With Big Four’s newish chief executive’s strategic review underway, modest rise in lending suggests early momentum
ANZ’s regulatory disclosures for the three months ending 30 June offer an insight into the early stages of newly recruited chief executive Nuno Matos’ strategic plans for the banking giant.
Customer deposits increased by $19 billion, or 3%, in the quarter, according to Pillar 3 disclosures published on Friday.
Meanwhile, net loans and advances across Australian retail and commercial lending (including Suncorp Bank) grew just 2% (marking an $8 billion increase) in the quarter.
This had helped to keep non-performing loans in check, with total non-performing credit exposures dipping slightly in the quarter, from 0.78% of total exposures in March to 0.77% in June.
Credit: ANZ third-quater chart pack
ANZ’s common equity tier 1 ratio – a key measure of financial strength – rose 16 basis points since March to 11.9%.
Though conservative, the modest rise in customer deposits and net loans, while keeping risk under tight control, suggests early momentum as newly recruited chief executive Nuno Matos kicks off a sweeping strategic review.
Matos, who stepped into the top job just 100 days ago, has been clear about the challenges ahead for Australia’s fourth-largest bank by market capitalisation.
“For a long time, some parts of our business have not been meeting their potential, particularly in terms of customer and shareholder outcomes and non-financial risk,” Matos said earlier this month.
In April, ANZ was forced by the Australian Prudential Regulation Authority (APRA) to address weaknesses in its risk-management practices following long-standing concerns around ANZ’s “reactive risk culture”.
It was a costly move by APRA, with ANZ having to increase its capital add-on from $750m to $1 billion.
“We need to be sharper and leaner, and reduce inefficiencies,” said Matos. “The productivity levels and the cost to run our business need to be brought in line with industry standards and shareholders’ expectations.”
Matos will also be assessed how well ANZ integrates Suncorp Bank, the regional lender it acquired for $4.9 billion last year. That deal, approved by the government in June, is seen as a key test of ANZ’s ability to scale and adapt.
Between ANZ’s Big Four counterparts, fifth pillar Macquarie Bank and a growing cohort of challenger banks and non-bank lenders, competition in the mortgage market is coming from left right and centre. Risk, meanwhile, will need to be closely monitored.
Matos has a tough job ahead.
