ANZ Group Holdings (ASX:ANZ, NZE:ANZ) reported solid fiscal third-quarter results, with its cash net profit after tax of AU$1.9 billion supported by a low bad and doubtful debts charge, Jefferies said in a Thursday note.

However, with replicating portfolio benefits nearly exhausted and competition on the rise, costs are now one of the company's most important earnings levers, the investment firm said.

The company's management confirmed previous comments that the replicating portfolio had around 7 basis points of embedded gains, "which would suggest limited support going forward," the equity research firm said.

The bank's Australian mortgage application values in the fiscal third quarter were broadly flat from the previous three-month period, but excluding the impact of the government's 5% deposit scheme, application values fell 5%.

Jefferies upgraded its EPS estimates on ANZ Group for fiscal 2026 and fiscal 2027 by 2% each on higher volumes and lower near-term bad debts.

It maintained a hold rating on ANZ Group while raising the price target to AU$34.10 from AU$33.71.

The bank's Australia shares gained 4% and its New Zealand shares rose 5% in recent Thursday trade.