Shayne Elliot, ANZ CEO opening remarks:
Thank you for the opportunity to appear before you.
Joining me today are Kevin Corbally, our Chief Risk Officer, and Evelyn Halls, our Customer Fairness Advisor.
Kevin has appeared before this Committee before.
Evelyn joined ANZ last year from AFCA, where she was Lead Ombudsman – Banking and Finance.
Her role is to help us improve the fairness of our products and services.
With me, Evelyn and Kevin are both well placed to answer your questions about our customers and how we’re trying to help them.
Last week, the Reserve Bank kept the cash rate steady at 4.10%.
However, we have seen a sustained increase in the rate since its historical low of 10 basis points.
This has focused much attention on how our customers are faring.
It is something that I, and my team, are watching closely.
Our latest figures were published in May and these showed that, while some customers are struggling, most are managing their way through the current financial pressures.
For example, only 6 of every 1,000 dollars in our Australian home loans portfolio was overdue by more than 90 days.
This is better than before the pandemic.
There are, perhaps, at least three factors to consider in asking why we’re seeing this level of resilience in our customers.
First, the nation is fortunate that households have entered this period of rate increases with the benefit of a strong labour market.
This has meant higher real incomes at the start of this interest rate cycle.
Good incomes mean that people can better absorb increased expenses, even if they don’t remove the pain altogether.
Second, households have, in general, been saving at a record level over much of the past three years.
Part of this was the pandemic but our deposit levels have continued to grow through last year and remain extremely healthy.
This has given households a buffer to fall back on as costs have increased.
Third, credit standards are higher than those leading into prior times of stress.
We have improved prudential regulation following the global financial crisis, robust responsible lending obligations to follow, and more sophisticated processes and data.
This means that fewer people are getting into trouble.
These observations about resilience so far are, however, in the aggregate.
Underneath the figures are Australians who are concerned about their household budgets.
Indeed, we have recently observed a modest increase in customers reaching out to us for help.
What was reinforced to us during the pandemic is that, in challenging times we must, and can, be there for our customers.
ANZ has a Customer Connect team to support customers, including by proactively reaching out to those who may be experiencing difficulties.
For those customers who we can help, we have measures such as partial payments and interest only terms.
We will continue to watch how our customers are going and support them when we can.
Beyond our customers, we are seeing the impacts of monetary policy in the general economy with a slight moderation in the most recent inflation figure.
GDP growth remains subdued, with our economists forecasting only 1% growth in 2023, rising slightly to 1.3% in 2024.
In particular, the weakness in per capita GDP means that the economy may feel more challenging than the headline numbers suggest.
Unemployment is expected to rise to 4.2% this year and 5% next year, and we are conscious that this will be difficult for many Australians.
Consumer spending is also weaker in all major categories compared to 2022, despite inflation and population growth over the year.
House prices are, however, seeing an upturn due to strong population growth, a reduction in household size and low levels of supply, with listings at their lowest since 2010.
Aside from macroeconomic matters, a key policy issue relevant to banking is the regulatory framework supporting the efficiency and safety of Australian payments.
A stable and trusted payments system is vital to the health and performance of the economy.
ANZ plays a significant role in the movement of money into, out of, and around, Australia.
Each year, we secure and facilitate the movement of $164 trillion, with payments made to and received from 149 countries in support of 8 million customers.
Making this happen around the clock requires constant work and investment.
We are continually innovating to provide new technology and deal with issues in payments like the insidious impact of scams on our customers.
We welcome the recent release by the Government of its roadmap on payments and the strong, collaborative focus on scams by the Assistant Treasurer.
The payments roadmap sets out a prudent path to modernising the sector through the gradual phasing out of cheques, greater use of the New Payments Platform and ensuring that we have a regulatory framework that provides safety and access.
We look forward to working with the Government on its agenda.
Evelyn, Kevin and I now look forward to your questions.