Faruqui: transformation drives consistent performance

ANZ’s strong 2024 full year result demonstrates the benefits of a transformation which has seen the bank’s revenue grow 19 per cent in the past three years, Chief Financial Officer Farhan Faruqui said.

Speaking with bluenotes on video, Faruqui said simplification and de-risking over the last decade has led to consistent performance, including generating about $1.7 billion in cost savings which allowed the bank to invest in new technology and strategic initiatives.

"I think that simplification, transformation and those technology investments have allowed us to become more efficient, improve customer experience and start to deliver benefits today in terms of financial results.” – Farhan Faruqui, ANZ CFO.

“If you go back to the 2021 financial year, our revenue is up 19 per cent, profit before provision is up 20 per cent and cash profits are up 12 per cent,” Faruqui said.

ANZ today released a statutory profit after tax for the full year ended 30 September 2024 of $6,535 million, down 8 per cent on full year 2023’s record profit results.

Revenue was $20,809 million, slightly down from $20,905 million the previous year. The final dividend is 83 per share, partially franked at 70 per cent.

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Click here to read the transcript

Faruqui said the evidence the transformation was coming to fruition was ANZ’s investment in two key platforms that were already delivering better outcomes for customers – the Transactive Global platform for corporate and treasury clients and ANZ Plus for retail customers.

“I think that simplification, transformation and those technology investments have allowed us to become more efficient, improve customer experience and start to deliver benefits today in terms of financial results,” he said. The investment in and simplification of the Institutional division led to a record return on equity of around 14 per cent this financial year, he said.

While the benefits of ANZ Plus for retail customers were already apparent, many more were still to come as the platform expands and evolves. This includes existing ANZ customers as they migrate to ANZ Plus in coming years, alongside more customers from the bank’s recent acquisition of Suncorp Bank. 

“A lot of these benefits are going to flow through the course of the next two to three years as ANZ Plus scales up as we have more customers, including Suncorp Bank customers, who are going to migrate onto the ANZ Plus platform.”

Banking business

Faruqui said ANZ’s business largely focuses on two areas – banking and markets.

ANZ’s banking business which produces 90 per cent revenue serves 11 million retail and commercial customers across Australia, New Zealand and about 6,500 institutional customers globally. It provides everything from deposits, lending, payment transactions and trade.

The core banking businesses’ net interest margin, return on equity and cost to income were “comparable to or arguably better’’ than many of our major bank peers, he said.

“Banking revenue has grown, and we've maintained profit before provisions because we've managed costs well and maintained a stable cost-to-income ratio for the banking business,” Faruqui said.

The markets business – which makes up the remaining 10 per cent of revenue and intermediates between corporate customers – grew its revenue by about 9 per cent during the financial year, Faruqui said.

“That revenue growth in markets was on the back of continuing improving volumes and flows. But if you go back over four years, that business has grown about 12 per cent in comparable halves,” Faruqui said.

“It has been consistent in terms of growing volumes. And most importantly, it has actually delivered an average return on equity of 11 per cent over the last five years.”

Global perspective

While Australia continues to face an uncertain global economy, Faruqui said banks must always find a way to navigate such challenging economic conditions and changing interest rates.

“As far as the rate cycle is concerned from a banking standpoint, it's sort of in our DNA to manage through these cycles,” he said. “The way we manage it is we try and control what we can control.”

This involved simplifying the business and investing in technology, which ANZ had done through assets sales and by developing Transactive Global and ANZ Plus, he said. These two technology platforms, which will ultimately house all ANZ customers, will be resilient and deliver services to customers more efficiently.

“Customers behave differently in different cycles. And to some extent, you have to understand as we go through cycles and as we go through uncertainty, it's also a great opportunity for us to make sure we are providing our customers with good advice on managing their risks.”

“We are also there for them when they feel the cycle is at a point where they want to invest or borrow more money to grow their business. That gives us a set of opportunities as well.”

Brett Foley is the Managing Editor of bluenotes.