O’Sullivan: getting on with the emerging opportunity

ANZ Chairman Paul O’Sullivan says he is cautiously optimistic about 2022 despite some remaining challenges from the ongoing pandemic.

“First of all, we've seen governments and central banks respond with unprecedented levels of liquidity and they've stayed in behind that,” O’Sullivan explained on a video with bluenotes for the bank’s virtual Annual General Meeting (AGM) in Melbourne.

"There is some uncertainty around but I also think there are a lot of reasons to be optimistic about the economy.” – Paul O’Sullivan

“Secondly, in Australia and New Zealand [we’ve seen] a fair degree of social cohesion and very rapid adoption of vaccination rates. I know there have been a lot of noisy comments but … we have close to 90 per cent vaccination rates in both economies. That's pretty remarkable.”

O’Sullivan also pointed to unprecedented levels of household savings and liquidity balances - the highest in 25 years.

“That money has got to go somewhere and that makes me fairly optimistic about the state of the economy,” he says.

Click here for a transcript of this video

O’Sullivan said the bank had remained strong throughout the crisis, maintaining high levels of capital and lowering “run the bank” costs.

“We're in a strong position heading into the year ahead,” he says. “There is some uncertainty around but … I also think there are a lot of reasons to be optimistic about the economy.

“As Australians and New Zealanders, when cyclones or floods come around and take away our houses, we don't stand around worrying about it. We get on with rebuilding.”

On the board’s focus for 2022 and beyond, O’Sullivan pointed to some short and medium-term issues which will be in the spotlight.

“A major focus for the board and management is restoring [home loan] momentum in the Australian Retail & Commercial division,” he explained. “We would expect, based on the work we've been doing, that we will return our mortgage book to growth this half and be growing in line with system in the next half.”

O’Sullivan highlighted the recently announced ANZx project – known as ANZ Plus in the market – as a key project for 2022. He also emphasised sustainable finance was an area where ANZ is already a leader and can continue to build on that platform.

“ANZ has been a leader over many years in terms of climate change,” he says. “We have the credibility and the track record.”

O’Sullivan says the commercial opportunity of a lower carbon economy has been estimated at $125 trillion with 50 per cent likely to be spent in the Asia Pacific.

“As bankers, we have a responsibility to help fund that transition,” he says. “We're very clear - we will only fund oil and gas companies who have a public commitment to a lower emissions pathway over time. And that's got to have attached to it governance and transparency and specific time-based targets.”

O’Sullivan outlined the trap of not lending: “If we were to say we won't lend to fossil fuel companies, we will drive that sector to lenders who are less committed to emissions reduction and who are less scrupulous than ANZ.

“I think we've found an appropriate and responsible strategy. I know it won't be popular with everybody but ANZ is all about being part of the solution and not merely putting our head in the sand.”

O’Sullivan also discussed the four major challenges he expects to face in the year ahead: inflation, housing affordability and social inequality, value chain disruption, and geopolitical tensions.

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

Andrew Cornell is Managing Editor of bluenotes

editor's picks

03 Nov 2021

O’Sullivan: outlook brighter after another difficult year

Paul O'Sullivan | Chairman, ANZ

ANZ Chairman Paul O’Sullivan says the bank has navigated a year of historic health and economic challenges while also supporting customers and the community.

16 Dec 2020

ANZ Board Minutes: flying 20 minutes ahead of the plane

Andrew Cornell | Past Managing Editor, bluenotes

New ANZ Chairman Paul O’Sullivan says boards must take a long-term view when making crucial business decisions and keep the community in mind.