Strong Expansion Strategy to Boost ANZ Growth

Submitted by Jim Thesiger on 31 December, 2009 - 06:17

The global banking and financial service provider Australia and New Zealand Banking Group (ANZ) is expected to lead the road of expansion in the industry during the economic recovery and offers the highest return through its Asian expansion strategy supported by a strong capital position. Mike Smith, the chief executive of the bank expressed his determination to turn ANZ into a power-house in this industry and the bank is expecting to see 20 percent of its earning coming from Asia by the year 2012. It is to be mentioned that ANZ bank purchased Asian assets from Royal Bank of Scotland in August. In his speech, Mr. Smith also emphasized on the importance of ANZ remaining strong in its home market.

While talking about the future prospects of ANZ, Southern Cross Equities analyst TS Lim termed ANZ as a very good retail bank which has growth aspects in the global market supported by strong execution capabilities. Mr. Lim also added that the bank has a very strong level of liquidity and capital and may see more opportunities coming out from the Asian region within three to six months. It is to be mentioned that the Tier capital ratio of ANZ was 10 percent after the bank accomplished a $2 billion worth of convertible preference share offer lately. The Tier 1 ratio of other three major banks including National Australia Bank (NAB), Commonwealth Bank of Australia (CBA) and Westpac Banking Corp (WBC) remained within the range of 8 and 9 percent.

According to Austock Securities analyst John Buonnacorsi, ANZ and NAB are likely to make a comeback in the market. He also added that both these banks took hits from the market as a result of holding complex financial assets which were associated with the sub prime crisis. On the other hand, the larger share in Australian operations and mortgages allowed Westpac and CBA to reassure their investors during the global financial crisis since the unemployment rate remained low to some extent and the defaults on mortgages were insignificant.