ANZ will be expecting a strong contribution to group profits from its institutional business in coming years, CEO Shayne Elliott told analysts yesterday. For the moment, though the division turned in a flat performance for the year to 30 September, with no growth in loans and advances over the FY20 result.
Cash profit (that is, excluding non-core items included in statutory profit) rose by just 2 per cent, year on year from A$1.85 billion in FY20 to $1.89 billion in FY 21, largely due to a decline in expenses.
The holding pattern aspect of performance was also apparent from the decline in net income experienced (ex large or notable items), from A$3.06 billion in FY20 to $2.45 billion for the year ended 30 September.
Elliott, meanwhile, was keen to make the point that his division remains one of the most disparate in the group, covering market operations, such as hedging and FX, through to lending and tech-focused services such as ANZ's payments and cash management platforms.
Accompanied by Farhan Faruqui, ANZ's group chief financial officer and other business leaders, Elliott explained that as trade picks up, notably international trade, he expected the financial markets business to once again flourish.
One key element, the payments and cash management business running over the New Payments Platform, is now delivering approximately $900 million in revenue, down from a recent trend that saw it delivering $1.2 billion to $1.3 billion annually.
NPP is a fee per service – with ANZ becoming more of a "processing shop", clearing Aussie and kiwi dollar payments for offshore banks. Elliott expects this is one part of the business that will lead the division's revenue growth in coming years.
“We have more than 50pc mkt share. Tailwinds are underlying volume growth, as more of this is being driven by fees rather than margins,” he said.
The other big promise comes from ANZ's push into sustainability finance, which, on some estimates, will develop into a US$100 trillion-plus market over the next 30 years.
On publicly available data, ANZ participated in 5 per cent of sustainability project financing and fundraising in international markets during 2020/21, Elliott said, assessing the outcome as “a pretty significant global position.”
In a media call to discuss the group's FY21 results, Elliott was asked about how likely ANZ would be to hit its target of $50 billion by 2025, given that ANZ had targeted $15 billion by 2020 and missed.
He said that by September 30 this year ANZ had invested $22 billion, “so we're way ahead of schedule.”
“It's not only the right thing to do, it's a big business opportunity here.”
This is not by chance, as Elliott's colleagues have been quick to point out. In an article written for the bank's in-house publication, Bluenotes, Katharine Tapley, head of sustainable finance, and Christina Tonkin, managing director of corporate finance at ANZ said:
“In the year to September 30 we saw record volume growth, participating in about $A119 billion of transactional volume across 81 deals in multiple currencies and jurisdictions.
“Of this volume, $A10.5 billion is attributable to ANZ’s balance