It’s tough for many businesses out there right now. Across two of Australia’s largest population centres, ongoing movement restrictions continue to hurt companies that may have thought the worst of the COVID-19 pandemic was over.
But I’m positive about the outlook – for Australia, for ANZ and for our customers. And our message is clear: ANZ’s commitment to our clients remains strong.
At the start of August, official data showed better-than-expected Australian economic growth in the three months to June. This took many by surprise, but amid all the uncertainty, I saw a resilience. And while there are still some tough times ahead, I think that resilience will keep us in good stead well into calendar 2022.
At ANZ, our presence across markets provides a unique perspective on the economy beyond raw economic growth. For example, we can look at the volume of non-performing loans in the institutional space. And that is currently - knock on wood - at record lows.
We can also look at asset prices. At a time of increased M&A activity, we are not seeing ‘eye-watering’ asset prices or leverage levels. You can perhaps argue there have been some on the fringes, but by and large, ANZ is seeing responsible acquisition prices and capital structures from our clients. And that's really encouraging.
It’s critical, when an opportunity seems too good to be true, to take a step back and reflect. And right now, at ANZ, we're seeing a lot of really prudent behaviour from our customers. Some are even erring on the side of conservatism, which is what gives me a sense of positivity towards a sustainable and strong economic outlook for 2022.
The Australian business community learned a lot from the global financial crisis, including how important it is to maintain a strong balance sheet, and not get caught up in the fear of missing out on ‘prize’ assets.
From an economic and business perspective, I'm really encouraged to see the strength of the balance sheets of our clients. We're seeing cash balances 20 per cent higher than levels seen pre-COVID. These are businesses in strong positions.
Combined with low unemployment and stability around interest rates, and despite the uncertainty we are all navigating through, everything is pointing to continued resilience in Australia.
Support
ANZ’s support for our clients remains unchanged and unwavering.
At the beginning of the pandemic, we fielded a significant number of liquidity requests. At the time we didn't know what the future would hold and how long it would take for Australia and the world to get COVID under control.
However, what we did know is we are a relationship bank, and we were going to stand beside our customers, and help them get to the other side of this pandemic. That’s what a relationship bank does - it stands by you in the good, and in the bad.
At the start of the pandemic in Australia, we were able to provide about $A8 billion in liquidity support in a matter of six weeks. In 2021, we’re not going anywhere near those requests, but our commitment has not wavered.
At a recent virtual event with clients, I kicked off with a reminder that ANZ is still here to help them through the pandemic. I watched their shoulders relax through my screen. It was a good reminder for me how meaningful that support can be during times of uncertainty, and the importance of reiterating the message – even when a request isn’t on the table.
That support extends into the aforementioned M&A space. At ANZ, nothing gets us more motivated than a call from a client to say, ‘we're ready to make this transformational acquisition, are you able to help us?’.
It's something that gives us a real sense of purpose during this difficult time; an opportunity to work as a team to really support our customers on either side of a transaction.
Forward
Don’t discount the opportunity for growth in 2022. At ANZ, we're investing ourselves and growing. We’re number one for customers in a number of markets and want to keep that momentum going.
We see a number of sectors on a growth trajectory, including technology, property, and healthcare, to say a few, and are investing in our greatest asset – our people – to be able to support our customers in this time of growth.
The proven economic strength of Australia’s major cities on coming out of lockdown is positive for the medium-term outlook. But the world is uncertain right now, whether you're in Australia, the United States, Asia or elsewhere.
While there’s no hiding from that, I'm feeling confident. I do anticipate a rebound in Australia and when that happens, ANZ’s going to be in a great position to provide support.
Tammy Medard is Managing Director, Institutional Australia at ANZ
This piece is an edited version of comments given to The Australian in September.