* CFO Shayne Elliott to take over effective Jan. 1, 2016
* Says bank will remain committed to Asia strategy
* Shares up 1.6 pct, in line with broader market (Recasts with fresh comments from incoming CEO, fund manager)
By Swati Pandey
SYDNEY, Oct 1 (Reuters) - Australia and New Zealand Banking Group's ANZ.AX incoming CEO Shayne Elliott said the bank was committed to seeking growth in Asia but flagged more discipline in implementing its strategy - one that has come under fire for its low returns.
Australia's No. 4 lender said Elliott, who has been chief financial officer for the past three years, would take the helm on Jan. 1, replacing industry veteran Mike Smith.
Smith kick-started the bank's "super regional" strategy in 2007, making it the only major Australian bank to focus on Asia. Although Smith initially gained plaudits, investors have become impatient with the region's high costs and weak returns, especially when compared to a lucrative domestic market.
"The opportunity remains valid, but the way we operate has to change," Elliott told an investor briefing. "We need to kind of re-address our focus on capital discipline and allocation of resources."
The appointment had been long expected and ANZ shares climbed 1.6 percent, in line with the broader market. The stock has, however, underperformed peers this year, falling 15 percent compared to 9 percent declines each for Westpac Banking Corp WBC.AX and National Australia Bank NAB.AX .
"(Elliott's comment) shows a commitment to fix the issue but Asia is a difficult market so it's questionable what can actually be done and at what cost," said Omkar Joshi, who helps oversee about A$1 billion at Watermark Funds Management.
Elliott, 51, joined ANZ in 2009 and has held senior positions in Citigroup (NYSE:C) over 20 years in a wide variety of countries. The New Zealander was also a senior executive at investment bank EFG Hermes.
ANZ has invested in 15 Asian countries where it focuses on cash management, foreign exchange and debt markets. Last month, it opened a new branch in China and will open its first branch in Myanmar on Friday.
But it has a return on risk weighted assets of only 0.81 percent in Asia, excluding minority partnerships that it is looking to exit - a level of profitability below the cost of capital. By comparison, the return for Australia is 2.84 percent.
And while ANZ is ranked No.5 for arranging loans in Asia Pacific ex-Japan so far this year, it falls to ninth place when Australia is excluded, according to Thomson Reuters data.
ANZ has already made some moves in Asia to free up capital amid a tighter regulatory environment and is in talks to exit minority stakes in Indonesia's PT Bank Pan Indonesia Tbk (Panin) PNBN.JK and Malaysia's AMMB Holdings Bhd (Ambank) AMMB.KL .