ANZ’s reported a flat cash profit of $6.4 billion, a partially-franked dividend and a revelation that it has over 1000 people dedicated to remediating victims of fees-for-no-service – double the previously reported number – in its full year results.
Speaking on an investor briefing following the announcement, CEO Shayne Elliott said the remediation program – which has paid out $1.6 billion over the last three years – has two parts to it; identifying the issues and raising a provision, and then getting the money back in the hands of the customers.
The first, he said, was “to some extent, the easy part”. The second half was where the extra resources are required.
ANZ stated it had 500 people working in the customer remediation team and “a further 500 people working on remediation with other various business units”.
The bank is keen to put their wealth management chapter behind them, with chief financial officer Michelle Jablko admitting it was currently “more heavily weighted towards fixing past issues”.
“We’ve expanded the number of staff supporting our efforts to just over 1000,” she said, adding that the bank was in the middle of an “accelerated proactive discovery review”.
ANZ was the first of the ‘big six’ Australian financial institutions to offload its wealth division, announcing in 2017 that it would sell its pension and investments and aligned dealer groups to IOOF for just under $1 billion.
Despite those licensees acting under the IOOF banner for some time now, the deal is not expected to be finalised entirely until Q1 2020 after being buffeted by the Hayne royal commission, serious charges against its executive team and an eventual reduction in the sale price to $825 million.
While pushing to get the deal across the line, top brass at the bank have been emphasising the importance of wiping the slate clean as quickly as possible. Elliott today called the remediation program “an important part of what we’re doing”, intimating that the sooner it was completed the bank could focus on other things.
“I can’t tell you when we’ll be finished but we’re working as hard as we can to get it done,” he added.
Jablko said that “fixing issues of the past” was one of the three things the bank was trying to “balance”, along with running the business well and building for the future.
The strain was made clear, however, with Elliott noting the “pressure” compliance remediation has put on the business.
A changed business shape
ANZ again doled out a final dividend of 80c per share for the year, bringing its full year dividend to $1.60, although franking was cut to 70 per cent.
Elliott explained that the unusual partial franking was due to both the strain of remediation costs and slowing revenue. “Our decision to reduce franking to a new base reflects the changed shape of our business as well as recognising how important the dividend, franking and predictability is to shareholders,” the CEO added.
There were positives for the bank, with institutional banking revenue rising 5 per cent to $5.2 billion and a relatively flat expenses bill. Process improvements and international property sales also added $260 million to the bank’s bottom line.