The lender's recent growth in home loans is surpassing that of the other big banks, writes Clancy Yeates.
ANZ is perhaps best known for its ambitions of becoming a vast regional bank spanning the Asian continent. But for all these grand plans, domestic factors still have a much bigger influence on its fortunes.
More than two-thirds of its $6 billion in annual profits come from Australia. It is aggressively pursuing domestic home loan customers, with the second fastest growing mortgage book of the big four. What's more, it has played a starring role in some of the more heated public debates in banking, such as the "offshoring" of jobs and out-of-cycle interest rate moves.
The executive at the centre of many of these issues is Phil Chronican, head of the bank's Australian operations.
The division posted an 11 per cent jump in cash profit to $1.4 billion in the latest half, but it is also in the midst of a cost-cutting drive that has led to job cuts and is likely to result in a further reduction in staff. At a time when banks are making record profits, Chronican concedes some may struggle to comprehend its aggressive stance on costs.
"I acknowledge that it's hard for some people to understand how in the one breath you can announce a $6 billion profit and then in another one say that you're fine-tuning your operation and 50 jobs are going here or 70 are going to New Zealand," he says.
But an organisation the size of ANZ has an array of expenses, he says, so there is a constant need to be vigilant on costs.
"It might look from the outside like everything would be fine if we just left it alone. The reality is that most of our costs go up every year."
He is equally direct when asked if this means the bank may need to lose more of its 47,000-strong workforce. "Do I think we can be even more efficient than we are today? Yes. We still have a lot of our processes that are very manually-intensive and I would like us to have more automation. So by definition that means we would have fewer jobs in back-office areas."
ANZ's cost-cutting has been controversial, with the Financial Services Union accusing the bank of treating its staff as an "expendable commodity" after it said last month it would replace 70 call-centre jobs with positions in New Zealand.
But Chronican has not shied away from some of the more ferocious industry debates.
In late 2011, ANZ moved to sever the long-standing link between Reserve Bank decisions and movements in mortgage rates, introducing a monthly interest rate review that is separate from the central bank's decision.
It was a move that triggered "out-of-cycle" rate rises early last year, which led to a sharp fall in ANZ's customer satisfaction ratings.
But the tactic has been successful, Chronican says, adding that the political and media response to unpopular interest rate decisions is less "vitriolic" than the flurry of outrage in the past. Last month, the bank also gained positive publicity when it cut mortgage rates by slightly more than the official reduction.
ANZ is aggressively signing up more home-loan customers. Its home lending rose at an annualised rate of 6.6 per cent in the past six months, compared with the 4.6 per cent average for the other big lenders.
"We've grown our share of the home loan business and the customer satisfaction ratings have improved again so I think on balance you'd have to say that there's been no lasting damage done," Chronican says.
With more than three decades in the industry, including 27 years at Westpac, Chronican is one of the most experienced bankers in the country. The division's $262 billion in loans in Australia also gives him valuable insight into the financial health of businesses and households.
So how does he think the economy is coping with the challenges posed by the peak in resources investment?
Despite the RBA cutting official rates to a record low of 2.75 per cent, Chronican says rate cuts alone are not enough to boost activity.
He cites economist John Maynard Keynes' concept of a "liquidity trap" - when central bank efforts to spark spending fail because people save the extra money because they are too worried to spend.
"When you have low confidence, systemically low growth, it doesn't matter how low your interest rates go, there's not the incentive for people to invest," he says.
"I'm somewhat sympathetic to the Reserve Bank not cutting rates every month because I don't think cutting interest rates alone would have driven any better outcome."
He says there is "some prospect" businesses will regain the confidence to invest more "over the next year or two" but stresses that interest rates alone cannot be relied on to trigger this change.
Before running ANZ's Australian arm, Chronican had extensive first-hand contact with the biggest companies in the country as the head of Westpac's institutional bank.
In this role, which he quit in June 2009, Chronican was widely viewed as a potential successor to chief executive David Morgan.
Given this experience, his name has been thrown about as a possible executive to replace ANZ CEO Mike Smith, who says he intends to leave in two to three years.
The trigger for this speculation was the surprise departure of ANZ Asia boss Alex Thursby in April, with the bank set to announce a replacement soon.
Whoever replaces Thursby is seen as a potential CEO in waiting, but analysts say Chronican could also be a contender alongside chief financial officer Shayne Elliott.
Chronican says he would not rule out the prospect of running the entire bank, but questions whether it is realistic. "That's one of those things you never know until the day it happens. But it is worth remembering that Mike and I are the same age so you need to be realistic from a time-frame viewpoint as to whether that's really going to be something that's going to happen," he says.
"I'm not ruling it out but if it doesn't happen I've had a pretty good run anyway."