May 05, 2011 – Mike Smith, ANZ chief, is reported to have welcomed the malaise infecting Australia’s property market and says that the fall in the prices of home for sale are “not a bad thing”.
Meanwhile, the bank in spite of the falling property prices has declared its intention to fight back in the home loan market after losing steam as major rivals aggressively fight for market share.
Mr. Smith said that ANZ had no intentions of tightening the lending criteria in response to the weakness in the housing market, which was said to be “generally in good shape”.
Mr. Smith also said, “I think that some of the reduction in prices is probably not a bad thing. Certainly the affordability issue is something that has been of concern,”
As published this week, the Australian Bureau of Statistics data revealed that the house prices fell by 1.7 per cent across the capital cities and by 2.5 per cent in Melbourne in the three months to March.
Mr. Smith’s comments came about due to ANZ posting a record first-half cash profit of $2.82 billion which is said to be a result that failed to impress analysts concerned by a string of factors including a dip in the group’s profit margin.
Mr. Smith, while unveiling the results, gave a warning that the growth in housing loans across the domestic credit system was doubtful to return to the levels once enjoyed by lenders before the financial crisis happened.
According to Mr. Smith, the strong Australian dollar, in the short term, which is said to be discouraging domestic manufacturers by ushering in a period of cut-price imports, was said to be doing “some of the lifting” for the Reserve Bank.
He added that parts of the Australian economy had “clearly hit a flat spot”.
TS Lim, Southern Cross Equities analyst stated that the offhand comments were among factors provoking investors to sell out of ANZ yesterday, with shares in the group decreasing more than 2 per cent.
ANZ’s interim dividend at 64c also drops 1c shy of analysts’ consensus forecast.
According to Australian operations Chief Philip Chronican, ANZ’s lethargic mortgage growth in recent months was not tactical; however, it is a consequence of the promotional and price war playing out in the industry.
Published last week, the Australian Prudential Regulation Authority data showed that NAB, Westpac and the Commonwealth Bank had all outpaced ANZ for mortgage growth in March.
