ANZ prioritises home loans, flags digital product

ANZ posted its results for the year to 30 September on Thursday (28 October), revealing its group cash profit had surged by 65 per cent year-on-year to $6.1 billion.

Net loans and advances under the Australian retail and commercial division had slightly inclined by 1 per cent year-on-year, up to $341.2 billion – however it was down from the first half of the year, slipping by 1 per cent from $344 billion at March.

Similarly, home loans dipped from the first half of the year, copping a $3 billion fall to a total of $278 billion at the end of September, but the total was up by 1 per cent from the year before.  

Home loans growth at the bank has been below system since June, with the first half of the year recording more new loans (92,000 compared to the second half’s 87,000).

ANZ chief executive Shayne Elliott explained the Australian property market had exceeded the bank’s expectations and overwhelmed its systems, as it was hit by “elevated” levels of new loans and refinancing.

Moving forward, freshly appointed group chief financial officer Farhan Faruqui called improving the performance of the bank’s Australian home loan portfolio in a sustainable manner its “highest priority”.

“Our efforts have been focused on creating additional sustainable processing capacity and improving assessment turnaround times,” Mr Faruqui said.

“While there has been a circa 40 per cent improvement in processing times across the entire portfolio in the last six months. We are clearly not back to where we want to be.”

Mr Elliott echoed his colleague, stating: “I’m very clear on what’s important at a group level, first restoring momentum in Australian home loans.”

Speaking to Mortgage Business, Mr Elliott stated the bank’s manual processes for assessing loans via the broker channel had been strained as application volumes jumped.

Around half of the $68 billion worth in new loans (56 per cent) during the year had been originated by brokers, slightly less than the 2020 financial year’s proportion of 57 per cent.

Of the total book, 53 per cent was broker originated, versus 47 per cent via the direct channel – the same split as FY20.

The bank has responded by investing in automation and in increasing staff dedicated to manual assessments, which Mr Elliott reported has already produced results and is expected to generate growth in the first half of FY22.

Fixing what ANZ already has available in the market is the bank’s medium-term approach to its home loans business, the CEO told Mortgage Business, but it is also working on a longer-term strategy to set it up for the future.

The group’s second priority, as listed by Mr Elliott, is the roll-out of its digital savings and deposit product, ANZ Plus, early next year.

ANZ will market the offering as centred around financial wellbeing, saying it is designed to help customers manage their spending, with financial coaching.

The bank expects to later expand the offering with the launch of a linked digital home loan product.

Mr Elliott told Mortgage Business ANZ is in the process of building the home loan offering, before it enters the pilot phase during 2022.

“It’s not something you can turn on a dime. It’s quite complicated to do,” he said.

“And as we’ve seen, even with startups and fintechs starting with no legacy, it’ll take a little bit of time to get there.”

[Related: CBA provides ‘Australia’s first’ build-to-rent commercial green loan]