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ANZ loan approval times ‘back in line with peers’

ANZ’s “strong” financial year 2022 results have highlighted “restored momentum” in its Australian home loans.

Touted as a “strong financial result” with all divisions “making a material contribution”, Australia and New Zealand Banking Group (ANZ) released its 2022 Full Year Result & Proposed Final Dividend statement on Thursday (27 October).

The big four bank announced an audited statutory profit after tax for the full year ended 30 September 2022 of $7.1 billion up 16 per cent on the previous year.

Its cash profit from continuing operations was $6.5million, up 5 per cent when compared with the prior year, it confirmed, while its common equity Tier 1 ratio was “strong” at 12.3 per cent and cash return on equity was 10.4 per cent, it added.

ANZ’s proposed final dividend is 74¢ per share, fully franked, it explained.

Notable attribution for the positive results was its improved home loan portfolio, with ANZ stating it had, “restored momentum in Australian home loans with application approval times back in line with peers.”

Its loan book rose to $283.1 billion as at September 2022, up 7 per cent on an annualised basis.

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Brokers originated 58 per cent of its flow.

It also confirmed ANZ Plus is in market with “deposits growing at a faster rate than any other new digital bank in Australia” and that its “fully digital home loan product [is] expected to pilot next month”.

Continued derisking of the group with the sale of its margin lending business, formal separation of wealth business and exiting of financial planning and advice were listed as key factors in the current results.

Asked at the results’ media briefing if the current rising rate environment was driving ANZ’s material mortgage growth recently (and if it was returning back into the market aggressively on price), ANZ chief executive Shayne Elliott replied: “I’ve been doing these for a long time. I can’t remember ever sitting here and saying the home loan market is not competitive at the moment.

“The home loan market is always competitive... and the nature of the competition shifts and who’s leading the competition changes [and that] is the nature.

“At the moment the fashion, if you will, is for cashback — [it] seems to be the flavour of the day and what’s leading.

“You have to be in the game on price, but we know, and you know, that actually while price of course is important, [it] has to be competitive, one of the big drivers is the confidence in getting a [loan] ‘yes’ and getting a ‘yes’ quickly. And that’s why building the capacity has been so important.

“The other thing I would say is that, at ANZ, a little over half of our flow has traditionally been broker driven, and price is important there, but actually the sort of service proposition is really important.

“What that means is that brokers need to know, again… confidence — ‘that if I submit this application, I’m going to get a yes and I’m going to get it within a certain timeframe’ — and so that’s why we have invested so heavily, and we talked about on the slide, ‘building capacity’.

“So yes, we are in the mix on price, [but] we’re are absolutely not the price leader, either at headline levels, or with discounts and cashbacks, [we are] absolutely not, but we are in the mix on price and we are in the mix on capacity.

“And importantly just to add to that, we put in here, in the slides, a lot of focus in the risk-adjusted margins, and risk-adjusted NIM for a reason.

“It’s actually what we focus on pretty heavily in making decisions around growth and appropriate investment.”

Progress made in strengthening the core business

In terms of ANZ’s restored momentum in Australian home loans and flagging its fully digital home loan product pilot next month, Mr Elliott explained other key aspects of the group overall.

“This was a strong financial result with all divisions making a material contribution and demonstrating the benefits of a diversified portfolio,” Mr Elliott said.

“We restored momentum in Australian home loans with application approval times back in line with industry peers.

“We continued the re-platforming of Australia Retail onto ANZ Plus, which is our new digital bank, with deposits already exceeding $1.2 billion and growing at a rate faster than any new digital bank in Australia."

The CEO outlined that the bank would begin piloting its digital home loan with staff in the coming weeks.

"This will see the introduction of a fully automated digital home loan, initially focused on the re-finance market, later in 2023," he said.

 The impending ‘probable’ absorption of Suncorp

Mr Elliott highlighted that the bank had been continuing its "systematic de-risking of the bank" - which has recently included the sale of its margin lending business to Bendigo & Adelaide bank and its exit from financial planning and advice. 

He said: “Given the progress we have made in strengthening our core business, we were able to agree [to] the acquisition of Suncorp Bank, which will provide an important platform for growth, particularly in the fast-growing and rapidly diversifying Queensland economy.

“Suncorp Bank is a well-run business that will see more than 1 million new retail customers join ANZ, sharing in the benefits of a wider range of products and services. It also means the Suncorp Group is able to focus on its core mission of being the best insurance company in Australia and New Zealand," he said.

“The acquisition, which is subject to government and regulatory approvals, will be partially funded by the successful $3.5 billion equity capital raising.

“This was the world’s largest equity raise this calendar year for an M&A transaction and was structured in a way to ensure all shareholders were treated equally.”

Just how fast is fast these days, anyway?

The latest monthly Broker Pulse survey data from Momentum Intelligence (October) provided some interesting insights in to loan times and industry standards ‘of peers’.

The proportion of brokers choosing both non-banks and major banks for their turnaround times rose last month.

Almost 40 per cent of broker respondents said the number of business days taken to reach an initial credit decision was the primary reason they used a non-bank in September (up from 27 per cent in August), while 35 per cent said they used a major bank (up from 29 per cent) due to this.

But it was the non-major banks that stood out when it came to turnarounds, attracting the highest proportion of brokers out of the lender segments (50 per cent) last month.

The findings come despite a small increase in turnaround times across the non-bank segment and small authorised deposit-taking institutions (ADI).

Non-bank turnarounds reportedly rose two days month-on-month (to seven days), while small ADIs were up two days (to eight days) in September.

Brokers reported that turnaround times increased across seven out of nine non-banks and five out of 11 small ADIs.

Overall, turnaround times grew across all lenders from five days in August to six days in September, the Broker Pulse data showed.

Specifically, turnaround times held at five days at the most commonly used ADIs (those used by more than 20 per cent of broker respondents) for the third consecutive month, with brokers reporting that they rose across only four out of 12 lenders in this segment.

[Related: ANZ to pay $25m for ‘misleading customers’ over 20 years]

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