ANZ Chief Executive Officer Nuno Matos remarks
Good morning everyone and welcome. Thank you so much for joining us this morning.
Today is an important day for ANZ, our customers, our people and our stakeholders.
The purpose of today's session is to update you on ANZ's strategy for the next five years and set a very clear ambition for the future of the Bank - ANZ 2030.
This includes our immediate priorities, which are already underway, as well as our broader areas of strategic focus out to 2030.
I will then hand over to our CFO Farhan Faruqui to cover the financial section of today's presentation, before wrapping up and taking your questions.
To help set the scene for our strategy, I want to share my thoughts on the Australian banking sector and ANZ's position in the market.
Reflections on first 150 days
First, some reflections on my early days as CEO of ANZ.
It has been nearly a year since I was announced in this role and just over 5 months since I started.
In that time, I have spoken with many of you and reflected on your feedback and insights.
I have also met thousands of our people, hundreds of our customers, many of our regulators and a range of government leaders.
I have spent time in our key markets across Australia, New Zealand, Hong Kong, India and Singapore, while carrying out an extensive strategic review across the bank.
This has helped me develop a clear view of our businesses and our position across our markets, the strengths of our franchise, as well as the opportunities and the areas for improvement to realise our untapped potential.
During this time, I announced four new members of the Executive Committee, who, combined with my existing strong leadership team, are the right people to deliver our strategy.
We have also made some important organisational changes to help simplify the bank and reached an agreement to resolve open regulatory matters.
These and other decisions have helped clear the path for the future.
External environment
To help set the scene for our strategy, I will now share some reflections on the industry.
Banking in Australia and New Zealand is highly competitive, with a 30% decline in returns across the major banks over the last decade.
The Australian market in particular is operating in a highly commoditised way, with limited differentiation among propositions, few value-added services - such as Wealth Management offerings, and an increasing level of disintermediation.
It also has a much higher reliance on net interest income, at more than 80% of the industry's operating income compared with around 50% in the major banks in the UK and Canada. There is also a higher reliance on third-party distributors relative to many other markets.
In parallel, Australia also has some of the highest bank capital requirements in the world, which sets a higher bar to deliver returns to shareholders.
Having said that, the Australian market offers great opportunities. It is a large market with a growing population and customer base, a stable economy and strong governance.
The stronger asset quality and higher capital requirements for Australian banks supports better ratings relative to our global peers.
This allows us to be competitively positioned in terms of our customers trusting us with their payments and cash management needs.
Strengths and opportunities
Within this competitive landscape, I am absolutely convinced ANZ has the portfolio and potential to deliver better outcomes for customers and strong growth for shareholders.
With 197 years of heritage, today we serve 8 million customers in Australia Retail, 700,000 customers in Commercial, and we have 30% market share in New Zealand.
We are number 1 in New Zealand, the number 1 institutional bank in both Australia and New Zealand, and we have a global footprint across 29 markets.
We are and have a fantastic combination of two scale markets, two market-leading positions, in Institutional and New Zealand, and a well-diversified business model which includes Asia, the fastest growing economic region in the world.
Well executed, this combination is certainly more powerful than a single market or single segment concentration.
We have four divisions, and the right strategic perimeter, and we are banking the right customer segments in the right geographies.
Now two divisions have performed consistently well - Institutional and New Zealand - with solid returns and contributing to around 50% of the Group revenues.
However, to be clear, the other two divisions, Australia Retail and Commercial, have underperformed.
In these divisions, which at industry level represent around 75% of the revenue pool in Australia, we see a significant opportunity to grow, materially enhance our returns and deliver better for our customers.
In addition, our company overall has become too complex and - at times - disintermediated from our customers, and we clearly need to improve how we manage our non-financial risks.
I am fully committed to driving the changes required to significantly simplify the organisation and see all four divisions perform well and deliver material growth, in line with their potential.
This is our time to deliver, and we are excited to execute our ANZ 2030 strategy.
Our ambition is for ANZ to unlock our potential to win the preference of customers, shareholders and the community.
Our strategy is focused on four strategic pillars:
- Number one - Customer First. With market leading, differentiated and superior propositions, we will raise the standard of every digital and human interaction for our customers.
- Number two - Simplicity. To set the market standard for productivity, we will deliver organisational simplification, divest non-core assets and improve efficiency.
- Number three - Resilience. Leading the industry in trust, safety and risk management, we will adhere to the highest standards of non-financial risk management and strengthen end-to-end accountability across the bank.
- And as a consequence, number four - Delivering Value. To sustainably improve our financial performance, we will create lasting value by delivering higher returning growth and results that matter for our stakeholders.
In delivering these priorities, we are supported by our core enablers: our culture, our people and our technology.
Today I am laying out this in two clear phases.
The first phase - across 26 and 27 - it's about delivering on immediate priorities in order to get the basics right, including a substantial improvement in productivity and initial investment for growth.
In the second phase, beyond 2027, we will realise the benefits of these strong foundations, accelerate growth and outperform the market.
Very important, in both phases, since day one we will continuously improve our returns and deliver value.
I will now move into the first phase of our ANZ 2030 strategy, which is comprised of 5 immediate priorities which I expect to be at the forefront of your minds.
Immediate priorities under our Strategic Pillars
Embedding my new leadership team
My first immediate priority is to embed my new leadership team - and together we will continue to drive a cultural reset.
Having the right people, and the right culture, are key to executing our strategy.
I have announced four new leaders joining my Executive Committee, bringing significant global and local experience, complementing well the existing bench strength.
My team has the mandate to execute our strategy at pace - and to continue to promote a culture reset.
We are building a culture of clarity, decisiveness, self-awareness, execution and accountability.
A culture based on talent and performance that focuses on customers' needs, promotes healthy and sustainable ambition, external competitiveness, and a desire to outperform while ensuring compliance with no short cuts.
It's about pursuing a culture that attracts both those who seek excellence and engages all of our people.
Our culture will become the biggest selling point for attracting and retaining talent. Our people will know they are part of something special, a journey to become the best bank for customers and shareholders in Australia and New Zealand.
Integrating Suncorp Bank faster to deliver
Our second immediate priority is to bring forward the integration of Suncorp Bank, to accelerate value creation for our shareholders, to benefit our customers, and to significantly reduce operational complexity.
In August 2024, we acquired Suncorp Bank, with its high-quality customer franchise of 1.1 million retail customers, of whom 40% are MFI, and more than 100,000 SME customers.
That also gave us increased exposure to Queensland, a state where we were materially underweight.
As noted at our half-year results, Suncorp Bank continues to perform well. However, to achieve the benefits of scale, we absolutely need to bring the two banks together, faster.
We will complete a safe and secure migration of Suncorp Bank to ANZ by June 2027. As you would expect, this work is already well underway.
On migration, Suncorp [Bank] will be moved into our existing, stable and safe system stack and ANZ branded channels and products.
They will immediately benefit from access to a wider range of products and ANZ's expanded nation-wide branch network.
When we announced the acquisition, we estimated full run-rate annualised cost synergies of $260 million.
We are now updating this estimate to the full run-rate annualised cost synergies of approximately $500 million per year by FY2029, of which the vast majority will be captured in 2028.
Throughout this journey, we will meet all our Federal and Queensland Government commitments.
Accelerate the delivery of ANZ Plus digital front-end to support our customers
I will now turn to our third immediate priority, which is accelerating the delivery of the ANZ Plus digital front-end to all of our retail and small business customers.
Stepping back, let me remind you what ANZ Plus was designed to do - a full re-platforming of our retail and SME business, including the front-end, channels, products and all platforms other than the core banking platform.
The need to modernise and re-platform these two businesses remains an undeniable fact.
Having undertaken a comprehensive review, I am confident that our ANZ Plus technology, architecture and platforms provide the right foundation to deliver a market-leading customer experience.
However, the pace of the rollout of ANZ Plus has been too slow. This has led to structural and system duplication, brand and channel ambiguity, and created a financial burden for the group.
This was due to two major factors.
On one hand, the sequence of development was predominantly vertical - product by product - which put the customer at the end of the journey. Meaning, we would only have a viable end-to-end proposition when all products were built in our middleware and subsequently reflected in our front-end.
Second, our delivery model was inefficient. It was expensive, with complex processes, lack of prioritisation and capability gaps.
To be clear, we are fully committed to delivering ANZ Plus - but in a different sequence and through a new, much more efficient delivery model.
We are prioritising the development of the front-end of ANZ Plus and will upgrade all 8 million retail customers in Australia to this new, superior, single channel experience, by September 2027.
As a result, the experience for ANZ customers will be significantly modernised and improved, while also providing better security and features.
We are bringing the comprehensive and competitive ANZ Plus front-end experience to all of our Australian Retail and small business customers across all of our retail and small business products, including credit cards and home-loans, connected to all of our channels.
In terms of tangible outcomes for ANZ, this plan delivers a profoundly simpler and stronger Australia Retail and Commercial division. There will be one team, one brand, one single customer front-end, and one system stack - instead of almost three of everything - and much sooner than previously planned.
Once we have all of our Australia Retail and small business customers onto the single customer front-end, we will move to the next phase post-2027 - completing the re-platforming of the middleware and eliminating existing [middleware] legacy platforms with exception of our core banking system, to be very clear.
Importantly, this will be done with minimal impact to customers.
Reduce duplication to simplify our business
Our fourth immediate priority is to reduce duplication and simplify the organisation.
We are stopping initiatives that are not aligned with our strategy, and prioritising what will make the most difference to our customers.
Across the group, we have identified substantial opportunities to radically improve productivity through a simple organisational structure and operating model.
This is already reflected in our announcement that we will reduce 3,500 roles by September 2026, as well as a further 1,000 managed service contractors.
Around 60% of the ANZ roles are from Group Technology and Australia Retail, as we merge two teams and streamline support functions. The remaining roles come from consolidating middle-office roles across the whole organisation.
There will be very limited impact on front line roles in branches, contact centres, RMs and in customer support.
And there will be no overall impact to ANZ's non-financial risk management capability; in fact, that capability will be strengthened to ensure that ANZ meets its obligations and commitments.
We have also stopped projects and platform developments that don't serve our strategy or deliver tangible benefits for our customers.
We are already exiting non-bank activities that lack economic or strategic rationale, such as Cashrewards and 1835i.
We expect the impact of these initial productivity improvements to yield pre-tax annual gross cost savings of around $800 million in 2026.
Enhancing non-financial risk management to improve customer outcomes
Our fifth immediate priority - and one which is critical across everything that we do - is improving non-financial risk management.
This is a core part of our strategy and the key component of our third strategic pillar - resilience.
A significant amount of work is already underway. I outlined much of it when I spoke with you last month following our settlement with ASIC, in relation to matters within our Markets and Australia Retail businesses.
This is a business and cultural transformation that delivers a better-run bank for our customers and will be executed at pace.
In addition, the comprehensive enterprise-wide root-cause analysis that was conducted gave critical transparency to the challenges we have in managing non-financial risk.
We are making strong progress in addressing these.
I manage a weekly forum of my Executive Team to oversee progress, drive accountability, and remove roadblocks. We're driving better accountability and a culture of constructive challenge.
We have appointed the right leadership to deliver this work, including Les Vance, who is reporting to me directly to co-ordinate the change required across ANZ.
Importantly, he will lead an integrated program of work which addresses the requirements under the Court Enforceable Undertaking, while also ensuring we address the ASIC matters resolution program, and other Critical Risk Programs in an integrated and holistic way.
Last month, we delivered a comprehensive Root-Cause Remediation Plan to APRA as required by the CEU.
We expect this work to take three years with the first year dedicated to design, followed by two years to implement and embed.
I want to stress that I am ultimately accountable for making sure we get this right.
Medium-long term strategic priorities
These immediate priorities in our first phase will ensure we get the basics right, while delivering significant cost benefit.
This positions us well for the second phase of our strategy, attacking the market with confidence and resetting the bank for growth and outperformance.
I will now address the strategic pillars that underpin the ANZ 2030 strategy, with an emphasis on Customer First.
Customer First
Allow me to be direct.
It is quite fashionable to claim, as the CEO of any organisation, that you are "customer-focused" or "customer-centric".
But stating this, versus truly living and delivering on it, are two very different things.
Despite our good intentions, we have not consistently lived up to the expectations of our customers across all of our businesses, in particular in Australia Retail and Commercial.
The most important strategic shift I want to underline today is how we are going to get back to growth by relentlessly focusing on customers across every segment and business of ANZ.
This is not about a headline on a slide, but rather a mindset we are going to drive throughout the organisation, that will strengthen loyalty and retention of those who bank with us, while attracting much more new customers.
We are focused on a set of initiatives which will make a real difference to our customers and will drive growth and revenue outperformance over time.
As you may expect, the level of strategic change in Australia Retail and Commercial is more significant, while in Institutional and New Zealand we are focused on extending and acceleration and optimisation of our solid competitive position.
I will now run through some of these key strategic initiatives, by division, starting with Australia Retail.
In this business, our deposit gathering franchise has not been strong, and we have lost share in MFI.
We have not put the same level of energy and focus on our own proprietary channels as we have for brokers. We have underinvested in physical proprietary channels and not delivered on time in our digital channels.
This will change.
First, in order to attract high quality deposits and accelerate our customer base growth, we will design differentiated propositions to customer segments, including the mass affluent segment and people relocating to Australia segment.
The mass affluent segment is a near $1.7 trillion dollar source of investable deposits and wealth, which offers a high-quality, growing source of bank deposits. We already have more than 200,000 customers with the right profile for this segment.
And for people relocating to Australia, by far the largest source of 'new to banking' customers in Australia, we have an undeniable advantage in being the only major international Australian banking brand in most of the relevant migrant corridors, particularly Asia and New Zealand.
In parallel, we will reinvigorate our transactional banking and credit card capabilities, regaining market share in these portfolios as we improve the quality of our propositions.
Second, a retail bank like ANZ needs multiple and strong customer acquisition channels.
Without compromising our great broker relationships, we will materially invest in and train our own mortgage sales force, aiming to increase the performance and the number of lenders in our branches by up to 50% over the next five years. This is already underway.
In addition, we are uplifting capacity in our home loan assessment teams and making process improvements to remove friction, whilst also investing in automation.
