ANZ is positioned well in a difficult environment. Although ANZ’s earnings fell 21% in 2008, underlying revenue* grew 12%. Lending growth for the year was 16% and growth in deposits and other borrowings was 21% highlighting an increased reliance on AA rated banks, the relative strength of the regional economy and the quality of ANZ’s franchise.
The Personal Division and our rapidly growing Asia Pacific Division delivered very good performances. The Institutional Division improved on an underlying basis but provisions and valuation adjustments had a significant impact on the result for the Group as a whole. The performance in New Zealand was softer reflecting a weaker economy.
Our results demonstrated ANZ’s ability to weather an extremely challenging year. We have maintained our dividend, provided security and confidence for our customers and worked hard to meet community expectations with responsible, sustainable banking services.
Since I joined ANZ in October 2007, we have done much to put the Bank on a new footing with a clear strategy focused on creating a super regional bank. We recognised the new reality in financial markets early and strengthened the balance sheet, increased capital and liquidity and systematically tackled some deficiencies in operating processes and controls.
We have identified four areas that we will focus on to deliver on our aspiration and we have made good progress in bringing them alive. These areas are:
Customer focus. Our business should be designed around our customers’ needs rather than product lines. This means removing silos and boundaries in our business and bringing us closer together as ‘One ANZ’.
Marketing and sales. We need to shift our thinking from selling commodity products to looking at differentiating the way we market ourselves, the way we segment our offering
and the way we serve our customers.
Technology. We need a different philosophy to bring us up to the levels of technology used by banks globally, not just in Australia or New Zealand.
Performance. We need out performance at every level – financial out performance, out performing in customer service and in our work ethic.
We have made good progress in 2008, however there is much that needs to be done over the next four years to deliver on our aspirations.
Although we expected credit costs to increase in 2008, provisions were high. In the wake of these losses, we have undertaken a review of our business to ensure that everything we do is core to our clients’ needs and our risk appetite is managed well.
We undertook a review of our Securities Lending business. Action was taken against a number of employees and we committed to a 13–point remediation plan.
In September, we announced a new structure for our business to accelerate progress with our strategy and to improve financial performance.
We have also built a strong management team of bankers with over 250 years of banking experience on our management board. I believe there is no substitute for bankers with experience of good times and bad, and the experience to understand and see difficult times through.
These actions will ensure ANZ will be a stronger, more effective business in the future.
ANZ now has the right foundation to build upon and there are significant opportunities emerging. Continuing to manage in a steady decisive manner will set ANZ up to deliver on our aspiration to become a super regional bank. This is the key to creating greater value and out-performance for our shareholders over the longer term.
I believe we have a clear direction and the capacity to make ANZ a great regional company. We are in the right place in the Asia Pacific region, at the right time with the right people to deliver performance and value to our shareholders.
Michael Smith
Chief Executive Officer
