Money Talks: ANZ CEO Antonia Watson on investing, interest rates ... and those big bank profits

Antonia Watson, chief executive of ANZ Bank New Zealand. Photo / Michael Craig

"I'm not going to sit here and deny we make very large dollar profit," says ANZ New Zealand chief executive Antonia Watson, on the latest episode of the Money Talks podcast.

"It's a big amount of money in a New Zealand context. I think what people don't get their heads around so much is exactly how big we are."

For the record, ANZ NZ's latest financial results showed first-half profit was up by 18 per cent to $1.096 billion.

Its operating income rose 6 per cent to $2.144b over the six months to March 31.

Although, due to high compliance costs, the bank's cash profit was up just 1 per cent to $968 million.

"Our investors have invested $15b into New Zealand, into our bank - that will be growing over time as the capital changes come in - and they need a return on that," Watson said.

"We've got a $194b balance sheet and it comes with an enormous amount of responsibility.

"That's $150 billion odd dollars worth of lending to Kiwis. So you are talking about a big dollar number."

But in terms of the scale of the business, the return to investors was "more or less middle of the road" relative to companies on the NZX, she said.

Still, those are very big numbers and a lot of money to effectively be in charge of - how does Watson view her role?

"I think a guardian is a really good word to use, we are a trusted custodian," she said.

"Banking is borrowing money from people - from you, from your savings account for a very short term, with a promise that we'll give back tomorrow. And then lending it to people for 30 years. So there's a huge amount of trust."

Watson, who grew up in the Auckland suburb of Epsom, has effectively come full-circle, now living in nearby Mt Eden.

She was always drawn to finance and accounting in her subject choices.

"My mother laughs because they put me through one of those psychometric testing things and I like things that are aesthetically pleasing. But in my case that might be a perfectly balanced balance sheet."

After training as an accountant, she worked at KPMG in New Zealand before heading off on an OE and landing with investment bank Morgan Stanley, working in London, Sydney and Budapest.

"I was in New York the weekend that Lehman Brothers failed," she said.

Everybody was looking at Morgan Stanley to see if it was next and she recalls arriving at work with TV cameras waiting outside.

"It was a fascinating time for me to understand the need for a Plan B," she said. "And for me the Plan B was to head home."

Watson recalls her first memory of money being taking her savings in to the bank to deposit when she was about 6 years old.

"I had $17.33c ... there is this enduring memory of handing over the money box and being giggled at by the teller."

Despite working in and being fascinated by money and finance, Watson hasn't really chased it as a goal in itself.

"Money is an enabler to other parts of your life," she said.

"It's not the be-all and end-all but I think I had an early appreciation of the value of money - those little things like taking the coins to the bank and knowing that was now sitting in a savings book."

When it comes to money these days, Watson describes herself as "a lazy investor".

"I tend to get someone else to do the work for me," she said. "Most of our money is in managed funds, on the more growth [end] of the scale."

It was really just commonsense, she said.

But sadly, too many people didn't know the basic, common-sense rules.

"Pay off your home, save for a rainy day, manage for the risk. There is still a lack of financial literacy in New Zealand."

The best piece of advice she ever got on money - possibly from her mother - was simply "the miracle of compound interest", she said.

"Money does make money, even if it's as simple as a term deposit."

• Money Talks is a podcast run by the NZ Herald. It isn't about personal finance and isn't about economics - it's just well-known New Zealanders talking about money and sharing some stories about the impact it's had on their lives and how it has shaped them.

• Money Talks is available on IHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every second Wednesday.

• You can find more New Zealand Herald podcasts at nzherald.co.nz/podcasts or on IHeartRadio.