👉 Background: ANZ is one of Australia’s big four banks, alongside CBA, NAB and Westpac. But ANZ actually has a larger global workforce than both NAB and Westpac, despite being the smallest of the four.

‍👉 What happened: ANZ’s new CEO, Nuno Matos, has announced 3,500 redundancies of ANZ staff by next September. On top of this, ANZ will also cut ties with 1,000 consultants and contractors. These cuts will affect teams in technology, procurement, risk and retail.

‍👉 What else: But, here’s the twist: ANZ had promised regulators that it would maintain its current headcount until 2027 (as part of its acquisition of Suncorp Bank). It effectively allows ANZ to cut jobs in the short term, so long as the number of staff are rehired. And, this is all part of ANZ CEO’s plan to improve ANZ’s cost-to-income ratio.

‍What's the key learning?

‍💡One of the most closely watched metrics in banking is the cost-to-income ratio, also known as an efficiency ratio. It measures how much a bank spends to earn a dollar of revenue. So, the lower the ratio, the more efficiently the bank is operating.

💡ANZ spends roughly 52 cents in costs to generate $1 of income so its cost-to-income ratio is 52%. Whereas CommBank’s cost to income ratio is around 43%, while Westpac and NAB are also below 47% So, job cuts and a reduced reliance on consultants will help lower costs and improve this ratio for ANZ.

💡ANZ’s new CEO has been known to enter a new business division and cut immediately. He did this at HSBC in Mexico as when he moved to HSBC in Europe. And now, he's applying this cost-cutting playbook to ANZ.