Enterprise-wide technology adoption drives ANZ full-year profits up
ANZ Bank's enterprise-wide approach to operations and technology has helped the company deliver a 15 percent increase in statutory profit after tax to AU$7.3 billion for the 2014 financial year.
The bank also posted a 10 percent increase in cash profit of AU$7.1 billion for the full year.
Cash profit from the bank's Australian division lifted 7 percent. Meanwhile, profit from its New Zealand business was up 17 percent, due to the strengthened digital offering that saw the launch of ANZ FastPay, a payments app for merchants using their iPhone or Android smartphone, and ANZ Direct Mobile, a banking solution for medium-sized or more complex businesses.
ANZ chief executive officer Mike Smith said that "good performance" is reflective of the progress the company has made in building its strength in domestic markets, growing its business in Asia to profit, and taking on an enterprise-wide approach to operations and technology.
"Our enterprise approach to productivity and technology has seen ANZ consolidate its position as one of the most efficient banks in the world. We are progressively standardising processes and systems, streamlining teams, introducing more straight-through processing, as well as more convenient online and mobile banking self-service options," he said.
During its 2014 full-year filing, the bank reported that its Banking on Australia program — the AU$1.5 billion five-year customer-facing transformation program that was launched in October 2012 — is continuing to transform the way the bank does business by improving distribution capability, delivering new digital and mobile solutions, building capability, and improving productivity by simplifying products and services.
Evidence of this was seen when ANZ reported in September that transactions made through its goMoney app reached AU$100 billion, with the e-commerce technology being adopted by more than 1.4 million users since its launch in 2010. ANZ also said at the time that goMoney user logins account for 62 percent of the bank's total customer digital login tally.
At the same time, ANZ's global technology and operations division — which is responsible for technology, operations, and service delivery to all customer-facing visions — managed to help the company increase its speed to market and strengthen the operating risk-control environment. As a result, for the third year, operations volumes increased while operations costs fell. In Australia, the average number of customer complaints almost halved over the past three years, despite ANZ reporting an 8 percent increase in customers.
In turn, technology expenses for the first half of the year to March 31 were AU$606 million, but increased by 9 percent in the second half of the year to AU$660 million for the period ending September 30. The bank attributed this increase to higher depreciation and amortisation costs of AU$285 million, rentals and repairs costs of AU$84 million, and higher software impairment expenses of AU$14 million.
Year on year, there was a 13 percent increase in technology expenses, from AU$1,122 million to AU$1,266 million, because of increased depreciation and amortisation, higher data storage and software licence costs, and increased use of outsourced providers.
Going forward, ANZ said it is committed to targeting to keep the group cost to income ratio below 40 percent, and aiming for a return on equity above 16 percent by 2016. To do this, the bank said it will continue to invest in physical, mobile, and digital channels to support its retail customers, increase sales capacity to support its business banking customers, and invest in customer analytics.
ANZ already announced earlier this month plans to unveil its Watson Engagement Advisor Tool in its Sydney "Grow Centre" that leverages IBM's cognitive computing platform Watson in a bid to improve its financial advice process, and extend the service to over 400 financial planners in Australia.
Smith said ANZ expects 2015 to present similar opportunities, with a continuation of a stable and benign credit environment.
"While the banking sector face a number of head winds, we believe the environment, ANZ's strategy, our business mix, and the strength of its customer franchise positions us strongly, and we are well placed to deliver against our 2016 cost to income and return targets," he said.