.

💸 Valuation No Longer Cheap

At a P/E ratio of ~13.5×, ANZ is slightly above its historical average. While it isn’t overvalued, it’s certainly not trading at a bargain either. Much of the recent upside has likely priced in the positives.

Market Mood: Taking Chips Off the Table?

Between July 19–21, 2025, ANZ shares fell 2–3%, part of a broader sell-off in major banks. Investors appear to be booking profits ahead of the upcoming August reporting season, wary of slowing growth and macro uncertainty.

The ASX 200 index also pulled back after hitting record highs, suggesting this isn’t an ANZ-specific issue but rather a broader sector rotation. Still, the timing raises eyebrows.

Should You Take Profits on ANZ?

Yes, If:

1. You bought in at 2023–24 lows and are sitting on double-digit returns.
2. You’re worried about margin erosion and rising credit defaults.
3. You want to shift capital into sectors with higher growth potential in the short term.

No, If:

1. You rely on ANZ’s dividend for steady passive income.
2. You expect RBA rate cuts later this year to support lending and reduce funding costs.
3. You view ANZ as a long-term anchor stock in a diversified portfolio.

What Lies Ahead?

As we head into the second half of FY25, several factors will influence ANZ’s performance:

1. August to November earnings updates – Will margins stabilize or keep slipping?
2. Loan growth outlook – Especially in mortgages and business lending
3. Impairment trends – Are household and SME borrowers coping?
4. RBA policy – Any cut in rates could offer relief, but also hurt bank margins

Essentially, ANZ is at a crossroads—awaiting cues from both internal performance and broader economic shifts.

Final Take: Be Strategic, Not Emotional

ANZ remains one of the top-tier banks in Australia, backed by strong fundamentals, high dividends, and a solid capital position. However, signs of strain are creeping in—narrowing margins, rising impairments, and valuation fatigue.

A smart strategy at this stage might be partial profit-taking. Lock in gains if you bought early, and reduce your exposure if you’re wary of near-term risks. But for long-term investors, keeping a core position still makes sense—especially for the consistent dividend stream and potential compounding returns.

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