Management said "we got it wrong"
The management of Australia and New Zealand Banking Group Ltd (ANZ), one of the biggest banks on the ASX, admitted that it got things wrong – resulting in the company’s “disappointing performance” during the financial year 2020-21 (FY21).
During its annual general meeting (AGM), ANZ CEO Shayne Elliott said the company saw more than 10% home loan revenue growth for FY21. However, the number of home loans on its books fell during the second half of the financial year.
According to The Motley Fool, Elliott pointed to two factors that resulted in the decline in the number of home loans:
- Customers paying down loans faster; and
- The insufficient speed at which the company could process an increasing number of applications.
Commenting on processing mortgage applications during the financial year, ANZ chair Paul O’Sullivan admitted via Sydney Morning Herald that “let me be frank; we got it wrong.”
“Although we expanded capacity, we didn’t expand capacity enough. And as a result, we lost market share to those who could process it,” he said, as reported by Sydney Morning Herald.
“We have spent a lot of time at board and management understanding this issue. There has been significant work done to bring in new processes, new ways of handling things and to look externally at best practice, so we can learn from that and improve.
“Yes, it’s been a disappointing performance, but there has been a lot of work done to get us back on track.”
Read more: ANZ economists release house price forecast
The ANZ board said the company took immediate action to fix its mortgage processing issues by materially increasing its assessment capacity and simplifying and automating processes.
The urgent action improved its processing times and resulted in a modest return to balance sheet growth. However, processing applications in a timely manner has resulted in a loss of market share – with the board revealing that even though ANZ shares have risen by 17% over the last year, it is still down 3% over the past six months.
Still, the ANZ board expects the company’s Australian home loan portfolio to return to growth in this half and ANZ growth to be in line with the overall system growth in the second half of the current financial year.
