ANZ Banking Group (ASX:ANZ)

Shayne Elliott
Market Cap (AUD): 76.51B
Sector: Financials
Last Trade (AUD): 27.2 +0.21 (+0.78%)
Tab Bar

1. About

Founded in 1835 and headquartered in Australia, ANZ provides banking and financial products and services to around eight million individual and business customers. ANZ operates in and across 34 markets.

The ANZ business is structured across the following divisions:

Australia: comprises the Retail and Business & Private Bank business units, providing a full range of banking services.

Institutional: services global institutional and corporate customers located in Australia, New Zealand, Asia, Europe, America, Papua New Guinea and the Middle East across three product sets: Transaction Banking, Loans & Specialised Finance and Markets.

New Zealand: comprises the Retail (including wealth management services) and Commercial business units, providing a full range of banking services.

Wealth Australia: provides investment, superannuation, insurance and financial advice services. Part of the Wealth Australia division is considered to be a discontinued operation.

Asia Retail & Pacific: comprises the Asia Retail and Pacific business units, connecting customers to specialists for their banking needs.

These divisions are supported by Group-wide functions including Technology, Services & Operations (TSO) and Group Centre.

Digital banking, which forms part of Group Centre, leads the strategic development and delivery of a superior digital experience for the bank’s customers and staff.

2. Business model


The business operates the following divisions:[1]



Revenue ($’M)

% of Revenue

% of Profit (before Tax )

Profit driver[2]





Customer deposits grew mainly in small business banking and home loans (offset accounts). Net interest margin decreased as a result of home loan mix changes, customer remediation, and the introduction of the major bank levy from July 2017. This was partially offset by higher deposit margins due to re-pricing. Other operating income decreased as the result of customer remediation and lower lending fee income. Operating expenses increased due to higher customer remediation costs, an accelerated software amortisation charge, restructuring, and inflation. This was partially offset by a reduction in FTE related costs. Credit impairment charges decreased as a result of lower delinquency and higher write-backs and recoveries in cards and personal loans, lower new provisions in business banking, partially offset by a net increase in economic cycle adjustments.





Lending volumes grew across all portfolios. Customer deposits grew in Markets and Transaction Banking. Net interest margin decreased largely due to the introduction of the major bank levy from July 2017, and growth in Markets liquid assets. Other operating income decreased due to lower Markets Franchise Trading income as a result of less favourable trading conditions in the 2018 financial year, and large positive derivative valuation adjustments recognised in the 2017 financial year. Operating expenses increased due to an accelerated software amortisation charge, restructuring, and inflation. This was partially offset by a reduction in FTE as the result of ongoing transformation activities and lower non-lending losses. Credit impairment charges decreased due to ongoing portfolio rebalancing and a benign credit environment.

New Zealand




Customer deposits grew across all portfolios. Net interest margin increased due to higher lending margins, partly offset by portfolio mix changes and lower deposit margins. Other operating income increased primarily due to a one-off insurance recovery in the 2018 financial year, partially offset by customer fee reductions. Net funds management and insurance income increased due to higher funds under management. Operating expenses increased due to customer remediation, increased business investment in digital capability, and inflation. This was partially offset by a reduction in FTE driven by customer migration to lower cost channels. Credit impairment charges decreased due to credit quality improvements across Retail and Commercial and Agri portfolios, and the release of the Agri economic cycle adjustment.

Wealth Australia




Income decreased as the result of higher customer remediation, and lower new business volumes in ANZ Financial Planning. Operating expenses decreased due to lower discretionary expenses, partially offset by higher customer remediation charges.

Asia Retail & Pacific




Impacted by the sale completion of Retail and Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to Singapore’s DBS Bank, and its Retail business in Vietnam to Shinhan Bank Vietnam. The Pacific business experienced lower operating income as the result of lending reductions due to portfolio rebalancing, and lower costs as the result of simplifying the business. Credit impairment charges benefited from improved credit quality and higher collections and recoveries.

TSO and Group Centre




Impacted by a number of large/notable items. In the 2018 financial year, this included the gain on sale of MCC, loss on sale of SRCB, the loss on reclassification of assets and liabilities to held for sale for Cambodia JV, OPL NZ, and PNG Retail, Commercial and SME, Royal Commission legal costs, and higher restructuring.

Other Items





3. Strategy


Major strategies include:[3]


Group’s strategy is to use strong Australian and New Zealand foundations, distinctive geographic footprint, and market-leading service and insights to better meet the needs of customers and capture opportunities linked to regional trade and capital flows.

In doing this, ANZ provides shareholders with access to a unique combination of high-returning franchises and direct exposure to long-term Asian growth.

Group’s strategy has three elements

  • Creating the best bank in Australia and New Zealand for homeowners and small business    customers 
  • Building the best bank in the world for clients driven by regional trade and capital flows
  • Establishing common, digital-ready infrastructure to provide great customer experience, scale, and control


The strategy is underpinned by strong expense, capital and risk management disciplines and the quality of our people.

4. Markets


The Company operates in markets including:[4]


Industry (Australia)

Industry Revenue (2018)

Annual Growth

National and Regional Commercial Banks

 $146 billion

(1.7%) annual (13-18)

Money Market Dealers

$7 billion

7.8% annual (14-19)

Financial Planning and Investment Advice

$5 billion

 0.3% annual (13-18)

5. Competition


Major competitors include:[5]


  • Commonwealth Bank of Australia Limited (ASX:CBA)
  • National Australia Bank Ltd. (ASX:NAB)
  • Westpac Banking Corp (ASX: WBC)

6. History



ANZ began in London when The Bank of Australasia was established under Royal charter



The Union Bank of Australia was established



The English, Scottish and Australian Bank established



The Bank of Australasia merged with Union Bank of Australia to form ANZ Bank



Opened office in New York



Established representative office in Tokyo



Merged with the English, Scottish and Australian Bank Limited to form Australia and New Zealand Banking Group Limited



Opened representative office in Malaysia



Acquired the Bank of Adelaide



Purchased Grindlays Bank in India



Acquired National Mutual Royal Bank Limited



Joint venture with ING Group for funds management and life insurance business in Australia and New Zealand acquired Bank of Hawaii operations in Fiji, Vanuatu and Papua New Guinea



Acquired National Bank of New Zealand from Lloyds TSB



Launched mobile phone banking and banking for iPhone

Obtained trading membership from the Shanghai Gold Exchange



Acquired Royal Bank of Scotland Group businesses in The Philippines and Vietnam



Achieved leading global bank ranking in Dow Jones Sustainability Index for fourth year in a row

Increased investment in China’s Bank of Tianjin and Shanghai Rural Commercial Bank

Received foreign bank licence in-principle approval in India

Launched GoMoney mobile banking app

Announced intention to establish an operations centre in Chengdu to support growth in China

Launched new Chinese brand name and tagline in Taiwan

ANZ’s locally incorporated bank commenced operations in China



Commenced banking operations in India with the opening of first ANZ branch in Mumbai



Awarded Bank of the Year and Home Lender of the Year in Australia by Money Magazine

Launched Banking on Australia, a five-year AU$1.5 billion program that included branch transformation and greater focus on improving the customer experience

Brought together the ANZ and The National Bank brands in New Zealand and completed a major program move to a single technology platform



Awarded Bank of the Year in Asia Pacific, Australia, Laos, and Cambodia by The Banker magazine, ranked the most sustainable bank globally in the Dow Jones Sustainability Index

Launched ANZ goMoney mobile banking app in the Pacific

Received approval from The People's Bank of China to act as a market maker for AUD-CNY direct trading on the China Foreign Exchange Trading System



Launched BlueNotes, ANZ’s corporate newsroom

Launched ANZ Grow app, Australia’s first digital wealth and banking app and first Grow Centre in Sydney

Became the first Australian bank to open in the Shanghai Free Trade Zone

Became one of the first international banks to be awarded Myanmar banking licence

Became the first bank worldwide to introduce EMV secure ‘Tap & PIN’ ATM technology to reduce skimming



Launched new ANZ Your World, Your Way marketing campaign

Signed MoU with the Australian Government to support sustainable development in the Pacific

Acquired Shout for Good to enable online charity donations



Established collaboration with Honcho by Business Switch, an online platform offering customers the opportunity to set up their small business in one day, along with tools to help their business grow



Sold stake in Metrobank Card Corporation

Entered into agreements to sell life insurance business to Zurich Financial Services Australia and aligned licensees and superannuation and investments businesses to IOOF Holdings limited.

ANZ completes sale of 20% stake in Shanghai Rural Commercial Bank ANZ

Acquired local startup REALas to help bolster digital offering in Australia's property market



Joined the Qantas Future Planet Partnership, a market leading program which partners with businesses to reduce their environmental impact and increase investment in projects such as the protection of wildlife habitats and rainforest preservation.

Signed the first agreement under an innovative $50 million funding initiative launched last year by Fortescue Metals Group and ANZ

ANZ New Zealand announced sale of OnePath Life NZ Ltd to Cigna Corporation

ANZ agreed to sell its 55% stake in Cambodian JV ANZ Royal Bank

Entered into an agreement to sell Group's Retail, Commercial and Small-Medium Sized Enterprise (SME) banking businesses in Papua New Guinea to Kina Bank

7. Team


Board of Directors[7]


David Gonski – Chairman, Independent Non-Executive Director

Shayne Elliott – Chief Executive Officer, Executive Director

Ilana Atlas – Independent Non-Executive Director

Paula Dwyer – Independent Non-Executive Director

Jane Halton AO, PSM – Independent Non-Executive Director

Rt Hon Sir John Key, GNZM AC – Independent Non-Executive Director

Lee Hsien Yang – Independent Non-Executive Director

Graeme Liebelt – Independent Non-Executive Director

John Macfarlane – Independent Non-Executive Director


Management Team


Shayne Elliott – Chief Executive Officer

Maile Carnegie – Group Executive Digital Banking

Kevin Corbally – Group Chief Risk Officer

Farhan Faruqui – Group Executive, International

Gerard Florian – Group Executive Technology

Alexis George – Deputy Chief Executive and Group Executive Wealth Australia

Mark Hand – Group Executive Australian Business and Private Banking

David Hisco – CEO New Zealand and Group Executive

Michelle Jablko – Chief Financial Officer

Fred Ohlsson – Group Executive, Australia

Kathryn Van der Merwe – Group Executive Talent and Culture

Mark Whelan – Group Executive, Institutional

read more

8. Financials


2018 Full Year Results Presentation


Financial Year 2017/18 (ended 30 September):[8]



Revenue ($’M)

% Change

Profit (before Tax) ($’M)

 % Change











New Zealand





Wealth Australia





Asia Retail & Pacific





TSO and Group Centre





Other Items










9. Risk


Major risks include:[9]


Capital Adequacy Risk

The risk of loss arising from the Group failing to maintain the level of capital required by prudential regulators and other key stakeholders (shareholders, debt investors, depositors, rating agencies, etc.) to support ANZ’s consolidated operations and risk appetite.


Compliance Risk

The risk of failing to act in accordance with laws, regulations, industry standards and codes, internal policies and procedures and principles of good governance as applicable to ANZ’s businesses.


Credit Risk

The risk of financial loss resulting from:

  • A counterparty failing to fulfill its obligations
  • A decrease in credit quality of a counterparty resulting in a financial loss

Credit Risk incorporates the risks associated with us lending to customers who could be impacted by climate change or by changes to laws, regulations, or other policies adopted by governments or regulatory authorities, including carbon pricing and climate change adaptation or mitigation policies.


Insurance Risk

The risk of unexpected losses resulting from worse than expected claims experience, including any of the following that exposes an insurer to financial loss: inadequate or inappropriate underwriting, claims management, reserving, insurance concentrations, reinsurance management, product design, and pricing.


Market Risk:

Market Risk stems from ANZ’s trading and balance sheet activities and is the risk to ANZ’s earnings arising from changes in interest rates, foreign exchange rates, credit spreads, volatility, correlations or from fluctuations in bond, commodity or equity prices.


Liquidity and Funding Risk

The risk that the Group is unable to meet its payment obligations as they fall due, including:

  • Repaying depositors or maturing wholesale debt; or
  • The Group having insufficient capacity to fund increases in assets.


Market Risk

The risk to the Group’s earnings arising from:

  • Changes in any interest rates, foreign exchange rates, credit spreads, volatility, and correlations
  • From fluctuations in bond, commodity or equity prices.


Operational Risk

The risk of loss and/or non-compliance with laws resulting from inadequate or failed internal processes, people and/or systems, or from external events. This definition includes legal risk, and the risk of reputation loss, or damage arising from inadequate or failed internal processes, people and/or systems, but excludes Strategic Risk.


Reinsurance Risk

The risk that an insurer fails to meet its contractual obligations, that is, to pay us reinsurance claims when due, which in turn creates a counterparty credit risk.


Reputation Risk

The risk of loss that directly or indirectly impacts earnings, capital adequacy or value, that is caused by

  • Adverse perceptions of the Group held by any of customers, the community, shareholders, investors, regulators, or rating agencies
  • Conduct risk associated with the Group’s employees or contractors (or both); or
  • The social or environmental (or both) impacts of our lending decisions.


Strategic Risk

The risk that the Group’s business strategy and strategic objectives may lead to an increase in other key Material Risks — for example: Credit Risk, Market Risk and Operational Risk.


Technology Risk

The risk of loss and/or non-compliance with laws resulting from inadequate or failed internal processes, people and/or systems or from external events impacting on IT assets, including the compromise of an IT asset’s confidentiality, integrity or availability.