Elliott’s strategy paying off for ANZ
(17 February 2017 – Australia) ANZ Bank’s refocus has started to pay dividends, its chief executive said as part of the group’s results announcement.
The comments come as ANZ posted first quarter profits of A$2 billion, nearly a third up from a weaker period in 2016.
ANZ CEO Shayne Elliott added that the bank’s is more positive about bad and doubtful debt charges, after a stronger December quarter and first six weeks of 2017.
The bank added that earnings were up 20 percent year on year (excluding some one-off items), although the sale of a Melbourne property increased that figure.
Since taking over from his predecessor, Mike Smith in 2016, Elliott has focussed the bank’s operations and capital on its highest-return units, and divesting of those that do not fit in with the strategy.
"The first quarter saw a positive start to the year. There was further momentum in executing out strategy to build a simpler, better balanced and fairer bank that more consistently meets customer expectations, and delivers improved shareholder returns."
Business deposits were up six percent, compared to household deposits which increased by four percent, with ANZ claiming they performed "well".
On the technology and payments front, ANZ said it was winning more transaction bank accounts, helped by their Apple Pay offering, which its Big Four rivals are not providing.
ANZ's institutional arm lowered its risk-weighted assets by a further A$900 million in the quarter. It achieved that by letting go of less profitable customers.
ANZ's core equity tier one capital ratio was 9.5 percent, while its net interest margin had narrowed by "several basis points".
Elliott highlighted that the bank had more work to do on cost cutting, saying that reducing expenses was the only way ANZ would be able to invest in technology needed to meet customers' needs.
In a statement, ANZ CEO Shayne Elliott said: "It is still too early to be definitive about the year as a whole, however, the first quarter, together with our experience during first six weeks of the second quarter, suggests the credit environment is marginally better than we expected at the time of our 2016 full-year result which was for the provision charge in 2017 to remain broadly the same as a percentage of gross lending assets.”
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