During FY19 ANZ generated $260 million in group-wide savings after absorbing inflation of $160 million, the bank’s chief financial officer, Michelle Jablko today told a full year results briefing. Those savings are in part thanks to increased automation and process improvements, but the bank has also cut costs through replacing “higher cost managed services with internal resources in technology,” the CFO said.
ANZ’s operating expenses dropped to 4 per cent to $9.07 billion for the 12 months to 30 September.
Technology expenses decreased by 19 per cent ($365 million) during the year, which ANZ attributed to accelerated amortisation charge in the prior period and insourcing.
Restructuring expenses were also down $150 million year on year, due to the higher spending in FY18 associated with the bank’s agile transformation program.
In the second half of FY19 the bank registered a $25 million decrease in restructuring expenses due to higher costs in the first six months of the year associated with shifting enablement functions to agile ways of working.
“This outcome has not been at the expense of investment,” Jablko said. ANZ registered growth of $185 million in its investment spend compared to the prior year.
“Over the past decade, we've invested about $1.2 billion each year in new technology and systems across the group,” ANZ chief executive officer Shayne Elliott told today’s briefing. “In 2019, we invested a record amount of $1.4 billion and we will invest even more in 2020.”
Outside of compliance with New Zealand’s BS11 outsourcing standard, that increase has been focused on Australia, the CEO said.
“But we didn’t do this on a buy now, pay later scheme,” Elliott said. “Seventy per cent of the investment is expensed during the year. As a result, software assets on our balance sheet continued to decline and remain the lowest amongst our peers, reflecting our more conservative approach to paying up front for investment, and holding ourselves to account to deliver outcomes.”
ANZ's capitalised software balance delcined to $1.32 billion.
ANZ announced a statutory profit after tax for the 12 months to 30 September of $5.95 billion, down 7 per cent on the prior comparable period. Cash profit for continuing operations was flat at $6.47 billion.
“This has been a challenging year of slow economic growth, increased competition, regulatory change and global uncertainty,” Elliott said in a statement.
“Despite the challenges, we maintained focus on improving customer experience, balance sheet strength and improving our culture and capability.”
In doing this, we significantly reduced the cost and risk of operating the bank even though strong headwinds impacted the sector,” the CEO said. “Investment was at record levels and we are a far stronger bank as a result of the progress made this year.”