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ANZ to push into home loans, APRA be damned; What does it mean? Just more advertising? Breach the APRA limit of specufestors?
Topic Started: 12 Oct 2015, 07:27 AM (1,676 Views)
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Could they go subprime? Or is this just a puff piece?

http://www.afr.com/business/banking-and-finance/anz-plans-homeloan-homecoming-20151011-gk66ol

ANZ's new chief Shayne Elliott plans a home lending push

Oct 12 2015, by Jonathan Shapiro James Eyers

ANZ Banking Group will seek to grow by selling more home loans in Australia after years of touting its growth opportunities in Asia, with incoming chief executive Shayne Elliott flagging a more aggressive push into mortgages in NSW and a period of consolidation in Asia in an effort to lift shareholder returns.

Despite the Australian Prudential Regulation Authority capping lending growth to property investors at 10 per cent, Mr Elliott said ANZ would continue with its quest to boost market share in NSW, observing that Commonwealth Bank, National Australia Bank, Westpac and its subsidiary St George had been outperforming ANZ across the state.

"We used to joke we were the No. 5 bank of four in NSW, which is true, and it's not just Sydney, it's right across the state. NSW is one of our priorities," he said.

"We have the most diverse book of all the four banks and have the least weighting towards mortgages and we can afford to grow it. And we want to grow it, because it's an attractive business, and a great business for customers, an anchor relationship.

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"We are not a hedge fund and we are not here to make bets on asset classes and geographies. What we are here to do is build a business that survives, grows and generates a decent return irrespective of the cycle."

Disruption and culture key challenges

In an interview at ANZ's Melbourne headquarters on Friday, Mr Elliott was asked to name the two biggest challenges facing the big Australian banks in the medium term.

He cited responding to digital disruption, and improving culture and ethics in the wake of recent scandals. These include the alleged manipulation of benchmark interest rates that has led to seven ANZ traders staff stood down pending a regulatory investigation.

Because BBSW was a traded market (unlike the Libor benchmark in Britain) a false sense of comfort had been created in Australia, he said. "We all thought [BBSW] was different, and quite rightly [ASIC] and others are wondering if there's a better way to do."

More broadly, Mr Elliott said social expectations of bank operations had changed. "Largely due to the GFC, rethinking how we operate and interact with our customers is going to be significant. It's about restoring the industry's reputation because we are a trust-based business."

The new ANZ boss, who will take over from incumbent Mike Smith on January 1, also pointed to rapid advancement in technology and suggested banks are in only the early stages of formulating their competitive responses.

Technology is massive transformation

Pointing to the proliferation of banking through mobile phones, he said this would allow ANZ to open "a whole new relationship with our customers" and said "that's where the new investments in relationships will come".

"The challenge for the industry is this massive transformation around digital, and I think we are only at the beginning stages of that where banks are playing around with a few apps. It's going to fundamentally change the ways banks operate and our business models. That's massive opportunity."

On Asia, ANZ chairman David Gonski said Mr Elliott had been appointed by the board with a mandate to examine the bank's "super-regional" strategy and adapt it to the current environment.

"The board definitely felt we wanted to evolve our [Asia] policy," Mr Gonski said in an interview on Friday.

"There was no need for the policy to be completely changed but we wanted to find a person who could, to use a banking analogy, stress test what we are doing all the time. Evolution doesn't mean leaving something exactly as it is, it means it moves so it is best for all parties as it goes along. We think this man will look at things and test them in his mind."

Read more: http://www.afr.com/business/banking-and-finance/anz-plans-homeloan-homecoming-20151011-gk66ol
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peter fraser
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createdby
12 Oct 2015, 07:27 AM
Could they go subprime? Or is this just a puff piece?

The previous CEO Mike Smith was a bit of a disaster for the ANZ. He was petrified of a housing collapse in Australia but he was very experienced in Asia, so he scaled back lending to housing in Australia and took them into Asia. As it turned out lending for housing in Oz was safe but the Asian market was risky. I suspect we will soon hear of write downs in their Asian operations as the new CEO takes the reins. Smith missed out on easy profits in Australia and possibly made losses in Asia.

Under Smith the ANZ became a market follower with ho hum interest rates and bland lending policies. I think that you will see the bank move closer to the cutting edge, but not into a high risk zone as they become a little less vanilla.
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Ex BP Golly
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Maybe they see the end is nigh, and If you are too big to fail, you should dig a deeper hole.

May as well maximise the returns on your government bail out right?

Go hard ANZ.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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peter fraser
12 Oct 2015, 07:49 AM
The previous CEO Mike Smith was a bit of a disaster for the ANZ. He was petrified of a housing collapse in Australia but he was very experienced in Asia, so he scaled back lending to housing in Australia and took them into Asia. As it turned out lending for housing in Oz was safe but the Asian market was risky. I suspect we will soon hear of write downs in their Asian operations as the new CEO takes the reins. Smith missed out on easy profits in Australia and possibly made losses in Asia.

Under Smith the ANZ became a market follower with ho hum interest rates and bland lending policies. I think that you will see the bank move closer to the cutting edge, but not into a high risk zone as they become a little less vanilla.
They raised 3 billion in shareholder capital and sold Esanda for 8 billion. Wonder if they'll make a bit on their Asian portfolio or really write it down?

If they can make money on selling Asian portfolio, that's a bit of powder in the keg to add with the recent capital raising. But there won't be anything else to grow the loan book.

I smell subprime.
Edited by createdby, 12 Oct 2015, 08:09 AM.
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peter fraser
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createdby
12 Oct 2015, 07:59 AM
They raised 3 billion in shareholder capital and sold Esanda for 8 billion. Wonder if they'll make a bit on their Asian portfolio or really write it down?

If they can make money on selling Asian portfolio, that's a bit of powder in the keg to add with the recent capital raising. But there won't be anything else to grow the loan book.

I smell subprime.
All major banks have to raise capital to meet the new APRA requirements. Maybe their Asian operations are profitable, I don't have that information, but it has been a shaky area recently so I am sceptical.

As a lender the ANZ have been ultra conservative since about 2009.

Exactly what do you think subprime is?
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Sydneyite
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peter fraser
12 Oct 2015, 08:31 AM
All major banks have to raise capital to meet the new APRA requirements. Maybe their Asian operations are profitable, I don't have that information, but it has been a shaky area recently so I am sceptical.

As a lender the ANZ have been ultra conservative since about 2009.

Exactly what do you think subprime is?
I haven't researched this deeply, however I recall reading stuff suggesting ANZs Asian expansion has done well? Something like 25% of their revenues and profit being generated offshore now? When traveling in Asia (eg, Singapore, HK), ANZ are the only "Aussie" bank branded ATMs I have ever seen? And they are quite numerous.
Edited by Sydneyite, 12 Oct 2015, 10:27 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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peter fraser
12 Oct 2015, 08:31 AM
Exactly what do you think subprime is?
When you run out of greater fools because assets are too expensive and income are low to service said assets, just sign up anybody for a loan.
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peter fraser
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createdby
12 Oct 2015, 09:46 AM
When you run out of greater fools because assets are too expensive and income are low to service said assets, just sign up anybody for a loan.
Oh - well that's not happening. Not even the non-conforming lenders are doing that.
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peter fraser
12 Oct 2015, 09:57 AM
Oh - well that's not happening. Not even the non-conforming lenders are doing that.
We'll see. But there's no other way to expand the banks loan books other than going subprime. Maybe using super as deposits to buy houses might delay the Minsky moment. But I don't see any other driver for income growth.
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ThePauk
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I GFC2, ANZ will be the first to fail.
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