ANZ to enforce accountability for mortgage disaster

ANZ is poised to enforce accountability for the disastrous performance of its mortgage business, with retail boss Mark Hand hanging on to his job by a thread.

ANZ chief executive Shayne Elliott. Picture: Arsineh Houspian

ANZ is poised to enforce accountability for the disastrous performance of its mortgage business, with retail boss Mark Hand hanging on to his job by a thread.

Sources said the bank was close to announcing changes in its executive leadership team, most likely this week.

ANZ has given up market share in its key mortgage operation to rivals CBA and National Australia Bank. The main problem has been slow processing.

ANZ chairman Paul O’Sullivan indicated the board’s frustration with the division’s performance at last year’s annual meeting. The business, he said, had been unable to respond to a significant increase in the demand for loans, and had lost market share as a result.

“Naturally, this has been a major focus for the board and management, and we are confident that the systemic actions being undertaken by management will address these issues, including increased investment in automation and process improvement,” Mr O’Sullivan said.

“As a result we expect our Australian home-loan portfolio to return to growth in this half and for ANZ’s growth to be in line with system growth sometime in the second half of this financial year.”

An ANZ spokesman declined to comment.

Addressing the issue late last year, chief executive Shayne Elliott said the front end was working well, with application volumes quite high by historical standards.

“In terms of our branch network we don’t have a problem at all, in terms of turnaround times,” Mr Elliott said. “People going into the branch get a turnaround really quickly and very competitively; (the problem) has been in the broker space.”

The ANZ boss said the bank made a risk-based decision after the financial services royal commission that it would manually assess all broker applications.

This made it difficult to ramp up for higher volumes, particularly when Covid-19 hit because it became more challenging to train people in the office environment.

Mr Hand acknowledged to investors that he hadn’t picked the home-lending boom.

“So in terms of our preparedness for that, we weren’t ready,” he said.

Since then, however, the business had been improved, with the ability to write home loans more than double what it was 18 months ago. ANZ was now in the process of doubling that again.

“But that takes time – to automate processes you need to change systems, you need to retrain staff, and you do need to put new staff on,” Mr Hand said. “So we have redeployed a lot of staff from other parts of the bank to help with this, but the technology solutions, the automation solutions, that we need to put in place just simply take time.”

Mr Hand said ANZ’s mobile network accounted for about 15-20 per cent of volumes, and the loans were treated the same as broker-originated business.

“So we have a bigger piece of our pie that goes through the slower process, compared to the branch deals where 60 per cent of customers will walk out the door with a decision within about one hour of entering the branch,” he said.

“So we do have a lot of work to do to improve that process, and we’ve got a lot of work under way.

“Our bias plays towards a little bit of a longer turnaround time, but if you look at our turnaround time for a straightforward deal, that is comparable to the deals that a Macquarie, for instance, might be writing.

“But the difference is in a few days, not in weeks.”