Pragmatic Matos draws line in sand following ANZ’s not-great year
Two out of four is not particularly great, and to ANZ chief executive Nuno Matos’ (pictured) credit, he’s under no illusions to the contrary.
Discussing today’s not-great annual results, which saw profits tumble by 10% due to restructuring costs, regulatory fines and compressed margins, Matos said ANZ has “performed quite well in two of our four divisions”.
Faint praise for the financial giant he took control of six months ago.
For the record, those quite-well performing divisions were Institutional and New Zealand, while Retail and Business, by Matos’ admission “have not performed the same way”.
It was a pragmatic reading of the results from Matos, befitting the pragmatic tone he has struck on the bank’s challenges since taking over in May.
But Matos expressed optimism that his ‘ANZ 2030 strategy can be the salve to the bank’s woes.
“What I would say is that we have the right strategy, what I call our ANZ 2030, to unlock the full potential of those four divisions to our shareholders and to our customers,” he said.
In the immediate terms, Matos has five priorities in mind, namely:
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Reset ANZ’s culture “to a much more clear, decisive and accountable” one
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Integrating Suncorp Bank
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Develop a “single-customer front-end”
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“Be very deep in productivity” and
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Address lingering issues around non-financial risk
The latter is particularly pertinent for ANZ, given the massive fines it has incurred for previous risk failures.
ANZ vowed reform following a brutal $240 million sanction this year in relation to misconduct in government and customer dealings. This contributed significantly to ANZ’s 10% profit slump.
In the longer term, Matos outlined four pillars of redemption, namely ‘customer first’, ‘simplification’, ‘resilience’ and ‘delivering value’.
Underpinning the ‘customer first’ pillar, Matos said ANZ will “significantly strengthen our proprietary origination, both in retail and in commercial”.
It reflects the Big Four’s renewed appetite for in-house mortgage lending in order to arrest the supposed slimmer margins associated with the broker channel.
NAB boss Andrew Irvine said NAB’s strategy to bolster proprietary home lending is working in the bank’s favour during last week’s results, which saw the bank increase home lending by 5.2% in the financial year to $364 billion.
But are banks missing the point?
Broking industry claps back
In an open letter published today, Anja Pannek, chief executive of the Mortgage and Finance Association of Australia (MFAA) has some choice words to say about this apparent pivot away from the broker channel, which currently facilitates nearly 80% of all new home loans in Australia.
“Australia has one of the most consolidated banking systems in the developed world,” said Pannek. “Without brokers, Australian borrowers would be worse off, with fewer choices and more expensive mortgages. That’s an outcome no government, regulator or consumer advocate would welcome.”
Pannek contended that “brokers don’t compete with banks… banks compete with each other. Every pricing decision made by a lender positions them against other lenders and is driven by their own growth targets”.
She lashed out at the apparent resurgence of channel conflict, saying: “Members tell us of ‘under-the-counter’ branch pricing and cases where a borrower’s application by a broker is declined but then approved in-branch, which raises legitimate concerns in my mind of lender bias in credit assessment.”
Peter White, managing director of the Finance Brokers Association of Australia (FBAA) also has some strong thoughts on the matter.
In comments sent to MPA, White said the fixation from some major banks on increasing branch lending and reducing support for broker channels is short-sighted and “misses the point”.
He continued: “The home loan market is more competitive than ever and increasingly driven by innovation, yet bizarrely some banks want it to be a closed shop, where they carve up the spoils.
“Increased competition is giving consumers more choice than ever and it’s clear they’re overwhelmingly putting their trust in mortgage brokers.
“It never ceases to amaze me that some banks view brokers as competitors, given the volume of loans brokers originate for them.”
Perhaps the final word should go to Angela Tracey, chief marketing officer at Loan Market.
Announcing Loan Market’s Shopfront Program last month, which offers up to $30,000 to help brokers set up their own premises and enhance their high-street visibility, Tracey said: “It’s clear that brokers have won the trust of customers. Brokers have stepped-up in their communities as banks have stepped-out, shifting their service models.”
But as the big banks also ramp up their investments in customer-facing bankers, it’s a tug-of-war with no clear winner for now.
