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Jablko: benefits of staying disciplined

Smarter, less emotional capital allocation is paying off for shareholders and customers, according to ANZ CFO Michelle Jablko, as the bank posted a growth in profit and a strong balance sheet at the half-year result.

ANZ posted a cash profit on a continuing basis of $A3.56 billion in the half year, a 2 per cent increase. Statutory profit was down 5 per cent to $A3.17 billion.

"We’re well above our peers, unquestionably strong and well ahead of time.” - Jablko

Speaking to bluenotes on video, Jablko said the bank had a good start to the year: “institutional has been through an enormous change over the last three years… our hard work is paying off. New Zealand [had] a consistent result in line with prior periods [but] Australia certainly had its challenges”.

Click here for a transcript of this video

Jablko said provisions for remediation costs have been ongoing for the last 18-24 months as the bank worked hard to review customer issues.

“We started early, so we’ve been going for quite a while… They’re reviewing all our products, trying to do the largest, most risky products first,” she said.

Touching on capital allocation, Jablko said the bank continues to hold a very strong position: “we’re well above our peers, unquestionably strong and well ahead of time”.

“Over the last few years, we have been able to allocate capital to best use, to generate organic capital for shareholders,” she said. “Looking forward, we’ve got some challenges ahead, particularly in New Zealand, that we will need to work through but it’s a bit early to tell what the ultimate impact of that will be.”

The CFO said the credit environment in Australia continues to be benign but that can’t last forever and there was some pockets of stress the bank was watching – although a tick-up in housing stress was off a very low base.

“We’ve changed our portfolio and that’s having a real impact. Our long-run loss-rate is down about a third compared to where it was three years ago – a really big change in a short amount of time,” said.

You can hear more of the conversation in the video above.

Andrew Cornell is managing editor of bluenotes

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