Next year could turn out to be tougher for the economy as interest rates and inflation will likely remain high, ANZ boss Shayne Elliott warned at the bank’s annual general meeting (AGM).
Elliott said on Thursday that more of the bank’s customers will likely fall into financial difficulty as he expects the economic growth of Australia and New Zealand to be slow in 2024 despite describing the economies of the two countries as having remained “remarkably robust”.
“The outlook is certainly more challenging, with interest rates and inflation expected to remain high, geopolitical risks rising and capital flows changing faster than we have seen in some time,” said Elliott.
ANZ chairman Paul O’Sullivan seemingly echoed Elliott’s views saying financial hardship could increase in the year ahead as the central banks continue to keep an eye on high inflation and many customers feel cost-of-living pressures.
“We know many of our customers are feeling the financial pressure, and indeed some may find themselves in financial difficulty over the coming year,” said O’Sullivan.
Elliott said the bank, with regards to mortgages, would remain “competitive but not market leading” in its mortgage pricing as it looks to increase home loans.
“Lending growth remains strong across our Australia retail and commercial franchises in particular,” said Elliott. “We want to grow our Australian home loan book profitably by continuing to offer reliable turnaround times, and in line with that we are competitive but not market-leading on pricing.”
A Brisbane Times report said the past two years saw intense mortgage pricing competition eroding banks’ net interest margins, and yet ANZ was able to grow its home loans above industry levels. The group revenue towards the end of the first quarter, as Elliott said, was tracking broadly in line with its performance in the second half of the 2023 financial year.
Elliott also shared that ANZ is moving towards a digital-first strategy, with the bank launching digital home loans as part of its ANZ Plus offering.
“In only 18 months since launching, ANZ Plus has attracted almost $11 billion in deposits and around 550,000 customers, with more than 40% new to ANZ,” said Elliott. He said the group’s revenue was increasingly being driven by its payments and currency processing businesses. The group processes about 60% of all money flowing into Australia and New Zealand, the report said.
“We facilitate an incredible $164 trillion in payments in, out, and around the markets in which we operate every year,” said Elliott. “Most of that is cross-border payments, leveraging the strength of our international network.”
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