This article first appeared on GuruFocus.

ANZ Group Holdings (ANZGY) delivered a stronger first-half result than the market expected, giving investors an early read on whether CEO Nuno Matos' turnaround plan is beginning to gain traction. Cash profit from continuing operations climbed to A$3.78 billion in the six months to March 31, ahead of the A$3.69 billion average estimate in a Bloomberg survey. For a bank that has spent recent years dealing with misconduct issues, regulatory fines and extra capital requirements across parts of its retail and institutional operations, the result could be an important first signal that the reset is moving in the right direction. Matos' 2030 strategy is focused on cutting duplication, reducing costs and directing staff time toward key projects, while return on tangible equity rose to 11.6%. ANZ also said it expects costs to be down around 5% in the 2026 financial year, adding more weight to the cost-control story.

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The bigger investor question is whether this efficiency push can translate into stronger market share, especially in home lending. Morningstar analyst Nathan Zaia said the result looked like a solid start on paper and called the upgraded cost-saving guidance encouraging, but he also warned that ANZ needs to become more competitive to gain share in home lending in particular. That is the core tension in this print: the bank is showing improved returns, progress in key businesses such as Australian retail and institutional banking, and a simpler operating model, but investors may still want stronger evidence that the turnaround can move from internal repair to growth. Matos said the bank's actions to reset the business are working, while also noting that there is more to do. On a call with investors and analysts, he said ANZ is already more focused on customers, simpler, more resilient and has materially improved value for shareholders.

Risk, however, remains part of the investment story. Matos warned that higher energy costs linked to the Middle East conflict could weigh on the economy, saying the longer oil flows remain constrained, the greater the chance the crisis shifts from mainly an inflation issue to a possible supply and growth challenge. ANZ increased its collective provisions in response to that external risk, taking a A$126 million collective provision charge that included A$175 million for potential Middle East conflict impacts, partly offset by improvement in the underlying portfolio's credit quality. The bank also said it is making progress on risk management and compliance after the prudential regulator last year imposed additional capital requirements tied to a series of inadequacies. Still, Promontory's first independent report, released alongside the earnings update, suggested challenges remain as the pace of change puts pressure on risk-management goals and often reflects competing priorities. ANZ shares dipped 0.9% as of 11:16 a.m. in Sydney, but they remain more than 20% higher over the past year and have outperformed their main rivals, suggesting investors could still be giving Matos time to prove the reset can deliver more than a cleaner first half.

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