ANZ Chairman Paul O’Sullivan has pledged to address the system issues that have led to the bank’s protracted turnarounds, as its mortgage portfolio continues to plummet.
At his annual general meeting on Thursday, December 16, O’Sullivan admitted that the bank was behind in processing its loans, which caused market share to decline to the benefit of its competitors.
In the second half of fiscal 2021, the group’s home loan portfolio declined $ 3 billion from the first half to $ 278 billion (although the total increased 1% on a year).
ANZ Managing Director Shayne Elliott noted that segment revenue grew by around 10%, but the number of home loans declined as customers repaid their loans faster and the speed at which the bank was processing. the demands “just weren’t enough”.
As the bank said it had taken steps to rectify its recoveries, ANZ continued to see a decline in its mortgage portfolio in October, with total mortgages falling to $ 260.35 billion from $ 261 billion. in August, according to data from APRA.
The mortgage issue had been a key factor impacting ANZ’s overall assessment of the CEO’s performance for the year 2021, with Mr. Elliott receiving 53% of the maximum potential annual bonus. He had also not received an increase in his base salary.
Mr O’Sullivan reiterated similar reasons previously given by Mr Elliott and Mark Hand, group director for retail and commerce in Australia. Namely, the bank had been hit by a demand tsunami and its systems were not designed to withstand it.
The bank’s process of requiring manual reviews of loans deposited by brokers had been overwhelmed by a flurry of loan applications via COVID.
“This year, the significant increase in demand for home loans in Australia has impacted our ability to process applications in a timely manner. Unfortunately, this resulted in a loss of market share which was a disappointing result, ”O’Sullivan told shareholders Thursday.
“Naturally, this has been a major focus for the board and management and we are confident that the systematic actions taken by management will resolve these issues, including increased investment in automation and improved processes. process. “
Other steps the bank took to reduce its turnaround times included seeking third-party advice and redesigning its systems to handle more capacity and facilitate faster decision-making.
It had also redeployed and trained more staff to perform its manual assessments. Mr. O’Sullivan stressed the importance of “being able to serve… third-party channels”.
But the president noted that the bank tends to “get a lot more more complex lending decisions”, unlike other banks which face simpler requests, which can be processed at a faster rate by systems. digital.
“I think you will find that these digital platforms are not very efficient or effective in dealing with these [complex loans]. On a day-to-day basis at ANZ we tend to have a lot more complex loan decisions, ”said O’Sullivan.
“However, this is no excuse for our performance.”
With the redesign of the system, ANZ expects its home loan portfolio to grow in the first half of fiscal 2022 and be in line with the growth of the system in the second half of the year.
“We recognize that we have more to do, especially in the real estate loan processing arena, but we have made good progress in building a bank to better compete in a very competitive and fragmented market,” O said. ‘Sullivan.
Mr Elliott echoed the chairman at the AGM, saying: “We are laser-focused on what is important to shareholders: We will continue to regain momentum in Australian home loans.”
The group is also expected to launch a digital loan proposal towards the end of next year, as part of its new online banking offering, ANZ Plus, due out in early 2022.
The digital product will fall under the “second aspect” of addressing ANZ’s larger drop in mortgage lending, said O’Sullivan, who is investing in new technologies and platforms.
“In fact, we are putting new front-end capacity in the bank to allow us to deal with customers digitally and to be able to perform flow processing with minimal human intervention,” he said.
“This is a major project for the bank.
[Related: ANZ sued over offset account, package failures]
Sarah Simpkins is the managing editor of Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.