ANZ's home loan market share has been slowly falling over the past couple of years, from 31.1% in the second half of 2017 to 30.7% in the corresponding period in 2019.
The bank currently writes about three of every 10 home loans written in the market and the landscape has become more competitive particularly from the smaller banks and some foreign banks.
Watson says as the biggest player in the market it is hard to defend its position as opposed to being a challenger bank.
However, ANZ was "well and truly" up for the task of defending its position.
Watson says ANZ has been using affordability as the lever to drive its home loan growth rather than the traditional price tool. She says the bank is "really keen to stay competitive on price" and that is shown in the rates it offers.
The proportion of home loans written through mortgage advisers has fallen a little and in the year to September 30 sat at the 40% mark. It has been higher in the past. Watson described the flow as "stabilising" and she wasn't sure why it had come back.
There has been some talk that the bank would pull back from mortgage advice following the Royal Commission in Australia and concerns around vertical integration and potential reputational risk. If that happened then it would be an opportunity for mortgage advisers.
Watson said that was not the case and ANZ would continue what it is doing.
On the issue of mortgage adviser remuneration Watson said ANZ "was not looking to change anything at the moment".
However it was watching what was happening in Australia including the idea of fee-for-service.
Watson said there would be "a big first mover disadvantage" in going down this track and no lender had stuck their head above the parapet on this idea.
During the year ANZ has lifted its spending on regulation from $638 million to $688 million. Part of that was to meet new Reserve Bank requirements. This latest regulatory requirement is a $350 million project over three and a half years.
While ANZ's Australian parent had significant remediation costs post the Royal Commission the costs in New Zealand were "very small". They related to things like a problem with its mortgage calculator.
Watson said banks had three options around meeting the Reserve Bank's proposed requirements to hold more capital. These were: shareholders would have to accept lower returns; prices could be lifted higher and a bank could limit its lending.
She said while no decisions had been made a combination of all these measures is most likely.
To prepare for changes ANZ New Zealand has reduced its dividend to its Australian parent company. This year the dividend paid was only 20% of earnings compared to 80% previously.
