ANZ NZ raked in almost $130 million in funds management income over the six months ending March 31, the bank’s just-published half-yearly accounts reveal, up about 2 per cent year-on-year.
According to the ANZ figures, the NZ business reported funds under management (FUM) of more than $31 billion as at March 31 this year, of which about a third comes courtesy of the bank’s three KiwiSaver schemes.
The NZ division holds virtually all of ANZ FUM after the Australian parent exited the in-house funds management business some years ago. However, ANZ reported about $50 billion in FUM in its OnePath pensions and investment business, which is en route to pending new owner IOOF.
IOOF has already absorbed ANZ’s third-party financial planning groups under an almost $1 billion deal inked late in 2017. However, the transfer of the OnePath superannuation and investments business has faced multiple delays partly related to the Australian Royal Commission (RC) into financial services.
Both ANZ and IOOF were criticised during the RC in a process that ultimately saw the exit of the latter’s long-time chief, Chris Kelaher.
The ASX-listed IOOF – which has a minor presence in NZ – hit another snag late in April after breaching Australian Prudential Regulatory Authority superannuation licence conditions.
At the time, ANZ said in a statement: “Until those matters are satisfactorily addressed, we are in no position to make further decisions on the transaction regarding our pensions and investments business.”
Overall, the ANZ NZ business recorded a net profit of almost $930 million during the six months to the end of March, down 4 per cent year-on-year. However, the NZ bank booked a cash net profit after tax of more than $1.1 billion over the half-year including one-off sale items of the OnePath Life business (to Cigna) and its quarter share in Paymark.
But the NZ business could require between $6 billion to $8 billion in extra capital if the Reserve Bank of NZ (RBNZ) bank funding proposals come into force, ANZ says in its results presentation.
Michelle Jablko, ANZ CFO, said in an ANZ in-house interview: “Looking forward, we’ve got some challenges, particularly in New Zealand, that we need to work through. It’s a bit too early to tell what the ultimate impact of that will be. And of course it depends on what our balance sheet looks like in the future as well.”
The RBNZ proposal to lift NZ bank capital buffers by about 40 per cent was also flagged as a major risk by the National Australia Bank (NAB) in its half-year results, released in the same week as ANZ’s.
NAB’s NZ subsidiary, the Bank of NZ (BNZ), would have to stump up between $4 billion to $5 billion if the RBNZ proposals come into force as is, the bank says in its results.
The capital enhancement would represent a “25-35 per cent decrease in the BNZ balance sheet”, the NAB document says.
“Where risk-adjusted returns are not sufficient, [BNZ] will need to consider re-pricing and/or reducing lending,” if the RBNZ gets its way.
Australian parents could also sell-down their NZ operations in the wake of the RBNZ capital upgrades with some observers suggesting BNZ would be first cab off that rank.
Regardless, the NAB NZ offshoot reported a healthy cash profit of $532 million during the six months to March 31, representing a year-on-year increase of almost $40 million. BNZ residential mortgage business was up 8.1 per cent over the year while business lending increase more than 4 per cent.
NAB has also set aside about A$1.1 billion to remediate customers following the RC findings and other regulatory investigations. The provision is largely part of efforts to make good any ‘fees for no service’ charged to both bank-branded and aligned third-party advice clients.
For the 2009-2018 period, NAB ‘advice partnerships’ earned an estimated A$1.3 billion in ongoing fees, the report says.
The bank is now targeting a 2020 date to float its MLC wealth business “while keeping options open for a trade sale” after delaying the move originally set for this year.
Meanwhile, NAB has earmarked $8 million to invest in NZ fintech firms as part of a $108 million fund to foster ‘financial innovation’.
According to the report, the NAB Ventures fund has made 10 fintech investments after identifying 600 potential targets from an original pool of 2,000 plus companies. NAB has simultaneously boosted its in-house digital services including the launch of robo-advice-like tool called ‘Goal Keeper’.
Finally last week, AMP NZ wealth management business saw net outflows of more than $50 million as leaks sprung in its non-KiwiSaver superannuation and retail units. The AMP KiwiSaver scheme, however, carved out positive quarterly net flows of about $40 million.
Both AMP NZ’s approximately $6.7 billion retail/super divisions and the KiwiSaver scheme were boosted by strong markets that added roughly $540 million and $340 million, respectively, to FUM counts over the quarter.
At the same time, the AMP Australian wealth business saw net cash outflows of A$1.8 billion over the first three months of 2019, reflecting “expected continued weakness in inflows and higher outflows in the post-Royal Commission environment”, AMP says.
Over the quarter AMP Capital FUM “increased 4 per cent to A$194.6 billion primarily due to stronger investment markets”, the release says.
In a statement, AMP chief, Francesco De Ferrari, said: “Our focus during the first quarter has been on accelerating change within AMP including establishing a new leadership team, progressing the remediation program and separating our life insurance businesses, and sharpening our offers to clients.”
As part of an ongoing management clear-out, last week AMP named John Moorhead as CFO, replacing the outgoing Gordon Lefevre. Moorhead makes the jump (effective June 1) from AMP Capital where has been CFO and chief operating officer since April last year.