BEHIND THE NUMBERS: Natural disasters and huge transformation but earnings remain solid

ANZ New Zealand had a good half-year result where all parts of our business performed well and, importantly, prepares us well for the uncertain economic environment ahead.

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Our business contributed $A0.77 billion to group profit. Revenue rose 1 per cent half-on-half or 14 per cent year-on-year, with margin expansion against a challenging competitive backdrop. Net loans and advances grew 3 per cent year-on-year driven by home and business lending.

"The task was clear. And enormous. We had to ensure ANZ NZ could support its customers in the event of an abrupt separation - in a very small window of time.”

Apart from the financials, there were two major themes evident in our result. The first was very positive – the completion of the BS11 regulatory project – but the other, sadly, devastating – the impact of natural disasters, particularly January’s floods in Auckland and Cyclone Gabrielle in February.

Gabrielle was the worst tropical storm ever seen in New Zealand and tragically saw lives lost and livelihoods destroyed. The impact on the larger community is still very raw and ANZ will continue to work to support New Zealanders to rebuild.

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Basis: Cash Profit continuing operations 1.New Zealand Division 2.Net interest income as a percentage of average credit risk weighted assets 3.Source: RBNZ, market share at as at Mar 23, Funds Mgt (KiwiSaver FUM) as at Dec 22

As New Zealand’s biggest lender we are acutely aware of our role and the impact we can have.

We have supported customers impacted by the floods and cyclone with emergency access to more than NZ$11 million of interest-free funds, as well as waiving around NZ$1.3 million in fees across February and March for our business and personal customers.

Since February we have also donated $3 million to communities affected by the storm, including support for businesses through local relief funds and funding for the horticulture and agriculture sectors. We also made a NZ$1 million donation to the New Zealand Red Cross Disaster Fund.

Enormous task

The other, positive, theme was completion of Banking Standard 11 (known as BS11). This was a technical and vastly complex project but at its heart was the Reserve Bank of New Zealand’s requirement that large banks ($10 billion in liabilities or more) had the legal and practical ability to control and execute outsourced functions – at short notice.

The task was clear. And enormous. We had to ensure ANZ NZ could support its customers in the event of an abrupt separation from our parent in a very small window of time – either six hours or by 9am the next working day, depending on the service.

This meant we had to redesign and manage our many banking systems – including payments, treasury and markets – so they could operate in the absence of our Australian parent.

While we had stand-alone New Zealand-based systems, many of our operations shared common technical platforms and processes with ANZ Australia. This had to change and the solution would be found in what we called the “Endeavour” program, one of the largest and most involved projects undertaken by ANZ, across Australian and New Zealand.

International effort

Endeavour was an appropriate name for the work. It involved two years of consultation and more than five years of delivery by thousands of ANZ staff across several countries (including 650 people at its peak).

More than 18,400 businesses processes had to be documented and 4000 new features delivered. Not only was this the largest regulatory project in ANZ’s history, it will deliver other benefits for the wider ANZ Group.

It can act as a potential blueprint for future regulatory changes. It has helped us develop “muscle memory” for these large, complex programs, be they regulatory or business related.

In New Zealand, we are better prepared for extreme events which threaten the delivery of services to our millions of customers.

With the challenges in global financial services, particularly in the United States, BS11 helps reassure New Zealanders we are strong, resilient and ready to deal with future unprecedented events, be they financial opportunities or indeed shocks.

Antonia Watson is CEO of ANZ New Zealand

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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