Finance company customers seek out banks

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Customers who previously might have applied for loans from finance companies have been driven to mainstream lenders by a series of high-profile failures, says ANZ.

Wednesday, May 1st 2013, 6:00AM 2 Comments

by Susan Edmunds

The bank yesterday announced a record annual interim profit due to falling operating expenses and lower provisions for credit impairment.

Its half-yearly results showed a statutory profit of $655 million, 1% up on the previous half.

ANZ chief executive David Hisco said the result maintained the momentum that had come out of a series of changes in the business. The bank dropped the National Bank brand last year. “The initial phase of our brand integration including the move to one core banking system has gone smoothly.”

He said simplification had allowed the bank to lift productivity and reduce costs.

ANZ’s managing director of retail, Kerri Thompson, said the bank focussed heavily on mortgage lending. Its loan book growth in the half had beaten the market although net interest income dropped from $1.36 billion in the half ended March 2012 to $1.30 billion for the same period this year.

She said the bank had targeted home buyers with things such as coffee cards at open homes, a website aimed at first-home buyers and a series of “how to” seminars.

Thompson said while credit criteria had not been relaxed, and were stringent for people borrowing in the high loan-to-value ratio end of the market, banks were seeing more customers who had previously gone to non-bank lenders.

“Some people in the past didn’t go to the bank all the time [for loans], they though they needed to go to finance companies. But with all the issues that have happened with finance companies, they’ve realised they needed to go to banks. We’ve looked and found their positions are often actually quite strong and we’ve been able to lend to them.”

The Reserve Bank has warned that banks will need to hold more capital against housing loans but Thompson said that was not a concern for ANZ. Customer deposits had grown 5% over the half and lending 1.2%. “Our capital position is improving so we are not under a great deal of pressure.”

The bank’s profit from its wealth division has also been steadily improving.  It generated $29 million in  statutory profit in the half year to March 2012,  $36 million in the half year to September 2012 and $38 million in the latest results.

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