Managing customers and risk through acute change

Andrew Cornell

Past Managing Editor, bluenotes

ANZ Chief Risk Officer Kevin Corbally says the bank is much stronger and better positioned to respond to the COVID-19 economic crisis than it was a number of years ago.

“The way that [a] crisis unfolds - who it impacts and how we respond is different [each time]”, he explained. “We tried to identify those customers, those industries that we [thought] could be more susceptible to this type of crisis... [through] a series of industry deep dives [and] stress tests.”

"So we haven’t incurred a loss today, we may at some stage in the future, it’s also possible we may not.” – Corbally

Speaking to bluenotes via video-link from the bank’s Melbourne headquarters with Group Executive Australia Retail & Commercial Mark Hand, Corbally said although there was an increased credit impairment charge in the full-year result, the bank hadn’t yet lost money as a direct result of the COVID-19 crisis.

“A new accounting standard came in to effect… for all banks,” he explained. “That requires us to look at what we think our effected future credit loss might be.

“What shareholders would have seen was the collective provision increased by $A1.7 billion this year. That’s us setting aside money for a rainy day. So we haven’t incurred a loss today, we may at some stage in the future, it’s also possible we may not. But we set it aside.”

Click here for a transcript of this video

On customer sentiment, Hand said although Australia’s economy is recovering well from the COVID-19 crisis, customers are still feeling anxious about the future.

“[Australia has had] many years of economic growth. So it’s been a long time since our customers have seen anything like a recession,” he says. “It’s important in times like this [for] customers to ask questions, to go back to their trusted advisors.”

“Take a breath, have conversations with people that have been through this scenario. Talk to your banker and really think about how you want to manage for the next six or so months.”

Hand also says all-time low interest rates will help customers sustain and run their business. Meanwhile, the bank is seeing positive signs of recovery in states like Queensland and Western Australia.

ANZ’s cash profit for continuing operations was $A3.76 billion, down 42 per cent with the prior comparable period. The statutory profit after tax was $A3.58 billion in the full year, a 40 per cent decrease.

You can hear the full conversation in the video above.

Andrew Cornell is Managing Editor of bluenotes