Before we begin, I would like to acknowledge that I am connecting from the lands of the Wurundjeri Peoples of the Kulin Nation. I also acknowledge the Traditional Owners of the various lands on which our attendees are joining from.
Today I’m joined by Maile Carnegie, our Group Executive Australia Retail, and Mark Whelan, our Group Executive Institutional.
In this session, I’ll cover:
- Our integrated approach to purpose, strategy and ESG, and how it ensures we are driving value for the bank.
- An update on the ‘Bank we’re Building’ strategy and how we’re setting ourselves up for future growth, including through some structural changes.
- And then lastly, what we’re seeing with the uncertain macro-economic environment, with interest rate rises and cost-of-living pressures.
- Here, I’ll mainly talk to the situation with an ‘Australian lens’, given most of our customers are here and it’s where we’re likely to see potential issues arising. But I do want to acknowledge from the outset, that the Australian market isn’t alone with what it’s experiencing, and the same stresses are also being felt in New Zealand and across the Pacific.
- I’ll then pass to Maile to talk specifically about how our customers are managing, and what we’re doing in preparation to assist those who may need help.
- Mark will then cover our Environmental Sustainability strategy, and how we are supporting customers successfully manage their transition.
So firstly, to our approach. At ANZ, we have a clear sense of purpose. To shape a world where people and communities thrive.
That purpose guides our decisions about ‘who we bank’, ‘how we behave’ and ‘what we care about most’.
We’ve worked hard over the last five years to ensure we have a strong culture, an embedded purpose, and that ethics and values are integrated into our decision-making.
Our strategy is also clear. We want to improve the financial wellbeing and sustainability of our customers.
We have three priorities we’re focused on. They are:
- Helping people save for, buy and own a sustainable, liveable and affordable home.
- Helping people to start or buy and sustainably grow their business.
- And helping companies move goods and capital around the region.
Aligned with these are the areas we care about most. Or our ESG priority areas. And they are:
- Improving the financial wellbeing of our people, customers and communities by helping them make the most of their money.
- Improving the availability of suitable and affordable housing options for all Australians and New Zealanders.
- And supporting household business and financial practices that improve environmental sustainability.
These are underpinned by our commitment to fair and responsible banking, as well as issues identified through our annual materiality assessment, namely:
- Investing in new technology and tools to protect our customers from scammers looking to steal their data and money
- Ensuring we have the most empathetic and helpful customer experience processes for when things go wrong, including managing complaints and customers in financial difficulty
- Investing in technology and partnerships that help customers improve their financial wellbeing and create value
- Finally, looking out for our people – physically and mentally so they can bring their best selves to assist customers.
So, our purpose, strategy, and ESG priority areas are aligned, as well as integrated with our material issues. And together, they work to support our overall ambition to create value for our customers, community, and shareholders.
Now what’s also unique about ANZ, is how our approach to ESG considers our extensive international footprint.
We operate in more than 30 markets, and therefore manage a broad range of ESG issues across our global business and operations. This means we need to be aware of challenges across our entire network, and regularly assess and identify numerous ESG risks and opportunities.
This ESG approach is critical to creating value and delivering long-term success.
Now, how we hold ourselves to account and govern our approach is also critical. And we have two ESG committees dedicated to this:
Our Board Ethics and Environmental, Social and Governance (EESG) Committee is responsible for setting the policies and principles for our approach.
It is focused on overseeing our response to risks and opportunities, as well as identifying and understanding our most material ESG issues – which informs our approach, and guides our targets, external reporting and disclosures.
Over the last 12 months this Board Committee has spent the bulk of its time on ‘governance’ issues, such as making sure our policies – like those which govern our lending to sensitive sectors – are up to date.
It’s also spent a lot of time overseeing our climate change commitment, including setting our portfolio emissions pathways – like in commercial properties and power generation.
Then, we have our management Ethics and Responsible Business Committee, which I chair, and is a leadership and decision-making body.
It operationalises our ESG work; considering the social and environmental impacts of the industries we finance – so the “who we bank” side of things; as well as our treatment of customers and the communities we serve – so “how we bank”.
This year the Executive Committee spent its time discussing topics such as scams and cyber-crime, and customers in difficulty or in need of additional support.
This includes initiatives such as the additional training we provided to four and a half thousand staff to help them identify and offer special support to customers facing financial difficulty.
Now I just want to talk briefly about the ‘Bank we’re Building’, which sets out our ambition to shape a better ANZ – one that is more focused and connected. And, one built on contemporary platforms, to help grow our market share sustainably and drive better lifetime customer value.
The last few years we’ve rightly focused on our operations, on remediation, costs and simplifying our business to provide returns for shareholders. And now we’re concentrating on growth and investment.
External forces are going to challenge how we execute this strategy – we’ve got to hold more capital, competition is increasing, and margins are reducing over the long-term.
It no longer makes sense to keep doing what we’ve been doing. So, we need to get a few things right. We must:
- Build an innovative, compelling and data driven customer proposition. This means having competitive, fast, reliable, and simple products and services that meet our customers’ needs.
- Establish partnerships that unlock value for us and our customers
- Have automated business services that are supported by cloud-based technology that is open, contemporary, resilient and compliant.
- And we need to ensure we have a more adaptive and agile organisation that encourages innovation.
Our people are also critical to the delivery of this strategy.
We want purpose-led people who drive value by caring about our customers and the outcomes we create.
The last couple of years of the pandemic really showed us what our people are capable of – supporting our customers during extreme times of stress.
We’re proud of them and their work, and our recent employee engagement results are testament to this, with overall engagement at 84 per cent.
Additionally, 89 per cent of our staff have reported a feeling of ‘belonging’ which is above the global best in class benchmark.
Now, to measure our success with the ‘Bank we’re Building’, we continue to build out clear metrics with internal and external targets.
These include having customers who are more loyal and engaged; and have greater financial wellbeing over their lifetime. It’s also ensuring our financial results are stronger and more sustainable over the long-term.
So, we’re building an ANZ that improves the financial wellbeing and sustainability of our customers. And one that delivers consistently strong shareholder returns.
We’ve got some work to do, but we’re excited and driven to make this succeed.
In addition to the strategic changes, another part of how we’re managing the future of ANZ is with some structural change.
You would have recently seen our announcement about acquiring Suncorp.
A key benefit of this acquisition is the strategic alignment of bringing the two organisations together. We both have strong corporate cultures, engaged workforces, and shared values and purposes. And we’re excited about what the future holds for us.
We also recently proposed the establishment of a Non-Operating Holding Company for the Group, which will give us strategic flexibility to partner with, or acquire non-banking businesses, as we prepare our core business for a digitally enabled future.
The proposal is subject to numerous approvals and we’re working through that process currently. We expect to send shareholders a memorandum in early November 2022.
Lastly, before I hand to Maile, I want to discuss the external environment and some of the economic challenges we are seeing.
Globally, there are geopolitical tensions with Ukraine and Russia, and North Asia and the Pacific. Trade tensions with US and China continue.
There are also very significant energy security issues in the European Union, which is having a knock-on effect around the globe.
Closer to home – in our key retail markets of Australia, New Zealand and the Pacific – many of our customers are dealing with real cost-of-living pressures.
Rising inflation and higher food and fuel prices across the Pacific are starting to have real impact on people’s standard of living.
In New Zealand, inflation is at its highest since 1990. And in Australia, inflation is also at its highest in more than 30 years and is outpacing wage growth.
And, interest rates are rising, with the RBA undertaking a substantial rate tightening cycle.
Because of this, we’re asking ourselves what it means for the financial resilience of our customers and what can we do to support them if they’re feeling challenged.
While we do know households have built up a large pool of savings over the last couple of years – it’s still too early to tell how this situation will play out. There are going to be some customers vulnerable to stress and we will be on the look-out to assist them.
With that, let me hand over to Maile to talk about how we are preparing to assist our customers through potential future challenges.