‘Improbable’: ANZ’s boss is trying to defy history

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ANZ Bank boss Nuno Matos will have to defy history to hit the ambitious financial targets outlined in the bank’s strategic overhaul as he tries to turn the underperforming bank around, analysts say, though his cost-cutting agenda has won plaudits from the market.

One notable aspect of Matos’ plan to cut costs is to reduce ANZ’s reliance on business consultants, with the chief executive even telling analysts at the market briefing on Monday that he “hates” consultants.

ANZ boss Nuno Matos has pressed go on an ambitious overhaul of the bank – and he wants it done quickly.

When asked how much he would be relying on external consultants to bring in the changes, or whether ANZ itself would be driving the project, Matos made it clear that his preference is for the bank to do more work in-house.

“You’ll be pleased to know I don’t like consultants, to be honest. I hate consultants, OK?” Matos said to Jarden analyst Matt Wilson on Monday.

ANZ’s chief financial officer Farhan Faruqui clarified that the comments were not intended “in an individual sense,” before Matos explained that he said a big part of ANZ’s productivity drive was coming from doing more work itself, rather than relying on third parties.

“I came from a school where things are done by the teams that are in the company, right? Sometimes, in special moments, you need some help, either because they have something you don’t have or because you need to do it faster as an accelerator. But I and we don’t like structured consulting or third parties or managed services,” Matos said.

ANZ does not have a blanket ban on using consultants, and Wilson told this masthead that Matos’ comments reflected his desire for the bank to execute its own strategy, rather than relying on outside help, while keeping costs in check.

Wilson estimated major banks spend tens of millions of dollars on consultants, but he was doubtful about how much value the industry creates for shareholders in most circumstances.

“He said he hates the industry. He is a lifetime banker and he has done this before,” Wilson said.

“The consulting industry creates limited value for owners other than in special circumstances where you need to corral people quickly. Ninety-nine per cent of the time you’re better off doing it yourself.”

ANZ shares performed better than other big banks on Tuesday, as investors digested Matos’ announced overhaul for the underperforming bank, including $800 million in cost cuts by 2026, further investment in bankers to write mortgages and business loans, and a speedier integration of Suncorp Bank.

The bank also wants to target the “mass affluent” segment, as well as expanding in business lending, with Matos targeting a return on tangible equity of 12 per cent by 2028 and 13 per cent by 2030, compared with 10.3 per cent in 2024.

Bank watchers on Tuesday said that achieving Matos’ longer-term financial goals would be tough.

Macquarie analysts said it was “improbable” that ANZ would hit its long-term target for its cost-to-income ratio or its target for return on tangible equity, though even partially achieving its cost targets could provide “sound upside.”

“ANZ is looking to achieve what no other bank has done: materially outperform peers on costs and then revenue,” Macquarie said.

Barrenjoey’s Jonathan Mott said providing cost-to-income ratio and return on tangible equity targets for 2028 and 2030 was “courageous.”

“Quite simply, history shows that Australian banks can either take costs out or grow revenue, but never both,” Mott said.

Morgan Stanley’s Richard Wiles backed Matos’ communication and willingness to name targets and timeframes, but said it would be difficult for ANZ to outperform the market in retail and business banking.

“We’re not convinced that ANZ can accelerate revenue growth and outperform the market during the ‘second phase’ of its 2030 strategy,” Wiles said.

The changes outlined by Matos follow his announcement last month that the bank planned to cut 3500 jobs, as well as 1000 contractors working in the bank.

The Finance Sector Union, which held a rally of staff outside ANZ’s Melbourne headquarters on Tuesday, has pushed ANZ to provide details about which areas are at risk of job cuts, as well as calling for no forced redundancies.

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