Banking currently dominated by ‘headwinds’, says ANZ
The Australian 10:52AM December 16, 2016
Daniel Palmer
The current operating environment for Australia’s banks is “dominated by headwinds”, ANZ chief executive Shayne Elliott has warned at the lender’s AGM this morning, with public confidence in the strength of the economy waning.
In a speech to shareholders, Mr Elliott expressed confidence in the bank’s ability to overcome the challenges of a low-rate and low-growth environment, however, as it streamlines its operations.
“The current operating environment is dominated by headwinds, none of which are likely to change soon,” he said.
“Left un-managed, they will drive down shareholder returns and further distance banks from customers as we become more internally focused.”
The banking chief executive said momentum had been built up since he took the reins of ANZ on January 1 with a mandate to improve the company’s reputation following a series of damaging scandals.
Along with the attempts at improving the culture within the bank, Mr Elliott has also embarked on a series of cost-cutting measures and a push to refocus on Australia and New Zealand that has seen a portion of its Asian assets hived off.
“ANZ is in a period of consolidation, simplification and transition, aimed at helping make us a leaner, more focused organisation,” he said.
“We have a clear plan and we’ve made significant progress this year.”
The company (ANZ) still had a long way to go to rebuild trust, Mr Elliott added, given the extent of the disconnect between the big banks and the Australian public that became apparent amid calls for a royal commission this year.
“What all of us are consistently hearing, is that Australians, from many walks of life, are doing it tough; that they aren’t as confident about the future as they were; and there’s a mood of distrust, resentment and frustration about big business and banks in particular,” he said.
“While criticism of banks isn’t new, we’ve mistakenly reassured ourselves that things can’t be that bad.
“What I hear from the community is that there’s a disconnect between what we are saying and what they are hearing.”
Mr Elliott admitted the bank had done itself “no favours” through the scandals of the past few years that have largely centred on its trading and financial planning operations.
The misconduct had left customers to justifiably wonder about the culture of an organisation in which it parks its cash.
“It’s clear that in parts of our bank we have been making mistakes and these have become too frequent to believe they are just isolated cases, or a few bad apples,” Mr Elliott said.
“But we are determined to fix this.”
Asset sales remain on the agenda for the bank with its wealth business in the firing line on the back of sales of its Esanda Finance arm and the Asia retail and wealth operation in five Asian countries to Singapore’s DBS Bank.
Further Asia divestments appear unlikely, however, with Mr Elliott insisting the bank was “still committed” to the region.
The ANZ boss briefly touched on the booming housing market, spruiking the bank’s ascension to the number three spot in the home lending market but also noting a strong rise in house prices encouraged a more prudent approach.
“The strong growth in house prices and lower levels of household income growth, has lead us to adopt a more cautious approach to growth in home lending,” he said.