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ANZ's Matos era to begin with a letter from Elliott
ANZ's Matos era to begin with a letter from Elliott

AU Financial Review

time11-05-2025

  • Business
  • AU Financial Review

ANZ's Matos era to begin with a letter from Elliott

When Nuno Matos, ANZ's new chief executive, takes a seat at his desk on Monday morning, in his new office on the 10th floor of the bank's Melbourne Docklands HQ, and opens the top drawer, he'll find a letter from Shayne Elliott. Reading it – and perhaps glancing out his window to the banks of the Yarra River, and Port Phillip Bay in the distance, to reflect on the messages – Elliott hopes Matos, unfamiliar with the peculiarities of Australian banking, will see his arrival in its historical context.

Labor wants to fix Australia's housing issues – but there's little hope for those not already on the ladder
Labor wants to fix Australia's housing issues – but there's little hope for those not already on the ladder

The Guardian

time09-05-2025

  • Business
  • The Guardian

Labor wants to fix Australia's housing issues – but there's little hope for those not already on the ladder

Days after Labor won a decisive victory with a mandate to fix housing affordability, those in charge of handing out mortgages poured cold water on it coming to pass. Andrew Irvine, the chief executive of National Australia Bank, said the country 'may not get the outcome we want' as the gulf between homeowners and everybody else threatens to expand in the coming months. The long-serving ANZ chief executive, Shayne Elliott, was even more forthright when addressing media on Thursday. 'I don't know we are dealing with it. I mean, things are getting worse,' said Elliott, who stepped down from his role on Friday after almost a decade leading the bank. Sign up for Guardian Australia's breaking news email 'I know there's really well-meaning, really thoughtful policies on both sides of politics … but the reality is, as we sit here today, I'm not sure there's confidence that we are going to see any material change any time soon.' The bank bosses pointed to a lack of housing supply for their dour outlook. There are also other factors, such as the need to improve transport networks and infrastructure to ignite that supply, resolve unnecessary planning impediments, tackle high building costs and labour constraints. The affordability problem has built up over decades, and Australia's banking CEOs don't believe the issue will be resolved any time soon. 'The Australian dream is owning a home, and you want younger people to have a chance to do that, you want new Australians to have a chance to do that,' said Irvine. 'The only way we're going to address this is to fix supply. It's still the case that too much of the discourse on housing is on the demand side.' The lack of reformist housing policies – economists criticised both sides of politics for their competing election platforms – is fuelling an expectation that home prices will just keep rising, putting home ownership even further out of reach for younger generations. Many housing reform advocates gave up on expecting federal governments to help resolve the issue after Labor's ill-fated 2019 campaign to overhaul negative gearing and capital gains tax, both of which would have represented robust reforms. Advocates are now focusing their attention on rental rights, which are a state issue. The thinking is that improving tenancy rights may lower the value of rental properties, easing affordability at the expense of landlords. Those already on the property ladder don't want to get off it. Even the banks were surprised how many of those who scrambled to get a mortgage in recent years – and then faced a string of interest rate increases and sharp rise in living costs – kept up with repayments. 'The resilience of customers who have navigated significant cost-of-living challenges over the past few years is impressive,' Westpac chief executive Anthony Miller said on Monday, after delivering the bank's half-year results. Part of the reason people clung on to their mortgages so tightly is that there are no good alternatives, given the tight rental market. Mortgage arrears at the major banks have tended to plateau, or even drop, over the past six months, hovering well below pre-pandemic levels. The number of households requesting hardship packages from their lenders has generally been falling. For those able to hang on to their mortgages, relief is in sight. After the Reserve Bank reduced borrowing rates in February, a quarter-of-a-percentage point cut in the cash rate on 20 May is deemed a sure thing, and would lower the key rate to 3.85%, from 4.1%. From there, financial markets are pricing in a further three cuts to 3.1% by December. Experts are a little less bullish, with a general consensus that the cash rate will end 2025 at 3.35%. Either way, mortgage holders are set to receive substantial relief on their interest payments. The monthly repayment on a $500,000 loan at an interest rate of 6.01% is $3,225. Every cut of 0.25 percentage points lowers the interest bill by $76 a month. A further four rate cuts this year would deliver a $304 boost to monthly household budgets. While existing homeowners will be cheering falling rates, the picture is more complicated for those hoping to break into the property market, or upgrade towards a family home. Lower interest rates boosts borrowing capacity – meaning buyers can afford to pay more. But cheaper money will also lift prices and potentially widen the deposit gap, and worsen the affordability crisis. AMP chief economist Shane Oliver said he expected a rate cut on 20 May followed by another in August. He then expects a cut in November and then again early next year. Oliver said the combination of cheaper loans and Labor's election housing policy to help first home buyers buy with a smaller deposit would ultimately push property prices higher. 'Lower rates and 5% deposits may feel like a good thing, and if you get in early it will be, because they can borrow more and it will be easier to service your loan,' he said. 'For those who get in later (after prices have started climbing faster), it's not so good – and the ultimate winners are existing homeowners.' Louis Christopher, the founder of SQM Research, said rate cuts – if they happen – will have a progressively greater impact on house prices as the year passes. Still, with the election and April holidays out of the way, Christopher expects a busy winter of property auctions. 'We expect housing prices across the country to climb by 6-10% in 2025,' he said.

ANZ's H1 cash earnings largely flat, margins stay pressured
ANZ's H1 cash earnings largely flat, margins stay pressured

Business Times

time08-05-2025

  • Business
  • Business Times

ANZ's H1 cash earnings largely flat, margins stay pressured

AUSTRALIA'S ANZ Group reported largely flat first-half cash earnings on Thursday (May 8), as persistent competition in the home loan market and a rise in asset impairments offset lending growth. Intense competition to sell cheaper home loans to customers hurt by higher interest rates and living costs has been pressuring the bank's margin. In February, the Reserve Bank of Australia delivered its first interest rate cut since November 2020, and markets have priced in another quarter-point reduction later this month. 'While initial rate relief was welcomed by retail and commercial customers, we know many continue to face challenges,' said ANZ outgoing chief executive officer Shayne Elliott, who will hand over the reins to Nuno Matos next week. Its net interest margin, a key measure of profitability, was stable at 1.56 per cent compared with the same period last year, but narrowed two basis points from the April-to-September 2024 period. Gross impaired assets increased 48 per cent to A$2.5 billion in H1 – the highest since March 2021 – mainly driven by a rise in home loan restructuring. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up ANZ's Australian retail division logged home loan growth of 3 per cent, while core institutional lending was up 4 per cent. The country's fourth-largest bank said cash profit was A$3.57 billion (S$3 billion) for the six months ended Mar 31, compared with A$3.55 billion a year earlier and the Visible Alpha consensus estimate of A$3.54 billion. 'The future of global conditions is uncertain and there will continue to be periods of increased volatility,' Elliott said, adding that the bank's balance-sheet strength will allow it to navigate the uncertainty. The Melbourne-based lender declared an interim dividend of 83 Australian cents per share, in line with the year earlier. REUTERS

Shayne Elliott's legacy after ASX: ANZ scandals as new CEO Nuno Matos takes over
Shayne Elliott's legacy after ASX: ANZ scandals as new CEO Nuno Matos takes over

The Australian

time08-05-2025

  • Business
  • The Australian

Shayne Elliott's legacy after ASX: ANZ scandals as new CEO Nuno Matos takes over

ANZ chief executive Shayne Elliott delivers half year results in Melbourne on Thursday. Picture: Arsineh Houspian. Elliott has certainly left a cleaner bank and importantly a far less risky one that delivers fewer financial shocks, but Australia's perennial number four bank is still a long way from meeting its potential. Former HSBC top executive and Santander banker Nuno Matos takes charge on Monday. It's by no means a broken business, however, where Elliot has unfinished work getting ANZ into shape, Matos' mandate will be all about execution. When he took charge at the start of 2016, Elliott set himself four strategic priorities: creating a simpler bank; focusing ANZ on businesses where it can win; driving a cultural transformation; and building a digital platform to get the bank's aging technology in shape. Elliott, the former institutional banker, moved quickly on the first two. He sold 30 businesses, mostly across Asia, and exited ANZ's problematic wealth management operations. In doing so, he raised about $8bn for shareholders. This started the journey of ANZ becoming a transaction led bank in Asia, processing currency flows. Importantly, it ripped risk out of ANZ's accident-prone balance sheet. 'The one that I wouldn't give myself a perfect score on was the digitisation of the business. I think we've made progress. I think in hindsight, what I was a bit naive about was how hard that would be,' Elliott tells The Australian. ANZ is today a lower risk bank than the one Shayne Elliott inherited. Picture:Getty Images He is talking about the massive rebuild of ANZ's tech network, a project that has cost billions and was years late. Only now Elliott's ANZ-Plus project is being switched on with nearly a million retail banking customers and all their banking data gradually being moved onto the new cloud-based platform. So the benefits of having a lower cost to serve is yet to be seen. A digital platform for business customers has also being built and is also being rolled out. Elliott says 'life got in the way' for ANZ with events like the 2018 banking royal commission and Covid pandemic which each caused major distraction for the bank. 'I'm not making excuses, but I'm just saying if you'd asked me in 2016 where I would hope to be in 2025 we would have hoped to be further down that track. Some of it's environmental and some of it is just a lot harder than it looks'. Elliot was speaking as ANZ posted a March half cash profit of $3.57bn, flat on the same time last year. The result was struck on record revenue and boosted by the first-time contribution of regional lender Suncorp bank, acquired by Elliott for $4.9bn. Stripping that contribution out, the headline result would have gone slightly backwards. The bank is generating record revenue and credit losses remain grounded near historic lows despite the interest rates hitting a cyclical high. ANZ trading scandal There's no doubt Elliott's legacy has been tarnished by the past year, when a bond scandal in his Sydney dealing room has attracted the attention of regulators. Several traders have since been sacked for behaviour issues, while market regulator ASIC has an investigation underway into more serious allegations of pricing manipulation in Australian government bond issues. ANZ has investigated the claims forensically and is expected to defend its position. However, it is waiting until ASIC finalises its investigation, expected next month. The bank regulator APRA has now told ANZ to set aside $1bn in additional capital for now due to concerns about persistent risk governance and culture. This is more than any other bank, and would be funds otherwise that could be converted into loans. A separate review into culture has made, and chairman Paul O'Sullivan has taken charge of non-financial risk. Incoming ANZ CEO Nuno Matos (right) with chairman Paul O'Sullivan. Picture: Aaron Francis Elliot says where ANZ has turned financial risk management into a strength, moving from a position of having the highest provisions and volatile credit exposures to the lowest there is work on non-financial risks. 'I'm also confident in the team's ability to get on top of that (non-financial risk) pretty quickly,' he says. ANZ v Westpac, CBA In many ways, the lack of acute regulatory shocks over the past decade has worked against ANZ. Both Commonwealth Bank and Westpac were shaken to the core by their respective hits from financial crimes regulator Austrac and forced to get their cultural houses in order. Then National Australia Bank went through the fire when its top management and board was singled out for criticism coming out of the Hayne financial commission. By comparison, ANZ sailed through, allowing a degree of complacency to set in around non-financial risks. ANZ's federated structure of managing risk at a business level rather than a group-wide level, may have served it through targeted issues like anti-money laundering and the banking royal commission, but it still allowed cracks for non-financial risks and poor behaviour. ANZ is now reverting to a group-wide risk management, allowing it to join the dots. The 61-year-old Elliott acknowledges he could have moved faster in some areas, this echoes the reflections both public and private company leaders have often told him. 'When people look back they never say, 'In hindsight, I was far too bold, and I was too fast'. They always say, 'I should have gone faster, and I should have had more courage' And I would say the same thing'. johnstone@ Read related topics: Anz Bank

Why this long-serving bank boss can sleep better at night
Why this long-serving bank boss can sleep better at night

Sydney Morning Herald

time08-05-2025

  • Business
  • Sydney Morning Herald

Why this long-serving bank boss can sleep better at night

Outgoing ANZ Bank boss Shayne Elliott says moves during his tenure to sell dozens of businesses and slash the number of major corporate clients on the bank's books will set it up for a more volatile world and the next inevitable financial crisis. Elliott, who will be replaced by Nuno Matos next week, delivered his last result as chief executive on Thursday, as the bank posted flat half-year profits of $3.6 billion. After more than nine years leading ANZ, Elliott cited a phrase often used in the industry – that in banking, it's better to be 'boring' – especially when the world is heading into a more disruptive era of rising geopolitical tensions and the unwinding of globalisation. As CEO, Elliott made major shifts at ANZ including selling about 30 non-core businesses and scaling back ANZ's presence in Asia; shrinking the number of big business clients on its books; and buying Suncorp's retail bank for $4.9 billion. The Melbourne-based bank has also been slapped with a $1 billion capital charge over governance failings in its markets division, and critics say its digital transformation has been underwhelming. Elliott, the longest-serving current big four bank boss, argued changes under his tenure had made ANZ a less risky and simpler bank, and it was much more picky about its biggest clients than when he joined as the head of ANZ's institutional bank in 2009. He said at that time, the 10 biggest clients of the bank were 'vibrant and exciting', but higher-risk and 'not a world for banks'. Loading 'I think banks are much better to be boring,' he said. 'I'd be very happy to say we're boring and safe in terms of our customer selection, and I sleep better at night because of that, and I know our shareholders do.' During Elliott's time as CEO, banks have also faced major changes from events including the COVID-19 crisis and what Elliott called the industry's 'crisis around culture' – the 2018 royal commission into banking misconduct.

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