"We got it wrong," Paul O'Sullivan says
ANZ dropped the ball when it came to meeting skyrocketing demand for mortgages during the pandemic property boom, chairman Paul O’Sullivan admitted during the bank’s annual general meeting Thursday. O’Sullivan promised ongoing investment in automation to correct the issue.
O’Sullivan said that 2021 had been a disappointing year for shareholders after slow approval times caused the bank’s mortgage book to shrink, according to a report by The Sydney Morning Herald. A reliance on manual processing of applications from mortgage brokers meant the bank was unprepared for the housing boom brought on by record-low interest rates, government stimulus programs and increased saving during lockdowns.
Shareholder Wolfgang Frank was one of many who took the bank to task during the meeting for its failure to meet skyrocketing demand, the Herald reported.
“How can a major bank such as ANZ have processing issues in a longstanding and basic product such as housing loans resulting in a material drop in market share?” Frank said.
ANZ still lags in mortgage approvals, with complex loans from brokers taking about 32 days and loans for first-home buyers taking about 10 days, the Herald reported. O’Sullivan said that remedying that was now a top priority for the bank, and pledged to regain market share in the second half.
“Let me be frank – we got it wrong. Although we expanded capacity, we didn’t expand capacity enough,” O’Sullivan said. “And as a result, we lost market share to those who could process it. We have spent a lot of time at board and management understanding this issue. There has been significant work done to bring in new processes, new ways of handling things and to look externally at best practice so we can learn from that and improve. Yes, it’s been a disappointing performance, but there has been a lot of work done to get us back on track.”
ANZ CEO Shayne Elliott said mortgage demand would continue to grow at 5% to 6% next year, but pointed out that not all mortgages could be approved in 30 minutes because of responsible lending laws.
“We have an obligation not just to process the loan, but to ensure and take reasonable steps to ensure that, quite rightly, the applicant has the means to repay the loan without undue hardship,” he said.
About a third of ANZ’s new mortgage applications come from self-employed or small business operators, the Herald reported. Elliott said that fact complicated the bank’s obligation to judge the borrower’s ability to repay.
“Of course, small business operators don’t have a payslip, so in order to assess them for a home loan, it’s a little more complicated and it takes a little more time,” he said.
