Major bank boss says market is ‘dominated by headwinds’

Addressing shareholders at the group’s AGM in Melbourne yesterday, ANZ chief executive Shayne Elliott admitted that the bank needs to face up the fact it hasn’t performed as strongly as it would have liked.

“And, at the same time, the environment we’re operating in is shifting more rapidly than ever before,” Mr Elliott said.

“Some changes are the normal cyclical changes that my predecessors have also managed like more subdued credit growth, low interest rates and the turning credit cycle,” he said.

“But other changes though are structural, like the disruptive impact of new technology and the rapid change in customer and community expectations, and the costs of additional capital and regulatory compliance.”

Mr Elliott said that “every day counts” because ANZ doesn’t want to simply respond to challenges but “be ahead of the game” and performing strongly in the eyes of its customers and our shareholders.

The 2016 financial year was a difficult year for the major bank. Profits fell by 24 per cent and the group lowered its fully franked dividend per share by 16 per cent to 160 cents.

Mr Elliott noted that the current operating environment “is dominated by headwinds, none of which are likely to change soon.”

“Left unmanaged, they will drive down shareholder returns and further distance banks from customers as we become more internally focused.”

However, the ANZ boss said the bank is “already on the front foot” and driving change. He flagged four major trends which he believes are redefining the bank’s future.

“The first is the well-known growth and now transformation of China to a consumer and services-led economy,” Mr Elliott said.

“The second is the shift from an economy driven by the trade of goods and commodities to one dominated by data and services. Third, there is the rise and economic power and influence of the small and medium enterprise in our economies, including the self-employed.”

Finally, Mr Elliott highlighted the ever-increasing rise in the power of consumers and their expectations.

“These trends can all be threats, but actually they also offer significant opportunities for banks that are able to position themselves effectively, and we're pretty excited about our ability to respond,” he said.

Moving into 2017, ANZ looks to become a simpler, more agile bank. One of the major milestones for ANZ in 2016 was the announcement that it would sell its wealth business.

Meanwhile, its retail and commercial businesses continued to perform strongly over the last 12 months.

“It was pleasing that after many years of being number four in home lending here in Australia, we moved to the number three market share position,” Mr Elliott said.

“Nevertheless, the strong growth in house prices and lower levels of household income growth, has led us to adopt a more cautious approach to growth in home lending.”

[Related: Major bank loses $2 billion in investor loans]