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Business Lending Growth to Supplant Hyper Mortgage Book Competition - ANZ

Business Lending Growth to Supplant Hyper Mortgage Book Competition - ANZ

(4 May 2022 – Australia) ANZ CEO Shayne Elliott confirmed the bank is seeking to flex its powerful corporate lending muscle to achieve growth instead of doubling down on the hyper-competitive mortgage market.

The Reserve Bank of Australia’s (RBA) shift to hawkish monetary policy by raising rates will only heighten already elevated competition in the mortgage market, negatively impacting retail banking margins.

Mr Elliott said at the Bank’s interim results he would prefer to allocate capital to expand lending in the institutional business rather than write more mortgages in a highly competitive, shrinking market where margins are contracting. CBA has already signalled its ambitions to unseat NAB as the largest business lender in the Australian market.

Mark Whelan, ANZ Head of Institutional Banking, warned not to expect the same level of growth in H2 2022 given much of the demand for credit came from customers drawing on facilities because of geopolitical uncertainties tied to Russia’s invasion of Ukraine. New ANZ CFO Farhan Faruqui stated there was strong lending momentum, directed towards more profitable customers across segments such as financial institutions, sustainability and food and agricultural supply chains. Selecting the right customers helped margins to rise by five basis points in the half.

“Where will we grow? I think the growth opportunities are much greater outside of home loans because in a rising interest rate environment, home loans are likely to grow slower. We do think there will be an expansion in business credit and we think we’re well-positioned to finance that. Our lending growth has been very strong in the institutional bank and we expect that to continue despite the fact many businesses are still unable to pass on rising costs to customers” commented ANZ CEO Shayne Elliott.

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