ANZ Group shares shot to a record high on Thursday after its first-quarter cash profit topped expectations and showed signs of early benefits from a cost-cutting overhaul under CEO Nuno Matos.
The profit surprise, including a bigger-than-expected drop in expenses, led some analysts to upgrade full-year forecasts for Australia's fourth-largest bank, which has long had weaker returns than its rivals.
Cash profit for the three months to Dec. 31 was A$1.94 billion ($1.38 billion), up 17 percent on the quarterly average of the 2025 second half, excluding significant items.
ANZ said more than half of its 3,500 staff cuts had occurred by the end of 2025, which helped it to deliver an 8-percent reduction in expenses in the quarter.
"Our productivity program aimed at removing duplication and simplifying the bank is well underway, delivering a significant reduction in expenses while growing revenue," Matos said in a statement.
ANZ shares jumped as much as 8.25 percent to a record A$40.20 while the S&P/ASX200 was up 0.3 percent on Thursday.
Key measures of profitability improved in the quarter, with cash return on tangible equity up 173 basis points to 11.7 percent, and its net interest margin up 2 basis points to 1.56 percent as funding mix shifts helped offset central bank rate cuts and loan competition.
ANZ's cost-to-income ratio fell to 49.5 percent, as operating expenses dropped 21 percent from the second-half quarterly average.
Its profit was 6 percent ahead of Citigroup's expectations, while the bank's A$5.7 billion revenue was in line with forecasts.
"The beat was largely driven by faster than expected progress on costs, with costs about 3 percent below our expectations in the quarter," Citigroup analyst Thomas Strong said.
"We expect the result will be well received given the progress on strategy and signs that improving macro environment is being experienced broadly across the sector."
Matos launched a broad reorganization, including redundancies and a move to simplify the bank, soon after he joined mid-last year.
Reuters reported the overhaul included 3,500 job cuts by September this year, 1,000 contractor roles, and an A$560 million restructuring charge, with Matos saying the company would also end projects not aligned to priorities.
Revenue for the quarter rose 1 percent from the second-half quarterly average excluding significant items.
Credit quality remained resilient, the bank said, with an easing of Australian housing loans 90-plus days past due.
Jefferies upgraded ANZ's earnings per share forecast for the current year by 6 percent and by 5 percent for the next two full years on the back of the higher net interest margin and lower bad debts.
"The real test though, in our view, will be how it manages its net interest margin when it gets back to system housing growth," said Jefferies analyst Andrew Lyons.
ANZ has the lowest mortgage market share of the major Australian banks with about 14 percent, according to regulatory data.
