Australia's best domestic bank 2018: Westpac
It seems perverse to hand out a best bank award down under given that a public inquiry into financial-sector misconduct has exposed widespread wrongdoing and poor governance.
Maybe the award should have gone instead to the Reserve Bank of Australia, where no such shenanigans have come to light. Thanks to some canny trading of the Australian dollar, the central bank turned from an A$900 million ($647 million) loss in the year ending June 30, 2017 to an A$3.8 billion profit in the following year – which is roughly half the average profit made at each of the commercial big four banks (Westpac, CommBank, ANZ and NAB) and with a fraction of the overheads.
But commercial business must go on, so this gong, awarded to Brian Hartzer’s Westpac, honours the best of a bad bunch during an embarrassing year for Australian banking’s collective reputation. Indeed, Hartzer can take credit for a simple but enlightened act of leadership during the brutal royal commission hearings.
Three years after the American took over from Gail Kelly as Westpac boss, his moment of national note came in November when the chief executives of Australia’s big financial institutions were summoned to appear before the commission. During the hearing, commissioner Kenneth Hayne had excoriated bank executives for their “pursuit of short-term profit at the expense of basic standards of honesty”.
Hartzer’s fellow bank bosses skulked in and out of the hearing as if they were doing the notorious perp walk, brushing away the media. But Hartzer did the smart thing, fronting up to face the public head on and appearing contrite. Hartzer said he welcomed his chance to speak to the commission, praised its work and committed Westpac to correcting “where we haven’t got things right for the customer.”
It was a lesson in crisis management that was missed by his peers.
Only a few days earlier, Westpac had announced an A$8.095 billion net profit for the year ending September 30, 2018, up 1% from the previous year. No sooner had Hartzer unveiled the numbers than the shares were savaged for results that were below expectations, partly because of higher regulatory and compliance costs. Hartzer got his pay docked 10% too, and warned that this may be as good as it gets for a while for the big Australian banks, as the stricter regulatory regime inevitably arising from the commission kicks in and pinches earnings.