ANZ plans 'significant' investment in China

Updated: 2011-09-30 10:53

By Li Xiang and Wang Xiaotian (China Daily)

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ANZ plans 'significant' investment in China

 Gilles Plante, ANZ China chairman
BEIJING - The Australia and New Zealand Banking Group Ltd (ANZ), the third-largest bank by market value in Australia, will continue to make "significant" investments in China, even as the world economic recovery remains fragile, a senior bank executive said on Wednesday.

The Australian lender has seen an 80 percent increase in revenue from its operations in China since it launched a wholly owned, locally incorporated subsidiary in 2010.

The rural bank it opened in Chongqing in 2009 also moved into the black as of the second half of this year, according to Gilles Plante, ANZ China chairman and ANZ CEO North East Asia, Europe and America.

"Our strategy is to focus on the Asia-Pacific region," Plante said. "Our business benefited from the ongoing economic turmoil as our traditional competitors retreated to their home markets while we expanded our operation in the region."

Plante said that continued global economic uncertainty will not affect the pace of the bank's expansion in China, given its strong capital position.

"We have no exposure to the debt crisis in Europe although some of our clients may be exposed to the sovereign risk in Europe," he said. "I think we will go through the crisis in a very good condition."

Profits from the Asia-Pacific market contributed 14 percent to ANZ's total profits in 2010, and the bank aims to boost the ratio to 25 to 30 percent over the next fewe years.

Plante said that ANZ will make further investments in China to expand its network, and it aims to set up more than 20 branches in the next two years.

The lender has six branches in Beijing, Shanghai, Guangzhou and Chongqing.

The bank expects its business in Asia excluding Japan to grow about 8 percent in 2011 compared with less than 3 percent in the United States and Europe.

While foreign banks in China are pursuing aggressive expansion plans, their operating costs are also rising, driven by fast branch and expansion.

Industry analysts said that rising operating expenses might affect the profitability and liquidity of these banks.

Although foreign banks' aggregate market share in the Chinese market was only 1.83 percent in 2010 according to a report by PricewaterhouseCoopers (PwC) International Ltd, the banks are still "surprisingly confident" about their prospects in the Chinese market.

Raymond Yung, financial services leader for PwC China, said China's economy might not be expanding as rapidly as in recent years, but it's still growing at a faster pace than the banks' own home markets.

"With the Chinese government taking steps to internationalize the yuan, more business opportunities will develop," he said.