Elliott: a transformational advance for ANZ

We have also released a trading update for the nine months to 30 June. This was a really good result with all our businesses growing well in terms of volume and increasing margins, continuing to be supported by the benefits of our diversified well-balanced portfolio, strong risk metrics and good cost control.

"Our focus over the past few years has been on our Australian franchise - particularly how we can accelerate growth in Retail and Commercial."

Our strategic priorities have remained consistent since the beginning of 2016 when we outlined a plan to simplify and strengthen our business, to establish the digital capabilities to compete in the future and focus on a smaller number of attractive areas where we could win.

This strategy has always been about building a simpler, stronger platform for growth – both organic and inorganic - and it’s great to be here announcing an acquisition of such a high-quality business that does advance our strategic ambitions.

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After simplifying the portfolio, getting the Institutional bank into shape and addressing the regulatory changes in New Zealand, our focus over the past few years has been on our Australian franchise - particularly how we can accelerate growth in Retail and Commercial.

And while the trading result demonstrated the turn-around in Australian home loans along with the strong performance in Commercial, today’s announcement is also core to those plans.

Closely aligned

Suncorp Bank is a unique opportunity for ANZ. It is a terrific franchise, a natural fit with ANZ and incredible opportunity to make a meaningful step forward building enduring scale.

Importantly, we know this business well – Suncorp Bank is one of ANZ largest customers as we are a key provider of banking services to them. We have admired the transformation Suncorp Group CEO Steve Johnston and Suncorp Banking and Wealth CEO Clive van Horen have driven at the bank over recent years.

Their purpose, risk settings, culture and customer demographics are closely aligned to ours. They have a great team and we want to invest in the business to benefit of all stakeholders.

We are acquiring 1.2 million customers – a 20 per cent uplift for ourselves here in Australia - a great management team, a culturally-aligned business and a platform for growth.

In the core Retail business, this provides a 17 per cent step up in Australian home loans, a 22 per cent step up in Australian retail customer deposits and a 20 per cent increase in small to medium enterprise lending. The equivalent of many years of organic system growth.

More importantly for us here at ANZ, this is an opportunity to increase our commitment to Queensland. We like the fundamentals of Queensland – it’s a young growing population, a diversified economy with big ambitions around sustainability.

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Fair hearing

With regards to the transaction process itself, we know there will rightly be questions from the government and regulators about the competition aspects of this transaction. But given our starting position, along with our commitments to the state, we believe we will be given a very fair hearing.

From an operational perspective, once completed, we will initially run Suncorp Bank as a separate business retaining the current brand. We have licensed that brand for a minimum of five years which allows us the option to consider longer term brand options – whether a full conversion to ANZ or possibly launching a new brand.

I just want to re-iterate how excited we are about this transaction. It really is a quality business with a solid balance sheet and good momentum. It provides ANZ a step up in enduring scale and a platform for growth at a compelling price. Undoubtably, there will be a lot of work to do but we have the capacity and capability to execute this well and drive significant benefits for customers and shareholders alike.

Finally, I’m sure you all probably saw news last week confirming discussions about a possible acquisition of MYOB. As you would expect, we look at opportunities to extend our strategic ambitions all the time. We had a close look at MYOB because it makes strategic sense but we have advised the market this morning we have formally withdrawn from discussions and our focus is on executing the Suncorp acquisition.

Shayne Elliott is CEO of ANZ

This article is an edited version of a presentation by Elliott to the investment community