Every year The Australian’s John Durie asks some of the biggest names in Australian business five key questions about what’s coming in the year ahead.
Here, in his own words, is what Citibank CEO Marc Luet sees ahead in 2020.
Read more from the 2019 CEO Survey.
How is your company affected by low-interest rates and what is needed to boost the economy?
Low-interest rates create challenges and opportunities for different parts of our business. For example, our mortgage business has experienced growth as a result of record-low rates, while our wealth management business is increasing its focus on solutions for clients needing alternatives for yield. Citi Research is predicting an interest-rate cut in February 2020. Recent GDP data indicating that consumption growth has weakened would have been disappointing for the RBA. Furthermore, the low-interest rate and tax cuts haven’t stimulated consumer demand as expected. To boost the economy, we think it’s essential the government continue to help ensure Australia is a globally competitive destination to conduct business, whether that is through a more competitive tax system, ensuring a best-practice legislative and regulatory regime that’s anchored by dialogue with industry; or better access to a skilled, productive workforce.
What is the impact of government regulations on your company, including those applying to the financial sector?
As a significant provider of credit to Australian consumers, we have welcomed the credit card reforms and believe they have been successful in helping protect cardholders from predatory and irresponsible lending. However, the recent update of ASIC’s Regulatory Guidance 209 outlining lending obligations, suggest a heightened regime, and, as a result, a tightening of credit in 2020. This, coupled with additional regulatory scrutiny, could have unintended consequences on Australian consumers. We would welcome a nuanced approach to any changes to responsible lending guidance that takes into account product differences and looks at ways of improving customer outcomes by means that do not impact the initial credit decision.
What are the major impediments to long-term growth facing your company, and what can or is being done about them? can or is being done about them?
As a challenger consumer bank, and a leading institutional bank in Australia, we must be able to compete against the local banks, emerging fintechs and other disrupters. We need to be able to introduce new products and capabilities and react and respond to market trends affecting our clients. We welcome the opportunities associated with Open Banking designed to drive greater competition. Australia has been seen positively by international investors for many years. Our offshore client base, both investors and corporations, will expect Australia to maintain rates of GDP growth in line with the potential growth rate. Investors seek stable political and legal conditions, transparent and consistent government processes, and a pro-trade and investment agenda. These are all key ingredients to Citi’s growth in Australia.
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