JPMorgan Warns ANZ On Its Asia Investment As CEO Mike Smith Speaks In Tokyo

ANZ boss Mike Smith. File photo / Getty

The ANZ has been warned about its Asia expansion strategy just as its CEO Mike Smith told business leaders in Tokyo how important the region is to Australia

JPMorgan analyst Scott Manning said in a report the returns from exposure to fast growing Asian banking markets haven’t matched those of domestic Australia-focused banks.

ANZ has made the biggest push of Australia’s banks into Asia and Smith has set a goal to earn between 25 per cent and 30 per cent of revenue outside of Australia and New Zealand by 2017, says the Financial Review.

“Since the inception of ANZ’s Asia strategy introduced by CEO Mike Smith in late 2007, ANZ has been characterised as a ‘growth play’, as opposed to domestic focused major bank peers Commonwealth Bank of Australia and Westpac which have been viewed to be largely constrained by a low domestic credit growth environment,” JP Morgan analyst Scott Manning said in the report.

The return on equity from the bank’s Asia business was 10 per cent in the first half of the 2013 financial year compared to 22 per cent rate for its domestic business, JP Morgan found.

Asia used 27 per cent of ANZ’s capital but contributed just 14 per cent of earnings, according to the report quoted by the Financial Review.

Mr Smith made a speech to the Japan-Australia Joint Business Conference in Tokyo, saying Australia needed to overcome the paranoia associated with foreign investment and attract more capital from Asia.

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