Australia and New Zealand Banking Group’s (ASX: ANZ) (“ANZ”) Asia, Pacific, Europe and America ‘super-regional’ strategy launched in 2007 by CEO Mike Smith has gone exactly according to plan.
Since its inception in 2007, the company’s earnings from the strategy have been rising healthily, beginning at 12% and rising steadily to 20% by 2012, and expected to reach 25-30% by 2017. In a bid to accelerate ahead of its domestic competitors, ANZ aims to grow faster from its move into Asia and beyond.
ANZ reported NPAT up 6% to $5.56 billion for the year ended 30 September 2012. NPAT has been up consistently since 2003, when it was reported at $2,246 million. Competitor National Australia Bank Limited (ASX: NAB) increased from $3,772 million to $3,837 million in the same 2012 period. ANZ’s recent results could be attributed to the global growth strategy in which 21% of group revenues were derived from outside Australia and New Zealand during 2012.
According to CEO Mike Smith, Asia’s developing countries could hold up to half the world’s financial assets by 2050 as more companies do business in the booming markets north of Australia. ANZ is known to be the most Asia-focused bank in Australia and as the revolution begins to take a hold on the global economy, ANZ wants to be the biggest part of it. Mr Smith is not alone; a recent study conducted by PriceWaterhouseCoopers found that 80% of 400 Australian senior business managers expect China to be the world’s biggest capital-raising market by 2025. However, with current problems relating to debt levels at some of China’s biggest banks, the second largest economy will need funding to fuel its huge expansion.
Last week, Mr Smith’s strategy took another step in the right direction as ANZ, along with Westpac Banking Corporation (ASX: WBC), was the first to start directly trading the Chinese renminbi. Mr Smith said the rise of the renminbi will “create major new opportunities for the Australian financial services sector as Asia’s growth and the renminbi’s internationalization drive financial depth in the region”. Together with Asia’s progressive liberalisation towards trade and investment, the possibilities in Asia are immense and ANZ will be in place to reap the benefits.
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