Anz Group Holdings Limited · ASX:ANZ
Anz — Investor Presentation (December 2008)
71 slides from Anz's investor presentation, Dec 9, 2008
Slide 1: Economics, interest rates and currencies chart pack
Economics, interest rates and currencies chart pack Presentation to ANZ Senior Management 9th December 2008 Saul Eslake Chief Economist
Slide 2: Summary of economic forecasts
2 Summary of economic forecasts 2007 2008f 2009f 2010f World economy Oil prices (US$ per barrel) 72 101 43 55 US GDP growth (%) 2.0 1½ -¾ 1 Euro area GDP growth (%) 2.5 1 -¼ ¾ Japan GDP growth (%) 2.1 ¼ -½ 1 China GDP growth (%) 11.6 9½ 8 9 World GDP growth (%) 4.7 3½ 1¾ 2¾ Australian economy Real G
Slide 3: Summary of financial market forecasts
3 Summary of financial market forecasts Dec Jun Dec Jun Jun 08 09 09 10 10 International markets US Fed funds rate (% pa) 1.00 0.50 0.50 1.00 2.25 US 10-year T-note yield (% pa) 2.50 2.15 2.85 3.60 4.10 ECB refi rate (% pa) 2.50 1.75 1.75 2.25 2.75 € - US$ 1.27 1.16 1.08 1.09 1.13 US$ - ¥ 96 99 102
Slide 4: The global credit crunch is continuing despite concerted efforts to recapitalize banking systems
4 The global credit crunch is continuing despite concerted efforts to recapitalize banking systems and stabilize money markets z The global financial crisis which began with the sub-prime mortgage market meltdown in July 2007 took a much more ominous turn following the US Treasury’s decision to allo
Slide 5: US house and MBS prices are continuing to decline, but bank losses are now matched by capital raisings
5 US house and MBS prices are continuing to decline, but bank losses are now matched by capital raisings US existing home prices Losses & write-downs announced since mid-2007 240 Jan 2000 = 100 Total 220 Country of origin (US$ bn) 200 US banks 414.6 180 European banks 258.4 160 Down 23.4% Canadian b
Slide 6: Central bank balance sheets have ballooned
Central bank balance sheets have ballooned as they seek to 6 keep their banking systems and money markets functioning Assets of the Federal Reserve Board Assets of the European Central System Open Market Account Bank 2.5 US$ trillion 2.0 € trillion AIG loan & CDO purchases Other assets Bear Stearns
Slide 7: Policy interest rates have been reduced to multi-decade lows
Policy interest rates have been (or will soon be) reduced to 7 multi-decade lows Monetary policy interest rates US Fed funds rate Euro area refi rate* 20 % pa 10 % pa 8 15 6 10 4 5 2 0 0 50 55 60 65 70 75 80 85 90 95 00 05 10 50 55 60 65 70 75 80 85 90 95 00 05 10 Japan call money rate UK base rate
Slide 8: Measures announced by governments since mid-October are slowly working to ease financial market stress
Measures announced by governments since mid-October are 8 slowly working to ease financial market stress 3-month inter-bank borrowing rates and official cash rates United States United Kingdom 7.0 % pa 7.0 % pa 3-mth inter-bank rate 6.0 3-mth inter- 6.0 5.0 bank rate 5.0 4.0 4.0 3.0 3.0 3-mth overni
Slide 9: Spreads between expected cash rates and wholesale funding costs have narrowed
Except in the UK, spreads between market expectations of 9 official cash rates and wholesale funding costs have narrowed Spreads between 3-mth wholesale funding and OIS rates United States United Kingdom 400 Basis points 250 Basis points 350 300 200 250 150 200 150 100 100 50 50 0 0 Dec-06 Jun-07 De
Slide 10: Spreads between corporate and government bond yields have remained wide
However spreads between corporate and government bond 10 yields have remained wide AA 5-7 year corporate bond yield spread over governments United States United Kingdom 600 Basis points 700 Basis points 500 600 400 500 400 300 300 200 200 100 100 0 0 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Dec-06 Jun-07
Slide 11: Since the Fed began buying MBS outright, mortgage rates have fallen
Since the Fed began buying MBS outright, mortgage rates 11 have fallen and applications for mortgages have risen 30-year fixed mortgage rate Applications for mortgages for home purchase 7.50 % pa Fed commences 500 Week ended 16 Mar outright purchase 1990 = 100 of mortgage- backed securities 450 7.00
Slide 12: The Fed's decision to start buying CP outright has prompted a modest revival
The Fed’s decision to start buying CP outright has prompted a 12 modest revival in CP issuance Financial commercial paper Asset-backed commercial paper outstanding outstanding 0.90 US$trn 1.30 US$trn 0.85 1.20 0.80 1.10 0.75 1.00 0.70 0.90 ` ` 0.65 0.80 0.60 0.55 0.70 0.50 0.60 26 Dec 26 Jun 25 Dec
Slide 13: Indicators of 'fear' in financial markets have retreated a bit
Indicators of ‘fear’ in financial markets have retreated a bit 13 from October’s all-time peaks but remain elevated ‘TED’ spread between 3-month ‘VIX’ index of implied volatility inter-bank US$ rates and 3- of the US S&P 500 share index month US Treasury bill yields 700 Basis points 80 Basis points
Slide 14: Banks in the US and the euro area are continuing to tighten credit standards
Banks in the US and the euro area are continuing to tighten 14 credit standards US banks Euro area banks Commercial & industrial loans Loans to enterprises 100 Net balance tightening standards (%) 80 Net balance tightening standards (%) 80 Large 60 60 40 40 20 Small 20 0 0 -20 -40 -20 00 01 02 03 04
Slide 15: Share market investors have lost almost US$30 trillion
Share market investors around the world have lost almost 15 US$30 trillion since the end of October 2007 Capitalization of world equity markets 55 US$ trillion 50 45 40 35 30 25 Peak-to-trough decline from 31 Oct 2007: US$28.8 trn (53% of 2007 world GDP) 20 15 2000 2001 2002 2003 2004 2005 2006 2007
Slide 16: Stockmarkets have rallied since November despite bad economic data
Stockmarkets have rallied since 20 November despite 16 uniformly bad economic data, on hopes of major stimulus Stock markets United States S&P 500 Japan Nikkei 1500 16000 Up 8.1% 1400 1300 14000 from 20/11 Up 18.3% (16.3% from 1200 from 20/11 12000 27/10 low ) 1100 1000 10000 900 8000 800 700 6000 D
Slide 17: The global credit crunch is continuing despite efforts to recapitalize banking systems
17 The global credit crunch is continuing despite concerted efforts to recapitalize banking systems and stabilize money markets z Growth in the world economy has slowed abruptly during the current half, with all of the major industrialized economies experiencing negative, or only barely positive, gr
Slide 18: The NBER has formally declared that a recession began in December 2007
The US National Bureau of Economic Research has formally 18 declared that a recession began in December 2007 … NBER’s key recession gauges since Dec 2007 cf. previous recessions Real personal income less transfers Industrial production 100.5 Preceding cycle peak = 100 101.0 Preceding cycle peak = 10
Slide 19: The US has yet to experience consecutive quarters of negative real GDP growth
… even though the US has yet to experience consecutive 19 quarters of negative real GDP growth US real GDP growth 10 % change from previous quarter (seas. adj. annualized rate) 8 6 4 2 0 -2 -4 Note: 2001 recession did not feature successive contractions in real GDP -6 00 01 02 03 04 05 06 07 08 09 N
Slide 20: The recession is being driven by household responses to deteriorating net worth
The recession is being driven (in the first instance) by household 20 responses to deteriorating net worth US household indicators Consumer confidence Real personal consumption expenditure 160 1985 = 100 (trend) % change from year earlier (trend) 10 140 8 120 6 100 4 80 2 60 0 40 -2 80 84 88 92 96 0
Slide 21: The US housing market is in a dire state
The US housing market is in a dire state 21 US housing market indicators Housing starts ‘Seriously delinquent’ mortgages 2.50 Mn units (annual rate, trend) 6 % 2.25 5 2.00 4 1.75 3 1.50 1.25 2 1.00 1 0.75 0 72 76 80 84 88 92 96 00 04 08 72 76 80 84 88 92 96 00 04 08 Inventory of unsold homes Rental
Slide 22: Household spending will come under further pressure from a deteriorating labour market
Household spending will come under further pressure from a 22 rapidly deteriorating labour market US labour market indicators Payroll employment Hours worked 600 Ch. ('000) from previous month 8 % change from year earlier (trend) Trend 6 400 200 4 2 0 0 -200 -2 -400 Largest single-month -4 -600 decl
Slide 23: The US household sector will cut spending to return to net lender position
The US household sector will cut spending in order to return to 23 its long-term position as a net lender US private sector net lending and liabilities Household net lending Non-financial corporate net lending 8 % of GDP 3 % of GDP 6 (trend) 2 (trend) 4 1 0 2 -1 0 -2 -2 -3 -4 -4 -6 -5 50 55 60 65 70
Slide 24: The US public sector should increase its net borrowing substantially
The US public sector should (and can) increase its net borrowing 24 substantially to cushion the impact of household de-leveraging US government and foreign net lending and liabilities Government net lending Foreign net lending 6 % of GDP 8 % of GDP 4 6 2 0 4 -2 -4 2 -6 0 -8 -10 -2 50 55 60 65 70 75
Slide 25: The euro area has also entered recession
The euro area has also entered recession, although it may not 25 be as severe as in the UK Euro area economic indicators Real GDP House prices 1.2 % change from previous quarter 25 % change from year earlier 1.0 20 0.8 15 0.6 10 France 0.4 Spain 5 0.2 0 0.0 -5 -0.2 Ireland -10 01 02 03 04 05 06 07 0
Slide 26: The UK will have a sharp recession
With a relatively large financial sector and house prices falling 26 almost as much as the US, the UK will have a sharp recession UK economic indicators Real GDP House prices 1.2 % change from previous quarter 30 % change from year earlier 1.0 0.8 20 0.6 0.4 10 0.2 0 0.0 -0.2 -10 -0.4 First decline
Slide 27: Japan's economy has entered recession
Japan’s economy has entered recession even though its banks 27 have very little exposure to the global credit crisis Japan Real GDP Export volumes 2.0 % change from previous quarter 20 Net balance (%) Actual 1.5 15 1.0 10 0.5 5 0.0 0 -0.5 -5 Trend -10 -1.0 -15 -1.5 01 02 03 04 05 06 07 08 01 02 03 0
Slide 28: Industrial production is declining in Western countries
Industrial production is declining in Western countries and also 28 set to slow sharply in developing and emerging economies Manufacturing purchasing indices (PMIs) and industrial production Advanced economies Developing economies 8 % change from % net balance 60 14 % change from % net balance 58 ye
Slide 29: China's economy is slowing
China’s economy is slowing, reflecting slower export growth and 29 an internal property slump Chinese economic indicators Real GDP growth Exports 13 % change from year earlier 40 % change from year earlier (6-mth moving avge) 12 11 30 10 20 9 Slowest growth 8 rate since SARS 10 (deflated by change i
Slide 30: Industry indicators show a starker slowdown in China
Industry indicators provide a starker indication of the slowdown 30 in China’s economy Chinese industry indicators Crude steel production Electricity generation 40 % change from year earlier 30 % change from year earlier Seas. adj. 30 20 20 Trend 10 Seas adj 10 Trend 0 0 -10 -20 -10 02 03 04 05 06 0
Slide 31: India's economy has also slowed
India’s economy has also slowed, largely reflecting weaker 31 household spending and a deteriorating trade performance Indian economic indicators Real GDP growth Merchandise trade 25 US$ bn (12-month moving total) 12 % change from year earlier 0 10 8 -25 Non-oil 6 Slowest growth -50 4 rate since 200
Slide 32: Commodity prices have fallen reflecting declining demand
Commodity prices have fallen reflecting declining demand, the 32 unwinding of speculative trades and a stronger US dollar Oil Gold 150 US$ per barrel 1000 US$ per oz. 950 125 900 100 850 800 75 750 700 50 650 25 600 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Base metals Wh
Slide 33: Spot prices for Australia's two largest commodity exports have fallen sharply
33 Spot prices for Australia’s two largest commodity exports have fallen sharply in recent weeks and are likely to decline further Coal prices Bulk commodity shipping costs 200 US$ per tonne 20 x 1000 Spot price (thermal coal) 'Baltic freight (ex-Newcastle) 150 15 (cape size) futures index 100 10 50
Slide 34: Commodity prices will fall further over the next 6-12 months
Commodity prices will fall further over the next 6-12 months 34 though should remain strong by historical standards Resource commodity prices Coal Zinc Gold 350 US$/tonne 225 US¢/pound 1000 US$/oz 300 200 900 Coking 175 250 800 150 200 700 125 150 100 600 75 500 100 50 50 Steaming 400 25 0 0 300 03
Slide 35: Headline inflation in the G7 has begun to come down rapidly
Headline inflation in the G7 economies has begun to come down 35 rapidly, and ‘core’ inflation is also likely to fall significantly Consumer prices United States Euro area 6 % change from year earlier 5 % change from year earlier "Headline" "Headline" 5 4 4 3 3 2 2 Ex-food Ex-food 1 1 & energy & ene
Slide 36: A period of deflation is not out of the question in the US
Indeed, a period of deflation is not out of the question in the 36 United States Survey-based measures of ‘upstream’ US price pressures Purchasing managers’ survey Philadelphia Fed survey prices paid prices paid and received 100 Net balance of manufacturing purchasing 100 Net balance of manufacturer
Slide 37: Inflation has also peaked in much of the developing world
Inflation has also peaked in much of the developing world (with 37 one or two exceptions such as India) Major developing economies – consumer prices China Other East Asia South Africa 10 % change from 10 % change from 16 % change from year earlier year earlier 14 year earlier 8 8 12 6 10 6 8 4 4 6 2
Slide 38: The US$ and yen have risen since July
The US$ and ¥ have risen since July, reflecting the hoarding of 38 US$ and unwinding of leveraged positions and ‘carry trades’ US dollar vs euro US dollar vs British pound 1.20 US$ per € (inverted scale) 1.40 US$ per £ (inverted scale) 1.50 1.30 1.60 1.70 1.40 1.80 1.50 1.90 2.00 1.60 2.10 Dec-06 Ju
Slide 39: Australia's economy had slowed significantly before the global downturn
39 Australia’s economy had slowed significantly before the global downturn began in earnest z The most recently released national accounts show that Australia’s economy had already slowed significantly before the latest stage of the global financial crisis and ensuing economic downturn, reflecting t
Slide 40: The Australian economy had been slowing since late 2007
40 The Australian economy had been slowing since late 2007, although income growth remained strong and unemployment low Real GDP growth Employment 6 % change from year earlier 4 % change from year earlier Seas. adj. 5 Non-farm GDP 3 4 3 2 2 Trend Real GDP 1 1 0 0 01 02 03 04 05 06 07 08 01 02 03 04
Slide 41: Consumer and business confidence have fallen sharply this year
41 Consumer and business confidence have fallen sharply this year although both now seem to be stabilizing (for now, anyway) Consumer confidence Business confidence 140 Ratio of optimists 40 Net balance of optimists to pessimists (%) minus pessimists (%) Actual 30 130 20 120 10 110 0 100 Actual -10
Slide 42: Households are lifting saving to its highest level in a decade
Households are responding to declining wealth by lifting saving 42 – to its highest level (as a proportion of income) in a decade Household income and spending Household saving 10 Real % change from 16 % of household disposable income year earlier Household 14 disposable 8 income 12 10 6 8 4 6 Trend
Slide 43: Household spending, borrowing and housing activity have slowed sharply
43 Household spending and borrowing, and housing activity, have both slowed sharply over the past six months Retail sales Housing finance commitments % change from year earlier % change from year earlier 10 60 8 45 Trend 30 Trend 6 Actual 15 4 0 2 Actual -15 0 -30 02 03 04 05 06 07 08 02 03 04 05 06
Slide 44: The fall in commodity prices will detract from national income in 2009
The sharp fall in commodity prices will detract substantially from 44 Australian national income in 2009 Australia’s terms of trade Real gross domestic income (ratio of export to import prices) (GDI) and product (GDP) 130 2006-07 = 100 8 Real % change from year earlier 120 6 110 4 100 2 Real GDP 90
Slide 45: Australia is exposed to the global credit crunch because of the external deficit
Australia is also exposed to the global credit crunch because of 45 the large external deficit and the way it has been financed Current account deficits Financing Australia’s current 2008 account deficit 125 A$ bn - 4-qtr moving total 225 US$ bn US$664bn 200 100 Current account deficit 175 75 150 50
Slide 46: Australian banks and securities markets have come under similar pressure
46 Hence Australian banks and securities markets have come under similar pressure to banks and markets overseas Banks’ short-term funding costs Corporate bond yield spreads 350 90-day Libor spread 600 AA spread over 5-7 yr US 300 over OIS (bp) US 500 gov't bond yields (bp) 250 400 200 300 150 Austra
Slide 47: The RBA has been expanding its balance sheet to support liquidity
Like other central banks, the Reserve Bank of Australia has 47 been expanding its balance sheet to support liquidity RBA open market Commercial bank deposits operations with the RBA 20 A$ billion 18 A$ billion Repos - private securities 16 Repos - gov't & quasi-gov't securities RBA term deposits 15
Slide 48: Sharp slowdown in credit growth
The ‘credit crunch’ plus the effect of higher interest rates on 48 credit demand has led to a sharp slowdown in credit growth Credit provided to the Australian private sector Total credit Credit to households 18 % change from year earlier % change from year earlier 25 16 20 Housing 15 14 10 12 5 Oth
Slide 49: The corporate sector is in a strong financial position
The corporate sector is (in general) in a strong financial position 49 and doesn’t need to cut labour costs aggressively Australian non-financial corporate sector finances Interest cover ratio ‘Profit share’ of national income 8 Ratio of gross operating surplus of 30 Gross operating surplus of Recor
Slide 50: Business capital expenditure expectations have remained strong
Business capital expenditure expectations have remained 50 remarkably strong, even into October-November Business new fixed capital Capital expenditure expectations expenditure Mining 100 Real % change from 25 % revision from previous estimate year earlier 20 2008-09 15 Average for previous 20 80 ye
Slide 51: Australia's housing market has softened but won't become as dire as America's
Australia’s housing market has clearly softened but it won’t 51 become as dire as America’s unless unemployment rises sharply Population growth Mortgage delinquency rates* 2.0 % change from year earlier % of total loans outstanding 6 Australia US 5 1.5 4 1.0 3 US 2 0.5 Australia 1 0.0 0 01 02 03 04
Slide 52: Australia's household sector will revert to a net lender
Australia’s household sector (like the US’s) will probably revert 52 to its traditional position as a net lender Australian household net lending and liabilities Household net lending Household liabilities 5 % of GDP 110 % of GDP 4% (trend) of 4 GDP` 100 3 90 2 1 80 Linear time trend 0 70 -1 60 -2 5
Slide 53: Scope for government borrowing to moderate household de-leveraging
There is considerable scope for government borrowing to 53 moderate the impact of household sector de-leveraging General government net lending z Australia’s general government sector has been running surpluses, on average, 4 % of GDP since 1998 (apart from a brief interlude in 3 (trend) 2001-02), a
Slide 54: Inflation will likely fall more quickly than the RBA expects
54 Inflation will likely fall more quickly than the RBA expects, despite the fall in the A$ Consumer prices 8 % change from year earlier 7 6 RBA fore- 5 "Underlying" cast "Headline" 4 3 2 RBA target 1 range 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Note: excludes impact of introd
Slide 55: Inflation expectations peaked during the September quarter
Inflation expectations peaked during the September quarter and 55 are now falling (sharply in the case of consumers) Household inflation Business selling price expectations expectations 7 % pa 7 % pa 6 Trend 6 Actual 5 5 Actual 4 4 3 3 2 2 1 1 Trend 0 0 01 02 03 04 05 06 07 08 01 02 03 04 05 06 07 0
Slide 56: Other monthly data also points to inflation having peaked
Other monthly data also points to inflation having peaked and 56 now declining Purchasing managers’ survey Monthly inflation gauge selling prices 6 % change from Net balance reporting 70 year earlier higher selling prices 5 Manufacturing 65 Headline 4 60 3 55 2 'Trimmed mean' Services 1 50 0 45 03 0
Slide 57: The RBA's cash rate is likely to be lowered further
The RBA’s cash rate is likely to be lowered further, to 3½% (or 57 even less) during the first half of 2009 … z The RBA has cut its cash rate by 3 pc Short-term interest rates points over the past three months – entirely reversing the increase¼s over 12.0 % pa the previous 6¼ years Standard variable
Slide 58: Official interest rates will be at their lowest since the late 1950s
… implying that official interest rates will be at their lowest since 58 the late 1950s, and mortgage rates since the early 1970s Short-term interest rates 25.0 % pa 20.0 15.0 Standard variable mortgatge rate 10.0 5.0 RBA official cash rate 0.0 60 65 70 75 80 85 90 95 00 05 10 Note: ‘neutral’ range
Slide 59: The economy will slow sharply and unemployment will rise
The economy will slow sharply (although it may not contract 59 outright) and unemployment will rise by around 2½ pc points Spending and output Employment and unemployment 8 Real % change from 4.0 % change from % 8 year earlier year earlier Domestic final Unemployment 7 3.5 demand (right scale) (spen
Slide 60: The sharp drop in the A$ partly reflects the rebound in the US$
The recent sharp drop in the A$ is partly a reflection of the 60 rebound in the US$ … A$ vs US$ and US$ vs other major currencies 1.00 US$ per A$ Mar 1973 = 100 65 0.95 70 Trade-weighted index of US$ 0.90 75 vs other major currencies 0.85 (right scale, inverted) 80 0.80 85 0.75 90 0.70 95 0.65 Austr
Slide 61: The A$'s decline reflects plummeting commodity prices and narrowing interest rate spread
The A$’s decline also reflects plummeting commodity prices 61 and the narrowing Australian-US interest rate spread A$ vs US$ and A$ vs US$ and Australia-US commodity prices interest rate spreads 1.00 US$ per A$ 1966 = 100 600 1.00 US$ per A$ Basis points 600 0.95 550 0.95 Spread between 500 0.90 0.9
Slide 62: The Australian dollar is likely to remain weak
62 The Australian dollar is likely to remain weak against the US$ and yen over the next two years Australian dollar vs US dollar Australian dollar vs Euro 1.00 US$ per A$ 0.70 € per A$ 0.90 0.65 0.80 0.60 0.70 0.55 0.60 0.50 0.50 0.45 06 07 08 09 10 06 07 08 09 10 Australian dollar vs Japanese yen A
Slide 63: Credit growth is expected to slow over the next two years
Credit growth is expected to slow over the next two years 63 reflecting both demand and supply influences Credit growth Housing Business 25 % change from year earlier 25 % change from year earlier 20 20 15 15 10 10 5 5 0 0 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 Other personal To
Slide 64: Outlook for the New Zealand economy
64 Outlook for the New Zealand economy z The New Zealand economy is in recession, having contracted by 0.3% in the March quarter and 0.2% in the June quarter, and in all likelihood by ½% in the September quarter. Our own business conditions survey and anecdotal evidence point to ongoing and signific
Slide 65: The New Zealand economy is in recession
65 The New Zealand economy is in recession, and continues to weaken Business confidence down again Construction sector leading the charge Annual % 9 GDP (LHS) Net % 35 2000 $m (95/96 prices '000m2 1600 30 1800 Residential 1400 7 25 investment (LHS) 20 1600 1200 5 15 1400 1000 3 10 5 1200 800 1 0 100
Slide 66: NZ business confidence is deteriorating
66 NZ business confidence is deteriorating ANZ National Bank Business Outlook survey Headline confidence Own activity 60 net % 60 Net % 40 20 40 0 -20 20 -40 0 -60 -80 -20 95 97 99 01 03 05 07 09 95 97 99 01 03 05 07 08 Employment Investment 30 Net % 30 Net % 20 20 10 10 0 -10 0 -20 -10 -30 -20 95 9
Slide 67: NZ households have begun balance sheet consolidation
67 NZ households have begun a period of balance sheet consolidation House prices retreating Discretionary spending being pared 4.0 back $mn 2.1 $bn $NZ 000' Groceries, food 400 3.9 2 and fuel (RHS) 350 3.8 1.9 300 3.7 REINZ median house price 3.6 1.8 250 (3-mth average) 3.5 1.7 200 3.4 Other retail
Slide 68: Monetary and fiscal policy are responding to the deteriorating outlook
68 As in other countries, monetary and fiscal policy are responding to the deteriorating economic outlook Interest rates are falling The currency is adjusting, with more to come 9 % Our OC R 0.9 NZD/USD NZD/USD expectations 8 0.8 7 0.7 6 0.6 5 Current 0.5 market pricing 4 0.4 3 0.3 00 01 02 03 04 05
Slide 69: New Zealand dollar to remain under pressure
69 New Zealand dollar to remain under pressure NZ dollar vs US dollar Australian dollar vs NZ dollar 0.85 US$ per NZ$ 1.30 NZ$ per A$ 0.80 1.25 0.75 0.70 1.20 0.65 1.15 0.60 0.55 1.10 0.50 1.05 0.45 0.40 1.00 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 Sources: Bloomberg, ANZ Nationa
Slide 70: Credit growth is weak and looks likely to remain so
70 Credit growth is weak and looks likely to remain so Housing credit Business credit - agriculture 20 Annual % 30 Annual % 25 15 20 10 15 10 5 5 0 0 99 01 03 05 07 09 11 99 01 03 05 07 09 11 Business credit - other Total credit 25 Annual % 20 Annual % 20 15 15 10 10 5 0 5 -5 0 99 01 03 05 07 09 11
Slide 71: Disclaimer
71 Disclaimer Important Notice UNITED STATES OF AMERICA by: Australia and New Zealand Banking Group Limited is represented in: ANZ Securities, Inc. (Member of NASD and SIPC) AUSTRALIA by: 6th Floor 1177 Avenue of the Americas Australia and New Zealand Banking Group Limited ABN 11 005 357 522 New Yor