Vestpac Banking Corp is still committed to its wealth despite its profit so far, and will continue to steer revenue by cross-selling products to customers despite consideration of the "vertically integrated" model by the Royal Commission Haine.
Recognition of providing advice through its BT Financial Group was now more expensive and more risky for reputation, said Vestpac Executive Director Brian Hartzer, declaring that sales of insurance, private wealth and investment "platforms" were key to the bank's strategy.
Vestpac's strategy is different from other banks that have ruined their fortunes.
Vernost г. Hartzera in BT comes despite having reported a 12% drop in cash income over the past year, and 40% in the second half because it was affected by customer compensation provisions, which also had a negative impact on consumer spending.
Vestpac's Western profit amounted to $ 8.07 billion, reversed $ 281 million in customer returns, higher funding costs and increased competition, especially from non-bank lenders. It was a "quenched result, reflecting the environment," said UBS analyst Jonathan Mott.
The payment of clients after the Royal Commission and the slowdown in revenue, due to the growth in housing loans, slowed the cash deposit in all four major banks in the past financial year, with profits falling by $ 2 billion or 6.5 percent to $ 29.5 billion.
Mr. Hartzer urged investors to keep their faith in the bank's high technology spending. This included a new "service center" next to Panorama, an open-ended investment management platform set up for the external market. It is understood that Vestpac has invested about $ 600 million in Panorama.
He said it would allow cost savings in the coming years and despite the cost and revenue ratio, which rose by 143 basis points to 43.7 percent in the past year, the bank continued to dedicate to a 40 percent reduction, leading to more digitization .
"Basically, we are now moving from the construction phase to the feed stage and we begin to understand the benefits.
"Higher savings will gradually decrease over the next few years, as we establish a customer service center, take into account Panorama, retire old platforms and collect benefits from middle and back office resulting from product simplification and automation."
Increased investment in technology in the event of higher compliance costs and low revenue growth was a feature of this reporting season for banks. Banks invest "to try to understand the client in detail, and significant investments in technology will be crucial because high-line revenue will be a big challenge," said Tim Dring, a local banker and capital market in the EI market.
"The more banks can understand the client, the more I can understand how products can be safely sold, whether they are wealth or bank bank products."
Understanding Vestpac's wealth strategy requires that its operations be split into their parts, said Hartzer, with financial advice looking at the most robust given "dramatic" increase in the cost of audit files.
"We continue to work through our model of financial advice so that we can determine the way of sustaining advice, and that remains a challenge," he said. Banks were not "necessary" to have consultants, he acknowledged, and Westpac worked on some "pilots" who were exploring new delivery models.
"We Do not Throw Products"
With the provisional report of the Royal Commission on the adverse behavior of banks, it is caused by pressure on staff to achieve product sales targets, Mr. Hartzer said that banks can continue to sell and increase revenue.
A key component of its strategy is the belief that its superior technology will provide customers with such a good experience that they would choose to "consolidate" other banking, insurance or wealth with Vestpac.
"We are trying to build deep links over time, not to throw products to people they do not want," said Hartzer.
"As people become more comfortable and are attracted to the use of digital channels to manage their money, they encourage you to consolidate your business in one place so that you have the added convenience to be able to see the position and start the money … We think it will be a great advantage in medium-term period. "
Some analysts are not convinced. TS pot Lim Bell Potera has launched a g. Hartzer during an invite of analysts on Vells Fargo's hostile problems in the US, but Westpac chief dismissed the comparison.
"We do not run a sales organization that pays people to sell a certain number of widgets," Hartzer said. "We are rewarding people to have deep conversations with clients and building platforms so that users see the benefit of having a good time together."
Most potential conflicts of interest have already eliminated Westpac's sales of its asset management operations, including BTIM, Hastings and Ascalon, he said.
Pressure on "simplifying our products, digitizing our business and modernizing our platforms" will help Westpac to increase productivity savings up to $ 400 million this year, he said.
But the immediate priority is to respond to the premise of uncertainty that hovers over the banking sector, "while we work through remediation, issues of the quality of the mortgage and the impact of potential regulatory change."
Remediation costs could continue in 2019, and the bank accounts indicate a current problem at an early stage relating to advice provided by affiliated Securitor and Magnitude Securities.
Growth of costs is "too high"
On unstable housing markets, g. Hartzer said he expects house prices "to cool further, and the investor demands to remain weak". The growth in housing loans will be reduced to 4% next year.
Vestpac provided new cost guidelines, implicitly suggesting that costs would have risen by about 2%, excluding remediation costs, compared to previous guidelines of 2% to 3%, but analysts suggested that this might not be enough.
"While we are stepping in the right direction, we continue to see Westbac's spending as too high for the current low growth rate of revenue," said analyst Mackuarie Victor German.
On the economy, Mr Hartzer said consumers could be more cautious about wage growth and the soft housing market, while companies could retreat due to uncertainty ahead of federal elections next year.
Asked about the impact of proposed work proposals on reducing negative income and Frankfurt loans, he said: "I think this is potentially contributing to the uncertainties we see on the investor market today, but it is difficult to come to an understanding of what the real impact of such changes in policies will be Be until you see the details of how it's played. "
It is expected that the g. Hartzer sees with commissioner Kenneth Haine during the seventh round of hearings at the Royal Commission, which began on November 19 in Sydney.
Asked about his preparations, he said: "I am sure it will be a challenging experience, but I am looking forward to engaging in political issues – because some very good questions have been asked by the Royal Commission, and it is important that they are thought carefully because some of these things may be the effects of the second and third order. "