The headline purchase price of $A4.9 billion represents 1.3 times Suncorp Bank’s first-half 2022 net tangible assets (NTA) and a price-to-earnings ratio of 13.8 times Suncorp Bank’s $A355 million full-year 2022 net-profit after tax (NPAT).
"Beyond cost benefits, we also see potential capital benefits from transitioning Suncorp Bank to advanced internal ratings-based treatment.”
Including the impact of the capital raising announced to support the deal, the acquisition is expected to be earnings per share (EPS) and return on equity (ROE) neutral pre-synergies. Including full run-rate synergies, we expect both EPS and RoE to be accretive.
We believe this returns profile is attractive both pre and post synergies, given the risk profile and the quality of Suncorp Bank’s franchise.
As a result of this agreement, ANZ will increase Australia mortgages lending by 17 per cent to $A326 billion; increase Australian business lending by 20 per cent to $A67 billion; and increase Australia Retail deposits by 22 per cent to $A179 billion.
In terms of value, we think about this in two broad categories. Firstly, benefits we expect to realise from completion; and secondly, the benefits we expect to realise following the integration of Suncorp Bank into ANZ’s existing retail and commercial businesses.
Let me start with the near-term benefits we expect post-completion. We have been appropriately conservative around the potential benefits from a higher interest rate environment along with the benefits of increasing the scale of ANZ’s operations and infrastructure as we progressively move away from services provided under the transition service agreement (TSA) with Suncorp Group.
The second category relates to cost benefits which we expect to realise as we merge Suncorp Bank into the ANZ authorised deposit-taking institution (ADI) and migrate customers onto ANZ’s platforms.
In this area, we see potential cost savings of around 35 per cent of Suncorp Bank’s cost base which in full-year 2022 is equivalent to around $A260 million pre-tax.