In its annual report released to the ASX, the big four bank announced that the 11 per cent decline in cash earnings for its BT Financial Group subsidiary will not deter it from the wealth management or life insurance market, nor would the strategy of rivals.
Indeed, “wealth” was listed as a specific “growth highway” for the bank going forward, in addition to servicing small to medium enterprises.
“While some of our competitors are increasingly looking to exit their wealth and insurance businesses, we continue to believe that having a strong business in this category will give us an increasing competitive advantage as Australia’s population ages in the years ahead,” the report explains.
However, Westpac expects the market to become more challenging despite the decisions of CBA, ANZ and NAB to sell of key segments of their wealth business, especially in the life insurance space.
“In our wealth business, we expect the broader competitive landscape to continue to undergo significant change with ongoing consolidation in life insurance, continued regulatory and structural change in financial advice, and increased overseas interest and participation in superannuation,” the report states.
The bank also said its decision to sell down its stake in BT Investment Management reflects its commitment to “open architecture”.
Last week, BT announced it will be adding two additional insurers to the approved product list of its bank-aligned advisers in 2018 in response to questions from ifa and several federal MPs.
If it committed to open architecture it would be looking at 5-10 insurers, and platform choice. But when one has spent 1 billion dollars they are looking for a return.