Australia & New Zealand Banking Group Ltd., the worst performer among Australia’s four largest banking stocks this year, will limit wage gains for about 900 of its top executives to 1 percent as demand for lending cools.
The cap means most of the bank’s so-called group one and group two executives will see their salaries remain fixed for the next year, Chief Executive Officer Michael Smith said in a letter to staff dated Sept. 19 and released by the bank today.
“I realize that for some this is a difficult message, but as leaders of our business, it is the right thing for us to do in the current climate,” Smith said. His comments were initially reported by the Australian Financial Review.
Melbourne-based ANZ Bank is among the nation’s banks facing slower earnings growth as the developed world’s highest borrowing costs and declining property prices erodes demand for mortgages to the lowest level in three decades. Commonwealth Bank of Australia, the nation’s biggest lender, is seeking to lower its cost-to-income ratio, while Westpac Banking Corp., the second-largest, said in August that it is increasing its so-called “productivity initiatives” to trim costs.
ANZ Bank rose 0.5 percent to A$21.10 as of 11:56 a.m. in Sydney after slipping 9.6 percent this year. The benchmark S&P/ASX 200 Index gained 0.2 percent, paring this year’s decline to 11 percent. Commonwealth Bank climbed 1 percent.
ANZ Bank’s 1 percent increase for its top 900 executives will be reserved primarily for those sitting lower in the salary range and “performing well,” Smith said in the letter.
“The environment for banks globally is becoming more difficult and we believe showing leadership from the top by demonstrating restraint on costs is the right thing to do for the business and for our shareholders,” Paul Edwards, ANZ Bank’s spokesman, said in an message e-mailed to Bloomberg News today.
ANZ Bank shares fell the most in more than a year on Aug. 19 after it said trading income slumped in the three months to June 30. The lender is due to publish earnings for its fiscal full-year through Sept. 30 on Nov. 3.
Commonwealth Bank has been pursuing a cost-cutting plan, which doesn’t involve job cuts, that has been dubbed “Project 35,” Sydney-based spokesman Steve Batten said, confirming a report in the Australian newspaper today.