ANZ chief Shayne Elliott flags pullback from China
ANZ could reduce the size of its business in China as a result of Australia’s mounting tensions with the Asian giant, its CEO says.
ANZ could reduce the size of its business in China as a result of the nation’s mounting tensions with its most important trading partner, according to chief executive Shayne Elliott.
Mr Elliott said ANZ, which has been in China since 1986, would continue to do business in the world’s second-largest economy.
“Our business in China … is to service the trade and capital flow in and out of China, mostly to Australia and New Zealand but also to other parts of Asia,” he told Melbourne radio station 3AW. “That’ll continue to be a great business and China is still going to buy iron ore and we’re still going to buy lots of stuff from China.
“But the scale and breadth of that operation may well change as a result of this.”
Australia is embroiled in an escalating trade dispute with China, which has been fuelled by its call for an independent investigation into the origins of the coronavirus pandemic. A milder version of the proposal won broad support, including from Beijing, at last week’s World Health Assembly.
In the meantime, China has imposed tariffs of about 80 per cent on barley imports from Australia, suspended beef imports from four abattoirs on technical grounds, and threatened further measures.
Mr Elliott said these events, along with street protests in Hong Kong against Beijing’s plan to impose a new national security law, had “raised the risk profile around certain parts of our business”.
“We facilitate a lot of trade in the region … and then of course we’ve got operations all around the region,” he said. “So, what does it mean for our offices in Hong Kong, for example: should they be bigger or smaller?
“Yes, they are big questions, and particularly for Australia, New Zealand, our home markets.
“We are liberal, open economies that depend on the free movement of people and goods, and if those things start to be less free, for health reasons or geopolitical reasons, of course that’s concerning.”
Loan deferrals
On the issue of loan deferrals, Mr Elliott said 20 per cent of the customers who had expressed interest in the initiative had decided not to proceed.
Overall, 20 per cent of customers had made inquiries.
A lot of people, he said, had inquired because of “initial fear”, only to calm down on reflection and decide they had no need to participate.
“When you look into them to say, well, what actually has happened in April and May?” Mr Elliott said.
“About half of them actually haven’t seen their income deteriorate, so they got a deferral out of caution, but actually they’ve still got a job.
“So, at this point, we’re hopeful that it’s not as bad.”
This was one of the reasons why ANZ had difficulty reconciling the original, $130bn price tag on the JobKeeper scheme.
“If half of people are supposed to be on JobKeeper, how come we weren’t being flooded with more people?” Mr Elliott said.
House prices
As for house prices, ANZ was “a little bit bearish”, expecting prices to fall in a range of 10-15 per cent over the next 18 months.
The reason was less demand because people would have less income, and immigration would be lower.
“You’ve got to believe that house prices are going to be softer,” Mr Elliott said.
“I don’t think it’s Armageddon. I think, when we say 10 per cent falls, that just means we’re going back to where we were not that long ago.
“We’re not alone in that. Most of the banks have got a number that’s pretty similar to that.”
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