Kiwi Ross McEwan is chief executive of National Australia Bank. Photo / Supplied
Kiwi banker Ross McEwan is surprisingly upbeat given the challenges the world is facing with high inflation, rising interest rates and geopolitical tensions mounting on multiple fronts.
It's not that the chief executive of National Australia Bank - parent of BNZ - isn't fully aware of what is going on.
"We have got some real financial issues in parts of the world. We are seeing China with some of its lowest-ever economic growth at about 3 per cent.
"They must feel as though they are in recession because they are used to 6 or 7. You have got the UK - as we have seen reported - having some real difficulties with inflation being imported into the UK and Europe with major issues because of the war and energy."
But he believes New Zealand and Australia are the perfect countries in the world to be in right now.
"We have still got very strong economies."
McEwan, who grew up in Hawke's Bay was back in New Zealand this week for only the third time since Covid hit in 2020.
He took over NAB in July 2019 after the bank's former CEO and chair left following an uproar spurred by Australia's Banking Royal Commission which saw NAB accused of charging fees for no service.
McEwan had resigned from a position as the CEO of the Royal Bank of Scotland in the United Kingdom where he was credited with turning around the bank's finances after it was partly nationalised.
He came back to the role in Australia hoping it would allow him and wife Stephanie to spend more time in New Zealand where he owns a beef farm outside of Auckland but six months later Covid arrived.
"The whole aim of coming back to Australia for my wife and I was thinking every couple of months we would get into New Zealand then Covid came along and lockdowns happened.
"So it's nice to be getting back into the flow."
McEwan believes the fallout from Covid and its lockdowns is still to come.
"I think we are going to pay for that for years to come unfortunately with a bit more mental health issues than we are anticipating."
When asked what his biggest concerns are at the moment McEwan points to the geopolitical situation.
"We have got to be careful we don't rely on one trading partner that is there today and could be more difficult tomorrow.
"We learned that decades ago with the UK."
McEwan says there are also big issues around cybersecurity.
"And that's been manifesting itself in Australia more with Optus, but we are seeing more and more situations where people are taking data that are held by companies and using it for bad ends."
Then there is the major transition needed to halt climate change.
"I think there are a lot of big issues. But I think if we quietly work our way through these and invest well Australia and New Zealand will do very well out of this environment that we are in. But there are some big issues for us."
McEwan said the world was running at GDP growth of just over 3 per cent at the moment.
"Our economist thinks that next year it's going to have a 2 - the mid to low 2s. That's quite a drop when the world has run at about 3.4 per cent since 1980."
"But that doesn't mean that Australia and New Zealand will have recessionary times. We might have a couple of quarters that are negative. But we're seeing Australia next year still at about 1.6 to 1.8 per cent GDP growth.
"We are having a commodities boom in Australia at the moment and let's say it's 1.5 next year, it's still growth. And for New Zealand we're looking at probably around half a per cent growth next year, so it's much lower than what's going on at the moment, but it's still growth, and we have just got to expect that to get inflation down some tough calls need to be made.
"Higher interest is one of them which does hurt. It hurts the family because they are paying the mortgages, they are seeing prices go up."
Despite rising interest rates McEwan said most borrowers were still in pretty good shape.
"As interest rates have come down, as they have for the last 12 years... many customers have left their payments exactly the same. So they are paying a lot more off on their principal and over time less and less on interest. And now as interest rates come back up again they will still be in a pretty good position."
McEwan said NAB's mortgage customers were on average four years ahead while in NZ most BNZ customers were ahead but not to the same extent.
"So there is some buffer in the system. But there will be some people that have some difficulty. And the one thing I would say to them is please ring your bank very early on."
McEwan said businesses were coping surprisingly well in the rising interest rate environment.
"I spend a lot of time out with businesses. I spent three days in Tasmania last week and this week in Hawkes' Bay."
He says most aren't talking about interest rate cost as they are focused on the lack of labour.
"They do talk about lack of labour as the biggest issue, and the second issue, they say to me, Ross, it's lack of labour, and the third one. There's a lack of labour."
It is unskilled, semi-skilled and skilled labour which is missing.
Rising costs are mentioned but most have coped by lifting their prices which has been the driver for inflation, McEwan says.
"At some point in time there will be some businesses that will have more difficulty but it hasn't started to flow through what we're seeing in the bank at the moment."
McEwan says there has been some good news for business of late with shipping costs coming off record highs.
"It used to be $2000 or $3000 to move a container from up in Asia, and it got up to $12,000 to $13,000. My understanding is it's down to about $8000 or $9000, so it's better. Some of the building supplies, gibrock...there is a lot more of it about, timber - there's starting to be more of it. So we're starting to see the supply end get back into control.
"It's not there yet. But we are starting to see the signs of more supply to meet the demand which is a very good thing."
Asked where all the workers are McEwan says it's simply down to the closed borders.
"We closed our economies down for two years. We sent people home. We stopped them coming in and out of the country. We stopped people visiting relatives so people said I have to leave because I want to be with my family. We shouldn't be too surprised when you close the country down and say you can't move around...people leave."
He said a lot of workers were lost through the likes of backpackers and overseas students.
"The thing that we need to do is tell people we are open again, and we're not going to close down because they're still sitting overseas, saying to me: 'Is the place open yet, can we come down?'"
McEwan says both NZ and Australia need to tell people we are open and are not closing again.
"And let's get the immigration services working really strongly to process applications."
He says truck drivers are in such demand they can get a job anywhere at the moment and it's the same for workers in care facilities.
Across NAB there are around 700 vacancies largely in digital and data areas and despite having a good employment reputation they just can't find the people.
"We had to start employing people in places like Vietnam, where we had an outsourced arrangement. We have brought them in-house just to get the skills that we need. Ideally, I would like them in Australia and New Zealand. But at the moment I'm having to source them from other countries to make sure we are fulfilling our requirements."
McEwan says short-term digital workers have to be attracted from overseas but long-term businesses need to be training them up themselves.
NAB has trained up 2700 of its own people in cloud management and McEwan says there needs to be more of that.
"But it doesn't happen overnight. It takes years and years to build that capability."
McEwan says talking to one of the heads of a big global property manager the other day he found that it is largely the big cities that are struggling to get workers back to the office - Sydney, Melbourne and Auckland.
"Those are struggling at around 30-40 per cent and it reflects where we are. I am a very big advocate for people coming back."
That's not to say he wants people back five days a week.
"No I'm a two to three-day minimum per week for some very clear reasons."
He says workers need to get back to help with training and development of colleagues and promotion.
"I'm not too sure how you get a promotion when I don't know who you are. You have got a better chance when I can see you and I know how you operate."
He also believes working from home all the time has created mental health issues.
"Talking to the experts, they are saying Australia and New Zealand have about one in five people who have some mental health issues and it's only getting worse when we leave people sitting at home, on their own and that is a real worry for the future.
"We are only just starting to see what Covid has done to us after the event now and I think it is helpful when people are back at work and we can actually help them out. People are social individuals, they need interaction."
While the cost of living is a barrier to workers coming back he believes stronger leadership is needed to get people back.
"There's also a fear from a lot of employers that if I say come back to work they will say I'll go work somewhere else. You've got to have more than that, [or] people will leave your organisation. Once people get back they are loving it."
He says it is the younger people that want to be in the office.
"They want to learn because we are stymieing their careers by having them sit at home not learning from the experts in the business."
McEwan plans to come back to New Zealand eventually.
"Over time we will. We still see New Zealand as home and my wife and I will come back. " His daughter has just moved back with her family.
"It's a magnificent environment to live in and we should never forget that. We should never take advantage of it. We should always be striving to make this a better place.
"But we also need to open up to other people coming and joining us where they can add some value to this great country and I think we are in danger of closing ourselves off and saying that is a good thing.
"That is not a good thing. We have to bring more people into the country to keep it refreshed, to bring in capital, to bring in youth. Otherwise we will end up with a lot of old people here and it will be very expensive to run.
"We have got to keep reinvigorating New Zealand as is happening in Australia."
Role: Chief executive National Australia Bank
Age: 65
Family: Married to Stephanie, two daughters
Education: McEwan was educated at Hastings Boys' High School followed by Massey University, where he completed a degree in business studies and human resources.
He later earned a masters in business administration from the Harvard Business School.
Career: McEwan's first management job was as CEO of Axa New Zealand from 1996 to 2002. He was then hired as group executive for retail banking services at Commonwealth Bank of Australia in 2003. He had expected to become the next CEO of CBA but missed out on the job which went to fellow Kiwi Ian Narev. McEwan instead went to RBS in the UK in 2012 as head of retail banking before becoming CEO in October 2013 where he led a major turnaround of the bank which at one point was 80 per cent owned by the UK government. He made a surprise resignation in 2019 and then moved back to Australia to head up National Australia Bank, the parent of BNZ.
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