ANZ 'must lift returns': Smith

Declining returns for ANZ are a feature of the bank's March 2015 half year result, an outcome irritating management as well as investors.

"I will not shy away from the fact we need to lift ROE. We have to get a better balance between growth and return - we need to lift returns," ANZ CEO Mike Smith told an investor briefing yesterday.

ANZ reported a return on equity of 14.7 per cent over the half, down 60 basis points from the September half and down 80 bps from the March 2014 half.

Foreign exchange effects and the D-SIBS capital charge had a "130 basis points impact," Smith argued.

But he said the industry was "misunderstood" on capital.

"We have been in an era of uncertain regulatory capital for seven years now," he said.

"The important thing here is phasing. There's the steady build up through the DRP [dividend reinvestment plan] - it does provide a useful way to raise capital."

The bank will apply a discount of 1.5 per cent under its DRP this half.

Smith defended ANZ's record on capital management.

"The allocation of capital seems to be forgotten; selling [businesses deemed non core] does release capital.

"We've paced our growth … and always held a buffer to our regulatory minimum.


"We should be rewarded for holding a buffer, not an excess,"