McFarlane: ‘Get it right, get it done’

Westpac chairman John McFarlane says he has a “dead simple” message on the bank's three-year “fix, simplify, perform” turnaround plan: get it right – and don’t muck around.

“A, we're going to get it right; and, B, we're going to get it done," Mr McFarlane said ahead of the bank's annual general meeting tomorrow. 

While acknowledging the bank faces a number of challenges, Mr McFarlane, appointed chairman in April 2020, said Westpac was in a good position with respect to its franchises and customer base, its capital position was strong and "considerable progress" had been made in the turnaround.

"The ‘fix’ is broadly on plan; the ‘simplify’ is way ahead of plan because we're selling businesses faster than we thought we would. The real priority over the next couple of years is ‘perform’,” he said.
 

Mr McFarlane said he was focused on rebasing the bank’s financial performance to “get shareholder value back up”, and an important part of that was reducing costs. 

He rebutted scepticism about the bank’s ability to deliver on its $8 billion cost target by 2024, reiterating the expectation flagged at the bank’s full year results that the bank’s costs would be lower in this financial year. 

The risks and opportunities of climate change were also high on the board’s agenda according to Mr McFarlane, and likely to be a topic of discussion at the bank’s AGM given two resolutions relating to climate change reporting are up for discussion. He noted Westpac was one of the “least exposed” of the major banks to sources of fossil fuels, having reduced its lending exposure to coal, oil and gas by a third over the last two years. 

"It's a very difficult problem for financiers because you've got a range of opinions from people that don't believe in climate change and feel that we should be expanding in natural areas where Australia has a mining advantage, to others who feel that we should stop everything today,” Mr McFarlane said. 

“And of course, neither of these is palatable for the country… because (we) have to transition.” 

He said the “right decision” was to support the country and customers to transition towards net-zero by 2050 and “to be out of coal by 2030”. 

On the COVID-19 pandemic, Mr McFarlane ranked Australia’s response up with the “the best in the world”, and indicated his view that the country was going to need to learn to “live with” the virus in a way that was the lowest cost to society.  

"It's been a fantastic outcome, (but) at a big sacrifice to debt levels and to the economy, which of course, has recovered faster than we thought it was going to," he said.