Antonia Watson: ANZ CEO on the bank lending less to businesses than it did five years ago

New Zealand’s largest bank is lending less cash to businesses than it was half a decade ago. 

Figures from the Reserve Bank show a softening across all bank business lending since the pandemic, with ANZ the only one going backwards. 

The overall growth rate across all banks has slowed to just 1.5%, down from 6% in 2013.  

ANZ CEO Antonia Watson told Mike Hosking much of the drop is caused by a decrease in lending to commercial property. 

She says their decision was to support their existing customers through rising interest rates and tougher circumstances as opposed to taking on new customers.  

However, she confirmed the bank is back to taking on new customers. 

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Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talk ZEDB. Follow
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Speaker 2 (00:16):
Let's pick up where we left off last week on
small business lending. Figure show is softening across all bank
business lending A and Z our biggest bank, of course,
actually going backwards on that. Overall the growth rates dropped
from six percent in twenty thirteen. This is for everyone,
not just ANZ six percent in twenty thirteen to one
and a half percent. So what's going on here? Antony
Watson is the CEO of A n Z and is

(00:37):
with us.

Speaker 3 (00:38):
Good morning, Good morning Mike.

Speaker 2 (00:40):
Is there a thing or not?

Speaker 3 (00:43):
Well, there's a thing which I can explain. But the
thing that I'm delighted to be able to tell you
is that we are growing and have been growing lending
to small and medium businesses and that's been despite there's
been a lot more non bank lender activity. I can
explain why why the reduction if you want me to
at selling you DC was the first thing that we
did in twenty twenty, and then the big impact really

(01:05):
has been a drop and lending to commercial property now
there's several reasons for that. You've got developments that would
sort have been done as interest rates were lower, that
then completed and then got paid off, and in that
period of time you had interstrate interest rates increasing times
got tougher, so not so much new demand. And our
decision so that this was our decision was to support

(01:26):
our existing customers as interest rates are increasing and things
are getting tougher, rather than taking on new new customers.
So the big drop in our lending has been from
property as opposed to smaller medium businesses.

Speaker 2 (01:38):
Okay, are you taking on new customers now?

Speaker 3 (01:40):
Absolutely. We've had seven thousand customers sign up in the
first half to our how to campaign, and that's a
campaign about helping you know, you've got this this thing
about you've got to get through the first two years
when you're a new business. We've got that's helping them
get through that first two years.

Speaker 2 (01:53):
Okay. And are those people new clients or people who
had borrowing elsewhere and came to you just in a
competition type way, that there would be.

Speaker 3 (02:02):
A mix and it will be new startups and reasonably
new businesses. That was part of the part of the
requirements for the package.

Speaker 2 (02:10):
Okay. Part of the explanation last week seemed to be
that there are rules that you guys have to carry
extra capital to back up business lending. Is that true?
And if it is true, how much of it is it?
And is it a burden?

Speaker 3 (02:25):
So yes, it's true. Exactly how much it is I
couldn't tell you off the top of my head, because
it's once again into business leanding. It's very risk based
and it depends on the individual business. But it is
risky a lending to businesses, the lending to householders who
have a home and good equity in their home to
back up for lending. So that's the reason we hold
more capital. It isn't a constraint. We're not constrained with

(02:46):
our capital. We don't sit there and think we'd rather
do lending to housing into businesses. We're open to both.
We are interested in leanding to anyone who's got a
good plan that shows that they can pay us back
over time.

Speaker 2 (02:57):
Right, I'll come back to the plan thing in a moment.
Would you be generally thinking that this view that you
hold is the view of all the major banks in
the country in terms of lending to business overall?

Speaker 3 (03:07):
I would suspect so yes, And that you do have
to look through the numbers. You know, the Reserve Bank
numbers that they publish are reasonby blunt because they're at
at noble business. They're well. Another thing that you know
we see in our portfolios are lending to very large institutions.
I think we've been out had about seven billion dollars
out since the time I joined the bank sixteen years ago.

(03:28):
Because as soon as your lending gets to say one
hundred two hundred million dollars, you want to syndicate that
amongst a lot of banks so that you're still spreading
the risk, and often you'll get them to borrow their
own money in the debt capital market. Good.

Speaker 2 (03:40):
I'm glad to hear this explanation because what I couldn't
work out in the numbers is that there seems to
be and in fact, I know there's a record number
of business sales in this country. There's never been more
interested in buying businesses. And I'm assuming some of those
people at least need to borrow from banks and therefore
are borrowing to buy businesses.

Speaker 3 (03:56):
Yes, but I think the thing to remember there is
the difference between equity and debt funding. So the first
thing you need is you need some cattle behind you,
because the minute you take on the debt, you're having
to pay interest on that. So, you know, we see
businesses that are undercapitalized, and it's important that you also
have their equity behind you when you start a business
as well.

Speaker 2 (04:15):
Okay, one of the criticisms we got when we raised
this last week was raised last week was that there's
no one in the bank. And this is not necessarily
you specifically, but it's banks generally that aren't business specialists.
In other words, you do it all by a computer.
You tap in a few numbers and some answer comes
back and you've got it all you haven't got Is
that true or not?

Speaker 3 (04:33):
We have? Oh, I can't give you the number of
top of my head, but we have many business specialists
who are sitting ready to help our customers. And if
they feel like they're not getting to help, they need
get them to email me.

Speaker 2 (04:43):
Right, So there are people right broadly speak at mortgage rates.
Where are we heading? What do you think for July
and August on the Reserve Bank? Go on, give us
the big big economic read here, Antonia.

Speaker 3 (04:53):
I don't know. I know that Sharon Zolner is saying
that they're probably might be seeing some more decreases. The
problem is you've got this uncertainty and got it in
speaking about business. Uncertainty is the worst thing for business.
I mean, could the current situation in the Middle East
increase oil price doesn't have a knock on effect and
suddenly we've got inflation again and can't lower rates. Or
could it lead to a recession and therefore they do

(05:15):
lower rates to simulate the economy. I just you haven't
seen the situation with us much uncertainty.

Speaker 2 (05:20):
I think maybe would you at a drink after work
when they go well what's new Zealand feel like, what's
your answer? What's the word you were using?

Speaker 3 (05:29):
My answer is sort of green shoots, but uncertainty. So
I think the situation we're in now is that whilst
we can see some improvement, you can see milk prices
and agree and interest rates coming down, so people have
got more money in their pockets. I think we've just
not quite got the confidence because of that uncertainty to

(05:51):
spend it on going out to dinner, or spend it
and on investing something in your business.

Speaker 2 (05:55):
Yeah, good insight apprechect time as always Antonia Watson. Hopefully
that at least most of our questions.

Speaker 1 (06:00):
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