By Scott Murdoch and Sneha Kumar
SYDNEY, Nov 9 (Reuters) - ANZ fell short of expectations for net interest margin and net interest income on Monday, dragging on its share price, as its CEO warned that global competition for capital from AI and other sectors would keep interest rates higher for longer.
Australia's fourth-largest lender by market capitalisation posted a 31% surge in cash profit of A$7.6 billion ($5.2 billion) for the year ended September 30, in line with a Visible Alpha consensus.
But
the bank's net interest margin, a key measure of profitability, fell to 1.53% from 1.55% in 2025, hurt by competition across most divisions and the timing of the Reserve Bank of Australia's rate changes. Net interest income of A$9 billion in the second half was also about 2% below analysts' expectations.
ANZ shares were down 4.2% in afternoon trade, while the S&P/ASX200 was flat.
Chief Executive Nuno Matos said a "supercycle of investment" around the world was creating global economic consequences.
Developed-economy governments, he said, were comfortable running budget deficits which meant they were increasingly taking on debt at a time when major corporates were also hiking borrowing.
"Renewables, defence and AI compete for long-term capital which means they compete with the administrations with governments for long term capital," Matos told reporters.
"We are in a world that from a funding perspective with so much projects going on is in a tough situation which is creating inflation and high rates."
ANZ is projecting Australia's economy will grow 1.6% next year, which compares with 1.1% expected for this year, but Matos also said that the economy would be able to weather "a benign environment".
ANZ's operating expenses declined 14% in 2026 due to lower restructuring expenses and the absence of the Australian Securities and Investments Commission settlement amount.
Its Australian retail division's annual cash profit climbed to A$1.71 billion from A$771 million last year, lifted by higher home loan volumes.
($1 = 1.4571 Australian dollars)
(Reporting by Scott Murdoch in Sydney, Sneha Kumar and Sherin Sunny in Bengaluru; Editing by Edmund Klamann and Edwina Gibbs)
