Gonski flags hit to dividend at ANZ

ANZ chair David Gonski says he will not take a short-term view during the coronavirus crisis as he addresses concerns shareholders will bear the brunt of bank actions through the pandemic.

Less than two weeks out from the bank’s half-year result, which investors fear will see its dividend slashed, Mr Gonski said he was acting in shareholders’ long-term interests. “Some might say that, at the moment, with some of the actions we are taking, shareholders in the short term may have to bear the cost and it is my job to act in the interests of shareholders,” Mr Gonski said in an interview published on ANZ website Bluenotes.

“But to act in the long-term interests of shareholders — and I stress long term — we must act in the interest of other stakeholders, of staff, of the community. In my view, to take a short-term view in a crisis like this would be very dangerous. It is difficult to balance these stakeholders in a crisis but we must. Everybody is paying, unfortunately.”

The bank would “do the right thing by people” through the unprecedented crisis, he said.

“It is a health crisis but it is also an extraordinary and evolving ­financial crisis and shock to the real economy.

“We must try and do the right thing by people, try and tide them over, try and get them to the other side. This is truly what we are here for and we must step up.”

ANZ will be the first of the big banks to report its half-year numbers when it hands down its result on April 30. Investors are bracing for a dividend hit after Australian Prudential Regulation Authority chair Wayne Byres earlier this month issued a directive to banks and insurers, ordering them to “seriously consider deferring decisions on the appropriate level of dividends until the outlook is clearer”.

The directive came after regulators in the UK and New Zealand forced their lenders to cease paying dividends through the crisis.

ANZ chief executive Shayne Elliott last week flagged that the bank was bracing for a financial hit, with its earnings to be pressured from the shutdown sweeping the broader economy.

“I think it is obvious that the bank’s profitability will be impacted,” Mr Elliott said. The economic impact of the pandemic would “be far worse” in the long run if the health crisis from the coronavirus wasn’t the priority, Mr Gonski said on Sunday.

“Despite our inexperience with health crises we have to treat this crisis first as a health crisis, then an economic crisis. Not the other way around,” he said.

Unlike other crises, where the end date was unknown until it was near, we know the COVID-19 crisis will end once a vaccine was available, he said. This knowledge has led to the bank planning ahead “for coming through the other side”. “We need to ensure we don’t make decisions in the crisis that would disable an effective reopening, decisions which might compromise us being in the best position we can be when we do re-open.”

ANZ was strong, resilient, and in a position to help customers, Mr Gonski said. “We have to prudentially run our bank in a compassionate and very well thought-through manner. But at the same time, we can’t take on just any loan that’s requested of us. We can’t make every dispensation that’s asked of us. We have to ensure that we are there and strong in the long term,” he said.