Peter V O' Brien, Finance writer
Friday 16th November 2001 |
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Net profit percentage changes in the table for the 2001 full year can be compared with the figures for the first half which were ANZ (+11.0), NAB (+28.7) and Westpac (+13.0).
That did not stop the companies' share prices jumping since the second week of May, the last time The National Business Review examined the sector.
ANZ and Westpac were at their 2001 highs last Friday and NAB enjoyed a strong rise after its preliminary announcement.
NAB declined earlier in the year when problems in its US mortgage service provider Homeside International required a two-part total "impairment provision" of $US1.61 billion ($A2.76 billion), preparatory to selling the subsidiary.
There was also a goodwill writeoff of $A858 million related to Homeside.
The profit figure in the table for NAB excluded the impairment provisions and goodwill writeoff. Such a substantial one-off amount distorted NAB's operating performance from core activities.
Banks seem to be reacting defensively to widespread criticism about their relationships with customers, if one reads between the lines of the latest comments.
ANZ chief executive John McFarlane's statement did not need any "reading between the lines."
He was blunt: "Although we have made progress in the areas of customer and community satisfaction, we have a great deal yet to do.
"It is well known that banks are not held in high regard by personal customers or by the community.
"Changing this perception of ANZ and contributing to changes in the wider industry is a major priority of ours over the next few years."
Westpac's comments were subtler, but, perhaps paradoxically, seemed to take an aggressive approach to a defensive position.
"Our customer-focused strategy and emphasis on building stronger relationships with our customers has been a major contributor to our strong revenue growth.
"This has been driven in part through our customer relationship management (CRM) project which has helped us to understand our customers better and identify opportunities within our existing customer base."
Westpac also emphasised "corporate and social responsibility," referring to a new board committee on corporate social responsibility which would "consider and review the social and ethical impacts of all of our activities and establish and maintain standards for our practices."
The bank "launched" its social responsibility charter in July and said it provided the "framework in which we aim to meet our social responsibilities to our customers, staff and the wider community."
The three banks had another think about branch closures, either slowing the process or providing alternatives, such as NAB's "new points of access" through a deal with Australia post.
They still have a problem, because the drive for cost efficiency, as expressed in the cost/income ration percentage in the table, required overhead cuts.
Westpac said its expense management allowed it to reduce the number of full-time equivalent staff by 1986, or 7%, to 28,534 at September 30. It did not say how many lost positions resulted from normal attrition or voluntary redundancy.
NAB referred to "personal costs related to savings of 136 head office and support roles."
Such jargon does nothing to enhance banks' perceived image in the community, particularly when one of the biggies boasts nobody would wait more than two minutes in a queue at a branch without receiving attention from what could be loosely termed a "roving floor walker."
That bank's employees scoffed at the claim, which appears to have been dropped after it was proved nonsense.
Banks could face an irreconcilable conflict between the requirements of customers, particularly individuals as opposed to businesses and high-net-wealth people, and their shareholders.
The latter wants higher profits and improved returns on shareholders equity and a consequent gain in share prices.
Share prices improved but the banks achieved that through a move to impersonality, which may be now in reverse.
It is a fair bet that many "elder citizens" have banking assets which, head for head, outweigh those of younger generations.
Whizz-bank banking staff might be bemused to learn that some of those people have difficulty using ATMs, let alone telephone and internet banking, assuming they had internet access.
Social considerations aside, Australian banks have been solid equity investments in recent years and should maintain their status.
Australian banks' statistics year ended 30.9.01 | |||||||||||||||||||||||||||||||||||||||||||
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