Anz Group Holdings Limited · ASX:ANZ
Anz — Debt Investor Presentation (June 2007)
34 slides from Anz's debt investor presentation, Jun 1, 2007
Slide 1: AN Hil
Zs AN Hil
Slide 2: Disclaimer
Disclaimer This presentation is being supplied to you solely for your information, and may not be reproduced or distributed to any other person (including any distribution in the United States) or published, in whole or in part, for any purpose without the prior written permission of ANZ. This prese
Slide 3: Overview and results
Overview and results
Slide 4: ANZ at a glance
ANZ at a glance e Established in 1835, ANZ is a major international banking and financial services group whose headquarters are located in Melbourne, Australia. — Market capitalisation of A¢$54.8 billion as at 31 March 2007 — One of the 10 largest and most successful companies in Australia — The lea
Slide 5: Focus & discipline delivering strong performance
Focus & discipline delivering strong performance Cash profit growth* 3,587 wi Second Half Profit li First Half profit 2,348 2,168 1,870 2001 2002 2003 2004 2005 2006 2007 AGAAP AIFRS Mar 07 v Mar 06 * Profit after tax 416.1% e¢ Cash* profit after tax 4} 11.8% ANZ Cost to income ratio* CTI ratio 70%
Slide 6: Four key priorities
Four key priorities Superior revenue growth ‘Strategic expansion = World-class : productivity Stakeholders and. capabilities Target 7-10% over the medium term Position in growth segments Superior service execution Expand footprint in Australia Consolidate leading position in NZ Make Asia substantive
Slide 7: Good progress in executing strategy
Good progress in executing strategy g wstralia jood earnings momentum + Leading customer satisfaction — + Leading staff engagement, + Investing for tomorrow. rtfolie of low-risk Asian growth tments, where we can add value ‘Improved results from ~ 7 New Zealand Asian expansion Partnerships >» China/M
Slide 8: Asia Partnerships — significant impact on capital in the half
Asia Partnerships — significant impact on capital in the half, but earnings becoming more meaningful Still early days in Partnership strategy, Base case* earnings potential bigger transactions yet to settle from Partnerships In addition to NPAT contribution, market value now ~400m above book value 1
Slide 9: Results in more detail
Results in more detail
Slide 10: A good interim result, driven by strong revenue growth
A good interim result, driven by strong revenue growth 127 (16) = (101) 5.6% 7.1% 1936 14.1% 1731 11.8 % 12.1% a Profit Before Provisions Mar-06 vo 5 B 2 rt Cash v & = E ay Ss ro) o ee Ce g g @ gs = ¢ é x 3 " o F z v # Favourable to expectations ¥ In line with expectations X Unfavourable to expectat
Slide 11: Divisional and Geographic Performance
Divisional and Geographic Performance Division anos. PBP ($m) Cash NPAT ($m) 4» 21.6% | Institutional . ba Lo 10.6% NZ Businesses*/» 13.5% ” NZD Australia “F 16.5% New Zealand Asia-Pacific “> 27.8% 4» 22.7% ™ Increase — Decrease @ Mar-06 vai lr sone arte Ui ea * New Zealand Businesses, which exclude
Slide 12: Strong revenue growth towards top of 7-10% range
Strong revenue growth towards top of 7-10% range Maintaining Revenue/Cost ‘Jaws’ Personal driving strong revenue growth 10% 4 (1HO7 ANZ League Table -Top 10 Performers) 9.1% ce 8.4% ; 8% 4 Y s < al 6% 7 4% 4 2% 7 0% 1 2HO5 1H06 2HO06 1HO7 hl Revenue Growth (pcp) # Cost Growth (pcp) 2HOS —- 1H06. 2HO
Slide 13: Volume growth - a mixed story
Volume growth —- a mixed story Growth rates System! 13% 12.0% Cards 13.0% Institutional o ] | 7% Focus on improving RORWA 14.1% Australia only** Total Lending 12.3% ee [ De 13.7%4 Housing . . n/a Total Lending 11% 13.4% ( 2HO6-1HO7 (hoh) 1 APRA monthly data annualised eleven months growth to Februar
Slide 14: Margin decline less than expected
Margin decline less than expected Competition biggest driver of Competition in Australia the key margin decline driver (1HOG - 1HO7) (competition impact on Group Margin) bps 229.0 [ ] 1.3 T a T T & 1.0) 3.3 = x G0) 3. “0.4 “0.5 Da g = 9 @ 08 % | -08 fa % rs) © o & a ecg ¢ 5 12 8 8 3 g 2 2 (7.0) 0.3
Slide 15: Credit quality and provisioning
Credit quality and provisioning
Slide 16: ANZ is conservatively provisioned
ANZ is conservatively provisioned ‘soins Alls eee ay Gross and Net Non performing Loans ($m) 726 661 640 Mar-06 Sep-06 Mar-07 Gross ei Net Gross NPLs / Non Housing Net Lending Assets (%) Total provision charge / Net Lending Assets (bps) ANZ Avg of Major 3 peers 4 1HO6 (annualised) tii 1HO7 (annualis
Slide 17: Individual Provisions — a few moving parts
Individual Provisions — a few moving parts Consumer IPs well up, but in line with expectations Seasonally $m higher in 200 5 55% 2rd half 150 4 127 102 100 + 50 + o4 1HOS 2HOS 1HO6 2HO6 1HO7 1HO7 Plan New & increased commercial IPs higher as expected.... $m 200 3% 150 [aan Expected to go higher, but
Slide 18: Mortgages — remains sound despite higher NSW arrears
Mortgages — remains sound despite higher NSW arrears Mortgage Retail FUM growing across all states, but NSW growth slower 23% 25% 20% 15% 10% 5% 0% VIC meme 2HO6 - 1HO7 (hoh) NSW QLD bs] Arrears still in good shape including lo doc (> 60 day delinquencies) 1HO6 - 1HO7 0.35% 0.30% 0.25% 0.20% 0.15% 0
Slide 19: Cards and Personal Loans: Credit quality and losses in line with expectations
Cards and Personal Loans: Credit quality and losses in line with expectations No material adverse trends in underlying arrears rates (>60 day arrears to outstandings) 3.0% 2.0% te NO 1.0% - wea 0.0% + F T T 7 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 wwe Low Rate* wooo Loyalty wane Proprietary Personal Loa
Slide 20: Risk grade profiles
Risk grade profiles Group — Gross Lending Assets $257bn* $272bn* $285bn* AAA to 11.2% BBB Hy BBB- BB+ to BB 16.0% BB- >BB- Mar-06 Sep-06 Mar-07 B+ to CCC 1.5% 1.6% 1.8% Impaired 0.3% 0.2% 0.2% Institutional —- Gross Lending Assets $72bn $74bn $76bn AAA 34.7% to BBB 7 37.0% BBB- 24.9% B+ to CCC Impai
Slide 21: Capital position
Capital position
Slide 22: Capital position remains strong
Capital position remains strong 12% 7 10% + 8% | 6% 7 4% 2% 0% + 10.5% 10.4% 10.6% 10.3% Sep-05 Mar-06 Sep-06 Mar-07 @ ACE Ratio fi Tier 1 Ratio & Total Regulatory Capital
Slide 23: Significant investment spend offsets strong 1H07 ACE generation
Significant investment spend offsets strong 1HO7 ACE generation ACE Ratio within target range 5 NZD FX hedges 6 «< >< > Ambank ee Final FYO6 E*Trade 9 DRP/BOP 5.50 7 SRCB (13) Others (2) NZ Tax assets Total (59) Total 5.00 7 3 0.09 (0.59) 4.50 4 4.00 4 Dividends*® INGA & Asso: Mar-07 Target Range 8
Slide 24: Basel II - likely to be some benefit, but rating agencies haven't been ignoring
Basel II - likely to be some benefit, but rating agencies haven't been ignoring the low risk nature of Aussie banks And remember, Australian banks already There will be a benefit have low Tier 1 ratios on a global basis... ¢ Convergence between economic % Tier 1 Capital Ratios . . . . Average of the
Slide 25: Consistent dividend payout strategy
Consistent dividend payout strategy Dividend growth in line with Cash EPS growth (%) 11.4434 10.7 10:9 9.8 9.7 % Payout ratio slightly above long term sustainable ratio Offshore earnings 100 90 Non-cash 4 and; One-off 80 structural ; items ina ’ ’ ’ impacts : particular 1HO4 1HO5 1H06 1HO7 70 + DPS
Slide 26: Transaction summary
Transaction summary
Slide 27: Hybrid Tier issuance as part of capital strategy
Hybrid Tier 1 issuance as part of capital strategy Rationale for issuance ¢ At March 2007 capital ratios, after funding Ambank, E*Trade, SRCB were: « ACE 4.42% « Tier 1 6.71% « Total Capital 10.26% ¢ Tier 1 issuance will: « Strengthen our Tier 1 and Total Capital ratios « Increase our Lower Tier 2 c
Slide 28: Transaction overview
Transaction overview ANZ acting through its New York branch Non-dividend paying preference share Interest bearing subordinated note investors Unit ANZ Stapled Tier 1 security ¢ Each security comprises an ANZ issued Preference Share stapled to a Subordinated Note issued by ANZ through its New York Br
Slide 29: Summary terms and conditions
Summary terms and conditions nits’ each comprisi issued by ANZ through oe ee A ate where Distributions are no ee a ig He ayes
Slide 30: Summary terms and conditions (continued)
Summary terms and conditions (continued) Conversion Discount (CD) is equal to 5.0% and GBP Rate is the 25 day forward £/A$ rate as at the 25% business day prior to the Conversion Date . i
Slide 31: Summary terms and conditions (continued)
Summary terms and conditions (continued) 1. The cash redemption price will equal the Issue Price plus any accrued distributions. A make whole amount is payable upon early redemption pursuant to a Regulatory or Acquisition Event. i iis
Slide 32: The conversion process
The conversion process Yes No Yes No Yes 30 Business Days 25 Business Days Conversion Date prior to Conversion Date prior to Conversion Date
Slide 33: Historical ANZ share price performance
Historical ANZ share price performance Satisfying the « The GBP equivalent ANZ share price would need to fall to: (a) 57.9% of GBP equivalent issue date share price (i.e. 55% / (1-CD)) to fail Test 1; and (b) 52.6% of GBP equivalent issue date share price (i.e. 50% / (1-CD)) to fail Test 2. yd 1998
Slide 34: ANZ Contacts:
ANZ Contacts: Rick Moscati Group Treasurer +613 9273 1368 Steven Craig Head of Capital Management +613 9273 2974 Website: The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form a