ANZ hopeful for growth
After transferring ANZ PNG’s retail, commercial and small to medium enterprises business segments to Kina Bank last year, ANZ is concentrating on corporate and institutional businesses. Business
reporter DALE LUMA discusses the bank’s transition with managing director MARK BAKER.
THE transfer of ANZ PNG’s retail, commercial and small to medium enterprise (SME) business segments took place on Sept 23 last year following the successful migration between the bank and Kina Bank.
This allowed ANZ to focus more on its core strengths in corporate and institutional businesses, according to managing director MARK BAKER. He told business reporter DALE LUMA that there were promising areas for the bank to grow into the future. He said the bank had remained a great contributor to the ANZ group this year.
Question: What was the year like for ANZ?
Baker: ANZ PNG’s financial year ending Sept 30 was a year of two distinct halves.
The first-half focus was on bedding down our new-look bank following the sale of our retail and SME business to Kina Bank, which was completed last September. We then entered 2020 with some early insights into Covid-19 through the experience of ANZ’s offices in China and Hong Kong.
By February 2020, we were already making contingency plans based on that knowledge. The impact on businesses in PNG has been significant and we quickly moved to reduce interest rates across all of our loan products.
That reduction is still in place.
We provided specific loan relief to customers particularly affected, and in many cases that relief is also still in place, over six months later. It’s certainly been a year like no other and we have had most of our staff working from home since April. This was made possible by the technology that ANZ has within the bank here in PNG and across our global network. We are now gradually bringing these teams back into the office. This all translated to a challenging year, but our bottom-line performance was in line with expectations. In 2020, we remain a significant contributor to the wider ANZ Group.
Q: With the bank focusing on its corporate business having its other segments acquired by Kina Bank, did that have any immediate impact on its corporate business in terms of growth?
The re-focus on our corporate and institutional business has allowed us to direct more resources to these segments, and identify areas of growth. In the current environment, the opportunities for growth are more limited by general economic conditions, which are not only impacting PNG. However, we do take a long term view, and believe there are promising areas for us to grow the business.
Q: What is the current portfolio like for your corporate customers?
It’s a diverse and well balanced portfolio ranging from some State-owned enterprises through to local corporates, many of whom source materials from offshore, and multinational companies who use ANZ across multiple countries. Our particular focus areas are resources, energy and infrastructure and food, beverage and agriculture. This aligns with ANZ’s expertise at a global level, which we bring to bear in PNG.
Q: What is the outlook for the year for the next few months into the New Year?
Next year (2021) will be a tough year, driven in part by the global economic situation, but also the lack of significant private sector Foreign Direct Investment (FDI) into PNG. That said, PNG companies are resilient, and have been working through difficult economic conditions for a number of years now.
Q: Will the bank be launching some new corporate business products?
The major change that you will have just seen is the opening of our new corporate centre in Goroka.
This is a new building and a sign of our confidence in Eastern Highlands and in particular its role in the agricultural sector. The centre has been designed to support our range of customers including those engaged in the coffee industry, and the coffee buyers in particular.
They form part of a complex supply chain that sees high quality PNG coffee making its way into global markets. Being in 33 countries worldwide, ANZ’s role is to help make the financing aspects of that supply chain work as smoothly as possible.
Q: What is the bank’s outlook on PNG’s economy?
We are forecasting the economy to remain soft in 2021, largely due to ongoing weakness in construction activity, in particular mining investment. We expect non-mining business investment to also remain subdued. Investor confidence is important, and if project negotiations can be concluded soon, although it may take time for funds to flow, would lift confidence. Companies would turn their attention back to investment in capacity, both labour and equipment.
Q: Any other comments?
My parting comment would be to reiterate ANZ’s ongoing commitment to PNG, including the continued development of Papua New Guineans through our world class training resources.
I’ve been reading with interest in recent weeks the appointments of senior bankers at BSP, Kina Bank and NCSL.
The common factor across all three is that they all previously had lengthy careers with ANZ, some starting as graduates. It does make me proud to see them move into these senior roles, but importantly also allows us to bring through our emerging PNG talent, many of whom are women. We try hard to support diversity and flexibility at ANZ and I think the ability to effectively work from home may be one positive that comes out of the Covid-19.