Shares in ASX-listed ANZ Group Holding Limited (AU:ANZ) fell 2.3% after the Australian Prudential Regulation Authority (APRA) increased the bank’s capital surcharge by AU$250 million. According to an APRA statement, ANZ’s capital requirements have now increased to AU$750, mainly due to concerns about the bank’s non-financial risk management practices.

ANZ is one of Australia’s four largest banks and operates in around 30 markets.

APRA raises concerns about ANZ’s risk management

In 2019, APRA had concerns about ANZ’s non-financial risk management and added a $500 million operational risk capital requirement. Since then, the bank has been working on a program to repair its risk management. However, APRA has not found any significant progress in ANZ’s non-financial risk management.

In relation to the recent issues, ANZ acknowledged that it made false bond trading statements to the Australian Office of Financial Management (AOFM) in its Markets division during 2022-23. As a result, APRA has directed ANZ to engage an independent party to investigate the root cause of the recent issues and assess risk management in its Markets business.

APRA further stated that the capital surcharge would remain in place until APRA was satisfied with the remedial measures.

ANZ reports increase in loan arrears

Earlier this week, ANZ released an update on its third-quarter performance. The update revealed rising mortgage arrears due to inflation and high interest rates. At the end of June, the bank’s bad debt provision stood at around A$45 million, reflecting a cautious stance in the face of economic uncertainties.

Meanwhile, ANZ’s Common Equity Tier 1 (CET1) ratio, a key indicator of core capital, was 13.3% at the end of June, down slightly from 13.5% at the end of March.

Following the Q3 update, analysts from Goldman Sachs and CLSA confirmed their buy recommendations for ANZ shares.

Is ANZ a good stock to buy now?

According to TipRanks analyst consensus, ANZ stock has received a Hold rating based on three Buy, two Hold and three Sell recommendations. The price forecast for ANZ stock is AU$28.48, which is 2.7% below the current trading price.

Since the beginning of the year, ANZ shares have risen by almost 13%.

View more ANZ analyst ratings.

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