Debt investors wanting to know when Australian ADIs will be back in full swing raising funds in the wholesale market may have to wait a little longer for an answer.
Speakers at the Australian Securitisation Forum’s 2021 Conference said they expected funding to return to pre-COVID conditions but the timing and extent of their move back into wholesale funding would vary considerably.
Scott Gifford, head of debt investor relations at ANZ, said the bank may have modest senior market needs next year.
“We have seen very strong customer deposit flows over the past couple of years and a lot of what we do next year will depend on what happens with those flows. We don’t think they will go backwards but the rate of growth might slow,” Gifford said.
“To give you a picture of that, in 2019 we have a A$100 billion gap between our lending and deposits. Since then, the gap has come down to $36 billion. That is a big reduction in our funding needs.”
Gifford said ANZ has had some issues in its mortgage business, with weak sales, and its progress in addressing those issues would also be a factor in its funding requirements.
Adam Parry, the manager of funding in treasury at Suncorp, agreed it was all about balance sheet flows and, in any case, the bank had a lot of capacity in areas like corporate term deposits before getting back into term funding.
Gifford said it might suit ANZ to sit back and see how the wholesale markets developed next year. With so little issuance over the past couple of years, there are uncertainties about pricing in the domestic market.
Looking at RMBS, Gifford said it was traditionally a small part of ANZ’s funding mix and that was unlikely to change.
Parry said Suncorp had not done an issue since 2018. It would look at the RMBS market next year.
Gifford said ANZ reduced its CLF balance by $25 billion over the past year and has a remaining exposure of $10.7 billion. He said refinancing that amount “would not move the dial much”.
Parry said Suncorp has a $4 billion CLF exposure. “Our liquidity metrics are bloated. We could bring those numbers down and that would absorb some of the CLF funding task.”