BEHIND THE NUMBERS: Focused on balanced growth

ANZ’s Australia Commercial operations delivered a solid half-year result, contributing significantly to the group’s performance.

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Central to our performance were lending and deposits which both exceeded system growth, supporting a 25 per cent direct return on equity and demonstrating the division’s importance as a net funder to ANZ.

" Three-years ago, around three quarters of Small Business Banking customers were using longform loan applications. This has reduced to around a third as customers prefer to use streamlined application processes including Quick Assist and GoBiz."

Australia Commercial’s lending reached $63.9 billion in the half, up 6.7 per cent compared with the same time last year. This result was our best first-half lending result since becoming a standalone division.

Similarly, Commercial deposits hit $116.5 billion, growing 2.7 per cent or $3.1 billion compared with the second half of last financial year.

Our ability to serve “both sides of the balance sheet” means Australia Commercial has a strong deposit-to-loan ratio and remains well funded.

Importantly, our deposit base consists of fewer lower margin term deposits compared with other major Australian banks. At the half, ANZ had the second-lowest volume of Commercial business term deposit funding, at 29 per cent of funds under management, helping limit the impact to net interest margins and revenue while ensuring we fund asset growth.

We’re focused on increasing our share of deposits, specifically transaction deposits which provide access to data we can use to add value and insights to our customer relationships. We have further potential to increase our share of transaction deposits, merchant and e-commerce relationships via our joint venture with ANZ Worldline.

Our industry specialisation also contributed to performance. Compared to the prior comparative period, Australia Commercial grew above system in our preferred industries of Agriculture, Forestry & Fishing and Property Services.

Our deep understanding of industries and customers delivered strong credit quality, represented by first half 2024 risk adjusted returns of 7.45 per cent, which was up 53 basis point on the previous corresponding period.

Our Private Bank is also performing well, with an uplift in direct lending and growth in deposits.

During the half we reviewed and refined how our customer-facing teams are organised to ensure a great customer experience and to expand ways businesses can bank with us as more customers engage via the channels most convenient to them, including digital.

Customers will have dedicated points of contact with relevant expertise to support them with day-to-day banking and their long-term business aspirations. Many customers will be able to book an appointment directly with bankers, while we’ll support customers with more complex needs via dedicated relationship managers across regional and metropolitan geographies and industry specialisation.

‘Whole of customer’ refers to our ability to meet all our customers’ needs by using Australia Commercial’s teams, products and services, as well as the expertise of other divisions including Australia Retail and Institutional.

Our focus on whole of customer engagement contributed about $700 million in revenue to other divisions from Commercial customers’ uptake of Retail and Institutional products, such as home loans and foreign currency accounts.  

In a six-month period when many small-to-medium sized enterprises looked to their bank for guidance, we supported businesses and enriched our customer relationships by serving whole of customer needs, such as transactional deposits, payments, merchants, foreign exchange, home loans, asset finance, cards, business lending and more.

By leveraging divisional and bank-wide capabilities, we’re uniquely positioned to serve whole of customer needs and improve our service to all customers – ranging from start-ups with simple needs, to emerging corporates with more complex needs such as markets products, private banking and wealth management.  

Digital innovation and simplification

We recognise many small businesses are time poor and often burdened by red tape and process. Businesses require greater certainty from their bank so they can realise their business goals – which is why we’re investing in our data, digital and online channels.

Three years ago, around three quarters of Small Business Banking (SBB) customers were using longform loan applications. This has reduced to around a third as customers prefer to use streamlined application processes including Quick Assist and GoBiz, which has improved both our time to decision and the time for customers to receive money by 10 per cent during the past year.

Quick Assist is an automated loan assessment process which uses customer transaction data to verify their ability to repay and takes on average three days for businesses to access capital.

Our digital lending platform GoBiz, which provides new and existing ANZ small business customers with fast access to unsecured lending, also reached new heights. GoBiz lending was nearly a quarter of all SBB approved applications in first half 2024 compared to 1 per cent three years ago. Funds under management also grew significantly in the past year.

As part of the buildout of our digital strategy we welcomed Kat Hartmann, earlier this year as our new General Manager of Digital and Customer Experience. Kat was previously General Manager of Experience at Woolworths Group.

Future growth

Australia’s small to medium businesses contribute greatly to our economy and are a valued part of ANZ’s history and customer base.

We’ll continue to invest to improve our ability to meet and exceed customers’ needs and give them the confidence to start, run, grow or transition their businesses.

Changing market conditions and customer needs will see us adapt and we’re well positioned to do so through our ability to innovate and provide an offering which caters for all sizes and types of businesses.

Clare Morgan is Group Executive for Australia Commercial at ANZ.

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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