ANZ Bank(ANZGY) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Statutory profit increased by 72% with earnings per share up by 65% and return on equity just shy of 10% despite elevated capital levels [12][44] - Net tangible assets increased by 5% per share, and the Board declared a final dividend of $0.72 per share, totaling $0.142 for the year [12][44] Business Line Data and Key Metrics Changes - In Australia, Retail & Commercial delivered good margin performance with home loan revenue growing over 10%, although the total home loan book fell slightly in the second half [13][55] - New Zealand reported strong performance with revenue up 8% and cash profit up 41%, while total funds under management grew by 11% [18][61] - Institutional business showed strong performance with revenue excluding markets up 2% in the second half, and markets revenue at $1.94 billion [58][59] Market Data and Key Metrics Changes - The Australian home loan book grew by $3 billion for the year, but experienced a decline of $3 billion in the second half due to processing capacity issues [56][57] - Average customer deposits increased by $17 billion in the half, outpacing growth in customer lending [52] Company Strategy and Development Direction - The company is focused on building a more agile and open business centered around financial wellbeing, with significant investments in technology and simplification initiatives [25][27] - ANZ is positioning itself for long-term growth through strategic partnerships and investments in fintech and sustainable finance [30][31][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic rebound post-COVID, but acknowledged ongoing uncertainties including inflation and supply chain issues [5][9] - The company is well-capitalized and prepared to take advantage of opportunities, with a focus on restoring momentum in Australian home loans and launching ANZ Plus [70][71] Other Important Information - The company has made significant progress in reducing operational costs, achieving a 3% reduction in run-the-bank costs on a constant currency basis [34][64] - Investment spend increased by 23% to $1.8 billion, with a focus on growth and simplification initiatives [66] Q&A Session Summary Question: Clarification on cost targets and restructuring costs - Management clarified that the $8 billion cost aspiration includes normal restructuring costs, and some current restructuring is higher due to productivity outcomes [77][81] Question: Expense targets and market income pressures - Management acknowledged that while costs are expected to grow incrementally in FY2022, they aim to achieve an exit rate of $8 billion by FY2023, with confidence in BAU expenses [92][96] Question: Divergence in market income performance compared to peers - Management attributed better performance in market income to geographic and customer diversification, with a strong multinational segment [94][95]