Customer remediation, fresh regulation, and the ongoing ‘simplification’ of operations after the royal commission will be short-term pain for long term gain, according to ANZ chief executive Shayne Elliott.
The bank announced on Wednesday its cash profit for the year ending September 30 dropped five per cent to $6.5 billion, with Mr Elliott flagging more staff cuts and branch closures as the bank looks to further streamline operations.
But he says a slimmed-down, increasingly digital operation will set itself up for the long play, and that royal commission-related restructuring and remediation won’t necessarily mean a lingering cost burden.
“In the long run I do not believe (the royal commission fallout) means a permanent increase in costs… I believe the way to meet our obligations, either the law or community expectations, is actually by being simpler,” he said.
“By doing less things and doing them well, by investing in straight-through process, more digitisation, but really taking out all the complexity, that will be lower costs, better for customers, and better for compliance.”
ANZ had earlier flagged $421 million in remediation costs and was tipped by UBS analysts to unveil a $6.2 billion cash profit ahead of a “tough” reporting season for the big banks, with customer compensation and royal commission costs set to hit lenders where it hurts.
NAB will announce its full-year results on Thursday, with Westpac up on Monday.
ANZ’s cash profit including discontinued operations plummeted 16 per cent for the year, while net interest income dropped two per cent to $14.51 billion.
Statutory net profit, which includes one-time gains and losses, was flat at $6.4 billion, while net interest margin, the difference between what a bank pays to borrow money and what it charges customers for loans, slipped to 1.87 per cent from 1.99 per cent a year ago.
ANZ shares were up 0.66 per cent to $25.83 at 1420 AEDT.
Mr Elliott said further staff cuts were likely, on top of the 200 staff fired for wrongdoing in the wake of the inquiry, but there was no target in place.
Likewise, the continued migration of customers to digital services means more ANZ branches will close.
“The outcome of simplification… doing less things but doing them well has been we do have less branches, we do have less products to service, therefore we have less need for people in contact centres, operational people doing processes,” Mr Elliott said.
ANZ will also not pursue an initial public offering of its New Zealand-based vehicle finance unit UDC
The bank held its final dividend steady at 80 cents per share, fully-franked.
Meanwhile, talks with Australia Post are ongoing over whether the bank will join its big four competitors and renew its support for the [email protected] service.