Defaults, bonus bonds and volatility weigh heavily on ANZ funds

ANZ reported a 12% year-on-year decline in its funds under management (FUM) in the 12 months to the end of September.

Full-year results for the Australian banking giant’s New Zealand arm said the double-digit decline in FUM was due to “the transfer of KiwiSaver’s default customers to other managers, the termination of bonus bond distributions and a downturn in the market”.

Nonetheless, ANZ, with $34.3 billion under management as of September 30, maintains its top ranking as the largest KiwiSaver and fund manager in NZ, but with an overall market share of 20% for the first time. %.

Despite its market-leading position, ANZ’s wealth management division posted a record 7.1 billion after-tax net profit for the broader group in the Australian bank’s 135-page 2022 results released last week. I hardly appreciate any mention of it being Australian dollars.

Chief Executive Shane Elliott says New Zealand’s money management business is now unique among ANZ Group, which has rushed out of the wealth sector over the past few years in a strategic ‘risk aversion’ move. .

Elliott said in a release that ANZ’s withdrawal from the affluent segment set it apart from rival banks.

“We continued our systematic de-risking of the bank, underscored by the sale of our margin lending business to Bendigo & Adelaide Bank, and last month the formal separation of our wealth business into Insignia and Zurich. Done,” he said.

“Together with the completion of financial planning and advice and the finalization of related remediation, we are the only major bank in Australia to remove the risk associated with managing shareholder wealth.”

A move into financial services accelerated by the Royal Commission of Australia in 2019 saw ANZ expand its investment, superannuation, third party distributors, life insurance and, ultimately, its in-house advisory arm (contract signed with Zurich). sold a number of Australian businesses, including March this year).

ANZ NZ’s total operations report an 8% increase in net after-tax cash earnings to over $2 billion in fiscal 2022 as rising interest rates and a surprisingly resilient economy supported the bank’s balance sheet doing.

But ANZ NZ chief Antonia Watson said the bank was preparing for tough times ahead.

“Many of our clients are taking the opportunity to pay off their debts and increase their savings. “…At this point, the majority of our customers are in good financial health, but we know that over the next year many will transition their fixed mortgages to higher interest rates. Some will be under pressure.”