John Morschel chairman of ANZ said that a weak global recovery is likely to have a negative impact on Australia in 2013, with those industry’s who are in the slow lane of the economy likely to remain that way.
Despite positive data emerging from the United States and China, Mr. Morschel says the banking environment in 2013 would remain challenging as a result of the peak in the mining boom.
‘‘There is no question we are continuing to see a frustratingly anemic recovery in the global economy,’’ he said.
Analysts expect investment in the mining industry to begin declining sometime in 2013 and according to Mr. Morschel, the impact of high labour costs, a strong dollar, declining commodity prices and political uncertainty would have a negative impact on new resource projects.
‘‘At the same time, there is little evidence of the weaker sectors of the economy such as retail , housing and manufacturing recovering sufficiently to pick up the slack,’’ he said. ‘‘Together with weak business and consumer confidence, this leaves overall business conditions in the economy softer.’’
The weak economy is adversely affecting profitability for banks as both consumers and businesses borrow less in an environment where funding costs are rising.
Mr. Morschel says ANZ has maintained its return on equity to between 15 and 16 per cent largely because it has expanded into the growth markets of Asia and improved productivity, two areas the lender intends to continue to focus on.
Mike Smith, the lenders chief executive says the lender is well positions to benefit from fast growing Asian economies and rapidly expanding middle class.
ANZ earned over 20 per cent of its profits from international operations including its Asian units.
‘‘There are enormous opportunities given Australia’s growing linkages to Asia but, at the same time we have an economy in transition as a result of a strong dollar, and weak business and consumer confidence,’’ Mr. Smith said.
This article first appeared on Money-AU