Morgan Stanley forecasts lower institutional revenue at ANZ
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The news: Morgan Stanley analysts are forecasting institutional banking revenue to drop at ANZ amid lower margins and markets income.
The numbers: The brokerage expects ANZ’s institutional revenue to fall by 2% in FY25 due to lower margins and markets income. It estimated that a 5 basis point change in transaction banking or corporate finance margins impacts institutional revenue by 1% to 2%, while a 10% change in markets income affects revenue by 3%.
ANZ shares are down 0.6% to $28.94 in early trading on the ASX.
The context: The analysts said margin expansion has accounted for about 40% to 45% of ANZ's institutional bank revenue growth over the past three years, with the majority occurring in FY23.
What they said: “We believe the institutional banking revenue performance in the past three years was largely driven by significant margin expansion in a rising rate environment and strong volume growth,” Morgan Stanley said in a note.
That is expected to reverse in FY25, with the bank’s management noting that there will be "moderate downside" from lower rates.
The source: Morgan Stanley research
