Faruqui said the bank’s core businesses - Australia Retail, Australia Commercial, ANZ New Zealand and Institutional - all grew in the half and generated returns above the cost of capital.
“It's a good set of businesses which provide diversification. They all go through different experiences in terms of competitive environment, in terms of the rate cycle that we're experiencing,” he said.
“And that creates diversity in terms of our ability to allocate capital in the most appropriate direction and finding the most return accretive opportunities with the lowest risk profile.”
Faruqui said the Australian retail banking sector – in both housing and deposits – had been competitive and that impacted the return profile of ANZ’s Australia Retail division.
He said the Commercial business had “a greater skew” towards deposits and that business benefited from the rising rate cycle.
Meanwhile, the Institutional business had benefited from higher and earlier tightening cycles in global markets, particularly in the US dollar and in New Zealand.
Faruqui said 60 per cent of overall institutional growth was driven by the international franchise in Asia, Europe and North America. A full 75 per cent of that growth in the international business had come in non-lending, lower capital intense parts of that business.
“They've actually produced an ROE this half which is higher than the Institutional average,” he said. “This is the first time that the international business has done that and is therefore one of the best performers in our group.”
Faruqui says the bank was ending the half with a Common Equity Tier 1 ratio of 13.2 per cent which makes it one of the most highly capitalised banks in the world.
“If you compare that to internationally comparable standards, that's about 19 per cent, which definitely puts us in the top bracket in terms of highly capitalised banks,” he said.
“In effect, the buffer that we have over and above the unquestionably strong to our proforma number is 75 basis points, which we think is an appropriate buffer today in terms of the environment that we're heading into.
“Having said that, we constantly review our capital position. We constantly review our surplus capital with the board and with management, obviously, and we continue to look for the first and best use of our capital in terms of creating value for our shareholders.”
You can listen to the full conversation by watching to the video above.
Andrew Cornell is Managing Editor of bluenotes