ANZ's CEO plans home lending push
ANZ's CEO, Shayne Elliott, says the bank plans to grow by selling more home loans in Australia, following years of raising growth opportunities in Asia, after finding itself left behind by its rivals.  New South Wales will be particularly on its radar, despite the Australian Prudential Regulation Authority (APRA) restrictions on lending to property investors.  Mr Elliott says, "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". At the same time, ANZ's head of banking operations, Mark Whelan, says the bank is concerned about the supply-demand balance in property markets,﻿ and has thereby reduced lending to developers, so as to avoid losses that could occur when the market slows down. ﻿﻿

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." A professional attitude, no matter what you do... is what elevates one from a machine," Mr Gonski said. Credit: Michel O'Sullivan 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." We used to joke we were the No. 5 number five bank of four in NSW, which is true, and it's not just Sydney, it's right across the state. Shayne Elliott 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." While Mr Elliott is not expected to make large changes to the strategy, he may revise targets for Asia earnings at the full-year results on October 29, and suggested ANZ will continue to seek to sell various equity stakes in Asian banks. ANZ owns a 39 per cent stake in Panin Bank in Indonesia, 24 per cent of AmBank Group in Malaysia, 14 per cent of China's Bank of Tianjin, and a 20 per cent holding in the Shanghai Rural and Commercial Bank. These stakes tie up about $5.3 billion of capital, draining returns at a time when banks are being forced to deploy capital more efficiently in response to regulators pressuring returns by forcing leverage to be reduced. "It's just they aren't on strategy and we have better uses for our capital," Mr Elliott said. "We don't see ourselves as being a monoline, with one product. We are just going through a phase where we are more likely to dispose of things than acquire."

Mr Elliott downplayed suggestions that ANZ's $8.2 billion sale last week to Macquarie Group of its Esanda dealer finance business was motivated by a desire to boost capital levels, indicating that the business was sold because it was off strategy, given it did not involve fostering customer relationships. "We didn't sell Esanda for capital, capital was an ancillary benefit," he said. "History says that really great companies that survive for long periods of time actively manage their portfolio of businesses. They buy and sell and shift resources around. So assuming that thing you have should be kept forever has not been a strategy that works." With Mr Elliott telling the AFR Weekend that "there is going to be a shift in driving returns", Mr Gonski said as CFO since 2012, Mr Elliott was acutely aware the pressures on capital use and return on capital. "I have absolutely no doubt that over his time as CEO, he will be acutely aware of capital [issues]," Mr Gonski said. "What that means, of course, is for him to put things to the board, for the board to make decisions and for the future to tell." After visiting ANZ branches and offices last week in regional Victoria, Melbourne and then Hong Kong, Singapore and New Zealand, Mr Elliott admitted adjusting to a more public role will take some time, but suggested he may adopt a more measured approach than Mr Smith, who will be remembered for his frank engagement on a range of public policy issues.