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Local banks won’t see lending growth return to pre-GFC levels in the foreseeable future, ANZ warns.
In a quarterly earnings update today, ANZ Banking Group chief executive Mike Smith said the international environment for banking was significantly more difficult.
“Bank funding costs are continuing to rise as the deepening economic and financial crisis in Europe causes dislocation and volatility in global markets, although prospects are brighter in the US," he said.
“There will not be a return to the level of credit growth that banks experienced pre-crisis for the foreseeable future, particularly in our major domestic markets in Australia and in New Zealand, as consumers reduce their gearing and businesses pace investments."
New regulation was also pushing up costs for banks around the world, Mr Smith said.
Shares in ANZ were in a trading halt this morning ahead of the bank revealing its underlying profit rose 4.6% to $A1.48 billion, across the whole banking group, for the three months to December 31.
Performance figures from the group’s ANZ and National Banks in New Zealand will be stripped out later this month.
But for now, the group said business at the New Zealand banks remained positive despite subdued economic growth.
Deposits increased 2.4% but lending volumes fell 0.7%.
Work to move to a single IT platform for both brands was expected to cost about $90 million.
Mr Smith said the investment was part of a wider efficiency programme to help the bank meet challenges emerging in economies on both sides of the Tasman.
“There is no question that adapting to this environment creates real challenges. Our recent decisions on interest rates for customers in Australia and on how man people we employ at ANZ reflects a need to transform our business in new and often painful ways,” he said in the market update.
“The changes we announced this week to our management team and organizational structure are deigned to accelerate progress with our super regional strategy and its emphasis on the connections between Australia, New Zealand and the faster growing economies of Asia.”