Elliott promises more growth for ANZ in mortgage assault
ANZ chief executive Shayne Elliott says there is more ground to claim in the lender’s assault on the mortgage market as it leverages cash backs and broker distribution channels to regain lost market share.
But Mr Elliott tempered expectations that the mortgage wars shredding retail banking profit margins this year would begin to ease in 2024. Lending growth remained strong for ANZ, he added at Thursday’s annual meeting in Brisbane.
ANZ boss Shayne Elliott in Brisbane on Thursday. Jamila Toderas
“We want to grow our Australian home loan book profitability by continuing to offer reliable turnaround times, and in line with that we are competitive but not market leading on price,” he told the meeting.
While ANZ is not offering the lowest interest rate in the market – Westpac’s advertised base variable rate is 6.44 per cent on a $500,000 loan compared to ANZ’s lowest equivalent of 6.54 per cent – it is the only major lender with a cash back offer in place for refinancing borrowers.
The bank was a key agitator in the battle for market share, lifting its grip on home loans by 0.4 percentage points to 13.5 per cent since the beginning of the year. ANZ is the only big four lender that has boosted its standing in 2023, angering peers as the intense competition clips margins.
ANZ has battled hard to recover ground ceded during the pandemic, with its market share still lower than the 14.1 per cent it held in January 2020.
Mr Elliott reminded shareholders its retail segment was “the smallest” of the big four. However, he was confident the business is resilient “despite high levels of competition and concerns around a slowing economy”.
“As we approach the end of the first quarter, group revenue is in line with the second half of the 2023 financial year,” Mr Elliot said.
Economic outlook ‘challenging’
ANZ’s operating income was up 2 per cent half-on-half to $10.3 billion in the six months to September 30, helping the bank to a full-year profit of $7.1 billion. Despite the increase in revenue, its group net interest margin fell 10 basis points to 1.65 per cent.
Mr Elliott said the bank was trying to limit costs and investing in improved home loan processing.
“Our investment in home loan processing capability and capacity and improved broker experience are providing ongoing benefits … our focus on high-quality customer selection and prudent risk appetite means credit quality remains strong, with no material increase in credit costs,” he said.
The CEO warned the broader economic outlook was “challenging with interest rates and inflation expected to remain high, geopolitical risks rising and capital flows changing faster than we have seen in some time”.
If its appeal to acquire Suncorp’s banking business for $4.9 billion is unsuccessful: “we remain confident in the execution of our Australian growth strategy,” Mr Elliott said.
ANZ directors John McFarlane and Ilana Atlas will retire after the meeting, with the board putting forward former Best & Less CEO Holly Kramer for election.
While ANZ does not face a similar shareholder resolution challenging its lending to fossil fuel companies like at Westpac and NAB’s AGMs, Market Forces boss Will van der Pol said ANZ is “the biggest Australian funder of fossil fuel expansion”.
ANZ chairman Paul O’Sullivan stood by the bank’s record on climate: “[The] board considers the statement is not an accurate characterisation of our actions on climate change,” Mr O’Sullivan said.
“If we remove financial support from these companies, it may push them to lenders who have less stringent or no requirements on emissions reduction.”
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