ANZ Group Holdings Limited (ASX:ANZ) operated its Dividend Reinvestment Plan (DRP) for the 1H26 Interim Dividend of 83 cents per share, which was 75% franked. ANZ arranged for shares to be acquired on market to meet DRP elections, so DRP participation did not add new shares to the register, although new shares were issued under its separate Bonus option plan (BOP).

Latest developments

ANZ reported its first-half results for 1H26. Statutory profit was $3.65 billion and cash profit was $3.78 billion, with cash profit excluding significant items up 14% on the second half of FY25. The common Equity tier 1 (CET1) Capital ratio was 12.39%. The interim dividend was held at 83 cents, while franking rose to 75% from 70%.

ANZ's third-quarter trading update showed unaudited cash profit of $1.90 billion, up 1% on the first-half quarterly average, and a CET1 ratio of 12.51%. More recently, the group's banking subsidiary, Australia and New Zealand Banking Group Limited, issued EUR 750 million of subordinated notes under its Euro Medium Term Note Programme, with a cleansing notice lodged with the ASX.

Key numbers

ANZ's two most recent dividends were the 83 cent FY25 final, which was 70% franked, and the 83 cent 1H26 interim, which was 75% franked, for a total of $1.66 per share. The unfranked portion of the interim dividend was sourced from ANZ's conduit foreign income account. The value of franking credits depends on each shareholder's tax position.

About the company

ANZ is one of Australia's four major banks, providing retail, commercial and institutional banking across Australia and New Zealand, with an institutional presence in Asia. Nuno Matos is Chief Executive Officer.

Under Matos, ANZ has been simplifying the group and reducing costs, including about 3,500 announced role exits, and it is integrating Suncorp Bank, with customer migration targeted for completion by mid-2027. It has also set FY28 targets for return on tangible equity of towards 12% and a cost-to-income ratio in the mid-40s per cent, which remain targets rather than certainties.

How the DRP works

According to its dividend notices lodged with the ASX, ANZ's DRP price is the arithmetic average of the daily volume-weighted average price of ANZ shares sold on the ASX and Cboe Australia during the applicable pricing period, rounded to the nearest cent. No discount applied for the interim dividend, and ANZ confirmed the DRP price in accordance with this methodology.

ANZ said shares for the DRP would be acquired on market during the pricing period, with new shares to be issued only if on-market purchases could not be completed. Shares under the BOP, which lets holders receive shares instead of a dividend, were newly issued using the same pricing methodology. The board can change the discount and how shares are sourced for each dividend, with the terms set out in each dividend notice. The two plans can be treated differently for tax purposes, because BOP shares are issued instead of a dividend rather than acquired with one, and New Zealand Imputation Credits attach to DRP shares but not to BOP shares.

Why it matters for shareholders

ANZ's dividend has been steady at 83 cents per half, and the lift in franking to 75% increases the franking credits attached for shareholders who can use them. New Zealand resident shareholders also received New Zealand imputation credits of 14 NZ cents per share on the interim dividend.

Because the DRP was satisfied through on-market purchases, participating holders received additional shares without the DRP adding to the share count. Shares received through the DRP are themselves eligible for any future dividends, which depend on board decisions.

What comes next

ANZ's financial year ended at the end of FY26, and based on past timing its full-year result and any final dividend decision are expected after year end, subject to board approval. The DRP terms for any final dividend, including any discount and whether shares are bought on market or issued, would be set out in that dividend notice.

Areas of focus include progress on the Suncorp Bank migration, cost savings from role reductions, Credit quality and the level of franking on any final dividend, as well as any update on capital management.

Risks and context

Past dividends do not indicate future payments. Dividends depend on earnings, capital levels and regulatory settings, and franking has varied between 70% and 75% over the past year. The unfranked portion has been sourced from conduit foreign income, and franking levels may change.

Bank-specific risks include Mortgage competition, Bad Debts if the economy weakens, integration risk with Suncorp Bank, and regulatory and legal matters, including a NZD125 million pre-tax provision for a New Zealand class action recognised in the third quarter, which ANZ has appealed. Reinvested dividends are still assessable income, and each DRP parcel sets a new cost base for Capital Gains Tax purposes.

Conclusion

ANZ Group Holdings (ASX:ANZ) operated its DRP at no discount for the 1H26 interim dividend, with DRP shares acquired on market and BOP shares newly issued. The dividend was held at 83 cents with higher franking, while execution on its transformation program and credit conditions remain key variables.

Key Insights

ANZ Group Holdings (ASX:ANZ) held its 1H26 interim dividend at 83 cents per share and lifted franking to 75%, with the unfranked portion sourced from conduit foreign income. The DRP operated with no discount and was priced using the arithmetic average of daily volume-weighted average prices over the pricing period, with DRP shares acquired on market while BOP shares were newly issued.

The company reported higher 1H26 cash profit on the prior half, a CET1 ratio above 12% through the third quarter, and continued work on cost reduction and the Suncorp Bank integration. Future dividends, franking levels and DRP terms remain subject to board decisions.