Cost cuts lift bank profit to NZ record
Staff efficiency and offering fewer products have helped drive ANZ to the biggest-ever profit by a New Zealand bank – $1.86 billion.
Chief executive David Hisco said the solid performance was due to lending growth and ‘‘strong cost management’’.
Cash profit was up 21 per cent compared with the year before.
The result was also buoyed by a lower than normal provision charge, reflecting growth in some parts of the New Zealand economy.
Hisco said it was a little higher than the bank had expected because of that charge.
He said that although the profit might look big to the public, shareholders had enormous capital invested in the bank. ‘‘If you add Fonterra, Air New Zealand and Spark together they wouldn’t have as much capital.’’
Its returns to shareholders were ‘‘middle of the pack’’, and ANZ paid 5 per cent of the total Crown tax take.
‘‘We are big at the top end but we pay a lot of tax and do a lot in the community.’’
Hisco said the bank had focused on efficiencies, digitising processes where it was appropriate. That made customer interactions faster and less prone to error.
‘‘We have reduced the number of products from almost 350 in 2012 to offer fewer than 90 in 2017, improving staff efficiency and making life simpler for them and our customers.’’
There were only a small number of New Zealanders who needed more sophisticated banking products.
‘‘We’re catering to the mainstream … that leads to economies of scale.’’
Hisco said expenses decreased 8 per cent and were below 2010 levels, while the bank had maintained high customer satisfaction.
‘‘That’s a remarkable achievement and reflects our team’s strong discipline, high productivity and our digital push.
‘‘The strength in some parts of the economy also meant fewer bad loans to contend with and a more benign credit environment saw the provision charge trend lower.’’
Customer deposits increased 6 per cent over the year. ANZ said one in every two New Zealanders had a financial relationship with the bank.
Hisco said he was not convinced that the lending environment was more constrained than it had been.
Some banks have been cutting back on lending, looking to reduce their exposure to the market and boost their capital positions.
But there were still lending options available to good borrowers.
He said a new government was unlikely to have a big impact on house prices. The market had already started to cool.
‘‘The market has had a good run; it probably needs a rest.’’
ANZ recently revealed that former prime minister Sir John Key is to take over as chairman of its board.
"The [housing] market has had a good run; it probably needs a rest."
David Hisco