Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — FY2008 Earnings Presentation
90 slides from Anz's earnings presentation, Oct 23, 2008
Slide 1: 2008 Full Year Results
For personal use only 2008 Full Year Results Australia and New Zealand Banking Group Limited 23 October 2008 1
Slide 2: Agenda
Agenda For personal use only • Mike Smith, CEO - overview • Peter Marriott, CFO – financial overview • Mike Smith CEO, – summary 2
Slide 3: Volatile global environment: A new reality
Volatile global environment: A new reality For personal use only • Volatile global environment ¾ Aftershocks working way through ¾ Up to 3 years for effects to work through real economy • Growth continues in Asia Pacific in 2009 ¾ Asian growth approx 7% ¾ Australia slower growth ( ~2%) but no recess
Slide 4: Actively managing new reality: A stronger foundation
Actively managing new reality: A stronger foundation For personal use only • Increased capital, strengthened the balance sheet and improved liquidity • Addressed Institutional issues ¾ leadership, strategy, risk • Introducing new business model to ¾ simplify ¾ lift customer focus ¾ enable performanc
Slide 5: Results overview
Results overview For personal use only Growth 2007 to 2008 NPAT $3,319m -21% Cash Earnings* $3,029m -23% Underlying Revenue*^ $12,343m +12% Expenses* $5,444m +10% Cash EPS* 155.3c -26% Dividend 136c unchanged *Adjusts headline numbers for significant items & fair value hedge gains/losses ^Adjusted f
Slide 6: Business performance overview
Business performance overview Cash Earnings For personal use only 2007 2008 Australia (Personal Division) 1,330 • Strong result from lending and customer deposits • Continued investment in personnel and premises 1,485 +12% New Zealand (Businesses) 815 NZD • Solid balance sheet growth, market share g
Slide 7: Agenda
Agenda For personal use only • Mike Smith, CEO - overview • Peter Marriott, CFO – financial overview • Mike Smith, CEO – summary 7
Slide 8: Key observations
Key observations For personal use only • Overview of financial performance • Impacts on performance ¾ Income & expense growth ¾ Credit intermediation trades ¾ Provisioning • Asset quality trends • Funding / Capital ¾ Risk Weighted Assets ¾ Cost of funding 8
Slide 9: $3 billion cash profit down on prior year due to higher credit impairments
$3 billion cash profit down on prior year due to significantly higher credit impairments For personal use only Cash EPS down 26% Reconciliation to July Trading update Cash profit (excluding the reclassification of $m credit risk on derivatives to income) (22.8%) 4,180 (256) Income 3,924 (895) • Lowe
Slide 10: Momentum in underlying business offset by credit related costs
Momentum in underlying business offset by credit related costs For personal use only Save for credit intermediation …but substantial credit related trades and a structured trade, costs lead to a 26% decrease in PBP growth exceeded 2007… Cash EPS 13.7% ^ Credit risk on 0.9% 13.7% derivatives # 2.1% 1
Slide 11: Strong underlying PBP and revenue growth
Strong underlying PBP and revenue growth Costs paced with revenue Full year revenue expense jaws For personal use only Income growth (% growth) Full Year 2H08 (HoH) 46 (% growth) (% growth) 11.5 24.8 16.4 10.5 9.9 4.4 -8.4 9.9 Asia NZ Personal Institutional^ Pacific Expense growth (% growth) 5.3 46
Slide 12: Volume growth slowing in the second half while margins have stabilised
Volume growth slowing in the second half while margins have stabilised For personal use only Margin trend improvement from Strong lending growth managing impacts of credit crisis $bn 16.3% bps 5.4% 10.3% 350 214.6 (6.5) 13 301 332 75 (5.7) 165 (3.2) 2.0 (1.3) 1.8 201.7 97 Credit market impacts 199.2
Slide 13: A strong result from Other Operating Income
A strong result from ‘Other Operating Income’ before impacts of credit risk on derivatives For personal use only Good contribution across all Core markets business delivered categories ($m) strong results ($m) 19.3%* (Reported growth -2%) 28.9%* (Reported growth -56%) 4,493 1,062 58 87.1% 3,765 824
Slide 14: Expenses reflect growth initiatives and institutional remediation
Expenses reflect growth initiatives across the region and institutional remediation action For personal use only Full year cost growth targeted to Second half cost growth slowing growth opportunities and in Australia and New Zealand and remediation work directed to Asia growth $586m^ $151m^ • Contin
Slide 15: Composition of Credit Risk on Derivatives
Composition of “Credit Risk on Derivatives” charged to Non interest income For personal use only Credit risk on derivatives 721 A$m • Back-to-back sold and bought credit protection trades • Mark-to-market on trades does not fully offset as one financial guarantor has defaulted and the valuation of t
Slide 16: Negative mark to market on sold protection not fully offset
Negative mark to market on sold protection not fully offset by value of purchased protection MtM impacted by volatility in CDS For personal use only spreads* and US currency Index AUD/USD 1 Counterparty (Bought protection) 200 0.9 150 Notional Mark Credit risk Principal to on 0.8 Rating No. 100 Amou
Slide 17: Stress test on Credit Intermediation trades
Stress test on Credit Intermediation trades looking at likelihood of cash losses For personal use only Data used in stress test Conclusion • Moody’s historical corporate default rates going • Only in Great Depression scenario did any tranches back to 1920* breach attachment points • Analysed cumulat
Slide 18: Significantly higher Individual Provisions from Institutional and NZ
Significantly higher Individual Provisions from Institutional large names and NZ portfolio For personal use only Significant increase in commercial Higher individual provisions Provisions off a low base, consumer across regions ($m) upward trend from NZ ($m) 1,130 657 157 159 438 338 814 473 FY06 FY
Slide 19: Collective Provision increase dominated by environmental factors
Collective Provision increase dominated by environmental factors reflecting recent credit stress For personal use only Collective Provision (CP) Economic cycle adjustment $m 818 • For deterioration in global credit markets and slowing NZ economy Economic Cycle Adj. (includes Inst. $180m, NZ $36m) 22
Slide 20: Higher arrears and impaired assets
Higher arrears and impaired assets from single name exposures and rising consumer stress For personal use only Consumer arrears being closely Impaired loans impacted by managed large single name Institutional Australia customers (Impaired Assets ($m)) 2.0% Credit Cards >60+ Days 1.5% Impaired Assets
Slide 21: Strong capital position compares favourably with peers
Strong capital position compares favourably with domestic and international peers For personal use only Basel II Capital Position (Tier 1 ratio) 10.7 10.0 Includes $1.08bn CPS issue and $0.6bn Private Volume, risk and Placement 0.38 8.09 methodology changes 0.05 7.71 0.63 2008 Final div underwrite O
Slide 22: Well placed to manage 2009 with conservative funding strategy
Well placed to manage 2009 with a conservative funding strategy and strong liquidity position Stable and diversified funding base For personal use only ($bn) Borrowed consistently over 2008 Group Funding profile* – September 2008 Commercial 9 Sub Debt Short term Bills 4% wholesale debt US$3.8bn Priv
Slide 23: Agenda
For personal use only Agenda • Mike Smith, CEO - overview • Peter Marriott, CFO – financial overview • Mike Smith, CEO – summary 23
Slide 24: Summary
Summary For personal use only • Volatile global environment ¾ Aftershocks working way through for 2 to 3 more years • New paradigm in financial services ¾ Re-emergence of mega regional banks • Growth to continue in Asia Pacific ¾ Importance of China, India and Asia • ANZ executing on Super Regional
Slide 25: Additional information
For personal use only 2008 Full Year Results Australia and New Zealand Banking Group Limited 23 October 2008 Additional information 25
Slide 26: 2008 NPAT benefiting from Visa IPO proceeds and fair value gains
2008 NPAT benefiting from Visa IPO proceeds and fair value gains partly offset by transformation costs For personal use only Cash EPS: down 26% Cash profit $m (22.8%) Details on slide 28 4,180 85 195 24 3,924 895 Economic and FV Hedges restatement Deferred tax balance Fleetpartners sale 217 152 248
Slide 27: Organisational transformation costs to derive $200m ongoing benefits
Organisational transformation costs to derive $200m ongoing annualised benefits from 2010 2008 For personal use only Future Full $219m costs annualised benefit Process re-engineering • Process efficiency Approach and methodology implementation ~100m to improve operational efficiency and reduce dupli
Slide 28: Underlying performance across divisions
Underlying performance across divisions For personal use only 2008 PBP ($m) 2008 Cash NPAT ($m) growth growth Total Group Flat 6,051 (23%) 3,029 Personal +12% 2,556 +12% 1,485 Institutional (14%) 1,838 (65%) 526 NZ Businesses* +5% 1,338 NZD (12%) 715 NZD Asia-Pacific^ +46% 569 +52% 413 2008 decrease
Slide 29: Accounting changes and credit related costs since July trading update
Accounting changes and credit related costs the major variances since July trading update For personal use only July 2008 Full Reasons for variance Change in total credit trading Year costs since trading update Results update Income 8-9% 4% • ~2.0% down from 2,669 accounting reclassifications 2,576
Slide 30: Securitisation and property market
Securitisation and property market For personal use only Asset Backed Securities • $318m in Alt-A RMBS assets in the liquidity portfolio, largely eligible for repo at the US Federal Reserve • Limited holdings in trading portfolios ¾Total Australian RMBS of $125m – $121m AAA rated, A$3m AA rated ¾Tot
Slide 31: Hedging the Kiwi dollar
Hedging the Kiwi dollar For personal use only FY08 Hedges AUD/NZD hedges established • FY08 NZD earnings (~96% hedged) have where revenues are believed to be been effectively translated at an average at adverse risk rate of 1.15 1.40 AUD/NZD • During the 2008 financial year, NZD 1.486 billion of eco
Slide 32: Credit intermediation trades
For personal use only Credit intermediation trades 32
Slide 33: Structured Credit Intermediation Trades
Structured Credit Intermediation Trades For personal use only Sold Protection Bought Protection • Credit intermediation trades entered into • CDS protection purchased over the same between 2004 & 2007 structures to mitigate risk • ANZ did not originate the structures • 8 counterparties (some of whic
Slide 34: Credit Intermediation Trade Structures
Credit Intermediation Trade Structures For personal use only Type of Portion of Mark to No. of No of Average Attach/Detach structure Notional Market structures names Remaini Average ng Life (Years) Synthetic $8.9bn $1,105m 20 ˜ 650 6 Attach Avg 19% CDO Detach Avg 43% CLO $1.3bn $105m 10 ˜ 700 11 Att
Slide 35: Calculation of credit risk on derivatives
Structured credit intermediation trades - calculation of credit risk on derivatives For personal use only Calculation of mark-to-market Counterparty (Bought protection) and is a function of: • Credit spreads Notional Mark Credit risk on • Credit correlations Principal to Rating No. derivatives Amoun
Slide 36: Credit Quality
For personal use only Credit Quality 36
Slide 37: Breakdown of 2008 collective provision charge
Breakdown of 2008 collective provision charge For personal use only Lending Business Unit Risk Cycle and Mix / Growth Total (A$m) Impact concentrations Other* Impact Group 197 200 525 (104) 818 Institutional 82 152 449 (53) 630 (excl. BB) Business 9 4 32 (3) 42 Banking Personal (excl Consumer 39 16
Slide 38: Increase in Individual provisions in Institutional and NZ Consumer
Increase in Individual provisions predominantly in Institutional and NZ Consumer portfolios For personal use only Commercial IP growth dominated increase Consumer IP growth driven by NZ retail in Total individual provision charge businesses and Australia growth 1,130 $m 500 Mortgage IP makes up Comm
Slide 39: Increase in Non Performing Loans and Days Past Due Loans
Increase in Non Performing Loans and 90 Days Past Due Loans weighted to secured portfolios For personal use only 90 Days Past Due well up, Commercial Non Performing majority on the secured book $m Loans by Geography 1,500 % of GLA Security profile 0.40% 1,200 Not well secured 900 0.35% 600 0.30% 300
Slide 40: NSW mortgage arrears remain above group average
NSW mortgage arrears remain above group average, portfolio LVR profile stable Mortgages Australia (Retail) For personal use only Mortgages^ 60+ Day Delinquencies by State (% of GLA) 0.80% 80% LVR at origination Sep-07 0.60% 60% LVR at origination Sep-08 Current LVR Sep-07 0.40% 40% Current LVR Sep-0
Slide 41: Collections teams increased and scorecards tightened
Collections teams increased and scorecards further tightened to manage arrears levels For personal use only Consumer Cards 30+ day arrears Bankruptcy numbers by state^ 120 (Indexed as of FY05) 4,000 NSW/ACT VIC/TAS 2005 100 QLD SA/NT 2006 3,000 WA 80 2007 2008 60 2,000 40 1,000 20 0 0 1 3 5 7 9 11 1
Slide 42: Increased stress in Commercial Portfolios
Increased stress in a number of Commercial Portfolios, broader group credit quality remains stable Institutional Banking & Financial For personal use only Group – GLAs Institutions Risk Grade Migration BASEL I BASEL II Summary by Customer Groups (FY08) $308bn $339bn $358bn upgrade 20 AAA to BBB 11.2
Slide 43: Increase in watch & control lists
Increase in watch & control lists - deterioration & credit vigilance in a weakening environment For personal use only Watch and Control list* Diverse industry focus on watch list (indexed data) (Watch list by industry - Number of groups %) Watch List Sep-07 Limits Control List Oct-07 Property Limits
Slide 44: New Zealand - Provisioning charges increasing
New Zealand - Provisioning charges increasing with change in economic cycle Contribution to Collective Provision For personal use only Provisions have grown from low levels (New Zealand Banking) Charge (NZD m) NZD m FY05 FY06 FY07 FY08 112 260 $18 $74 $302 $158 220 Risk 32 180 Volume 140 Scenario 38
Slide 45: New Zealand - arrears and impaired assets increased
New Zealand - arrears and impaired assets increased from historical lows with h’hold cashflow pressures 90 days past due largely secured For personal use only Non-performing loans NZD m % $309m 350 0.35% 300 0.30% Personal Housing 250 0.25% SME 200 0.20% Secured Lending 150 0.15% 90% Rural 100 0.10%
Slide 46: Commercial Industry exposures – Group
Commercial Industry exposures – Group For personal use only Commercial Property Agriculture, Forestry & Finance & Insurance 35bn 12.0% 35bn 12.0% 35bn 12.0% Fishing 30bn 10.0% 30bn 10.0% 30bn 10.0% 25bn 25bn 25bn 8.0% 8.0% 8.0% 20bn 20bn 20bn 6.0% 6.0% 6.0% 15bn 15bn 15bn 4.0% 4.0% 4.0% 10bn 10bn 10
Slide 47: Commercial Industry exposures – Group
Commercial Industry exposures – Group For personal use only Mining Accommodation, Cafes Electricity, Gas & 35bn 12.0% 35bn & Restaurants 12.0% 35bn Water Supply 12.0% 30bn 10.0% 30bn 10.0% 30bn 10.0% 25bn 25bn 25bn 8.0% 8.0% 8.0% 20bn 20bn 20bn 6.0% 6.0% 6.0% 15bn 15bn 15bn 4.0% 4.0% 4.0% 10bn 10bn
Slide 48: Capital, liquidity and funding
For personal use only Capital, liquidity and funding 48
Slide 49: Balance sheet, capital, lower risk
Actively managing for new reality: Balance sheet, capital, lower risk For personal use only Balance Sheet Strengthened collective provision balance (CP/CRWA#) • Collective provisions set above 1% 1.13% 0.94% of credit RWA’s 0.81% 0.79% 0.73% Capital – Tier One [7.7%] • Proactive in raising capital S
Slide 50: ANZ capital position strengthened under FSA and OSFI
ANZ capital position strengthened and compares favourably under UK FSA and Canadian OSFI regulation For personal use only Sep 07 Mar 08 Sep 08 Sep 08** ANZ ANZ FSA OSFI Basel II Basel II Basel II pro forma Basel II Basel II Core Tier 1* 5.2% 5.3% 5.9% 6.3% 8.0% 8.7% Tier 1 6.9% 6.8% 7.7% 8.1% 10.0%
Slide 51: Tier ratios higher under FSA regulation comparisons
Tier 1 and Core Tier 1 ratio’s are higher under FSA regulation comparisons • Capital differences arise principally due to FSA: For personal use only ANZ Tier 1 on an FSA basis • Not requiring a deduction for accrued dividend ~10.0 and net of the associated DRP 10 • Not requiring a Tier-1 deduction f
Slide 52: Tier ratios higher under OSFI regulation comparisons
Tier 1 and Core Tier 1 ratio’s are higher under OSFI regulation comparisons For personal use only • Capital differences arise principally due to OSFI: ANZ Tier 1 on an OSFI basis 12 • Not requiring a deduction for accrued dividend and ~10.7 net of the associated DRP 9.7 10 • Not requiring a Tier-1 d
Slide 53: Conservative funding strategy leaves ANZ well placed
Conservative funding strategy leaves ANZ well placed to manage liquidity in difficult market conditions Funding composition Sep-08 For personal use only • Funding strategy designed to ensure stability of core Group Funding profile^ – September 2008 sources of funding such as Customer Deposits and Co
Slide 54: Balance sheet strengthened despite difficult environment
Balance sheet strengthened despite difficult environment For personal use only Significant increase in liquid assets ($bn) • Prime liquid asset portfolio increased to nearly 3 >12 months of offshore wholesale funding maturities times Sep-07 levels • All liquid assets eligible for repo with a central
Slide 55: Strong 2008 funding year
Strong 2008 funding year leaves ANZ well placed to manage 2009 requirements For personal use only Completed $39 billion of term wholesale Borrowed consistently over the year ($bn) funding during FY08 (FY07 ~$24 billion) 10 • Includes $9 billion of 1 year debt and $6 billion of 8 US$3.8bn extendible
Slide 56: Strong funding position maintained despite higher issuance costs
Although global term wholesale issuance costs have increased, strong funding position maintained For personal use only ANZ 5 year CDS spreads 200 • Fundamental repricing of default risk has 180 caused credit spreads to widen globally 160 140 • Despite this, the relatively stable Australian Basis poi
Slide 57: Margin analysis
For personal use only Margin analysis 57
Slide 58: Group Net Interest Margin
Group Net Interest Margin – Full Year and Half on Half For personal use only FY08 vs FY07 Competition Pressures (FY07 vs FY08) Major drivers -2.7 Product Mix 219.1 Personal deposit mix -1.3bps 215.6 -2 3.5 NZ deposit mix -1.1bps 5.5 -1.9 Assets 2.3 Accounting noise -0.9 Mortgages -1.3 bps 6.4 Fundin
Slide 59: Personal NIM
Personal NIM – Full Year and Half on Half For personal use only FY08 vs FY07 Competition Pressures (FY07 vs FY08) Major drivers -4.4 Assets -2.7 222.3 1.2 Variable rate mortgage -2.3 bps 4.7 -3.9 2.1 218.5 Other Declining fees -0.7bps Asset Mix Product Mix Assets High to low margin TDs -3.2bps Other
Slide 60: Institutional NIM
Institutional NIM – Full Year and Half on Half For personal use only FY08 vs FY07 Competition Pressures (FY07 vs FY08) 0.3 Major drivers 166.2 -0.4 9.1 -0.5 Product Mix High to low margin TDs -0.7 bps -3.0 Assets 157.1 5.4 Relationship Lending -1.4 bps 2.0 Other Accounting noise Other 4.3 Liabilitie
Slide 61: New Zealand NIM
New Zealand NIM – Full Year and Half on Half For personal use only FY08 vs FY07 Competition Pressures (FY07 vs FY08) Major drivers -6.4 Product Mix 249.1 4.9 -0.2 Decline in low yield/high margin deposits -6.2 bps -5.6 0.1 10.4 Assets -0.1 Rural and business banking -1.7 bps Funding Mix Asset Mix Li
Slide 62: Divisional performance detail
For personal use only Divisional performance detail 62
Slide 63: Personal - Double digit growth despite difficult conditions
Personal - Double digit growth despite difficult conditions For personal use only Profit Before Provisions Comments: 12% • NPAT growth of 12% in difficult Cash profit year 12% • Strong revenue growth of 11% 155 199 • 2% cost growth in 2H08 $m 312 51 62 1,485 • CTI down 56bps to 47.89% 1,330 12% 9% •
Slide 64: Personal - Business unit performance
Personal - Business unit performance Full Year 2008 For personal use only Business PBP 2008 $m Growth % NPAT 2008 $m Growth % Mortgages 582 +5% 395 +6% Banking Products 647 +28% 442 +27% Consumer Finance 714 +9% 311 +12% Rural, Commercial & Agribusiness 204 +18% 128 +12% Products Small Business 137
Slide 65: Personal – good revenue growth through targeted investment
Personal – continuing to generate good revenue growth through targeted investment For personal use only Full Year 2008 underlying performance* 2008 Key Points – Business Units Revenue growth (PCP) Positive Mortgages (NPAT +6%) 30% Jaws • FUM up 13%, above system growth 25% SBB • Strong NPAT of 19% i
Slide 66: Personal - Solid FUM growth across products
Personal - Solid FUM growth across products For personal use only Loans ($bn) Deposits ($bn) Consistent channel mix (% flows by distribution channel) 12% 13% Sales FUM 22% 19% 18% 19% 6% 7% 180 38% 80 74 42% 44% 44% 164 156 70 36% 37% 44% 37% 160 65 147 60 2H07 1H08 2H08 2H08 140 Broker Network Spec
Slide 67: Personal - A strong focus on customers
Personal - A strong focus on customers For personal use only A leader in customer satisfaction Continuing to grow main (Main Financial Institution 6 months rolling avg*) bank relationship share *** % Market Share Gap 85 % 80 20 2.9% 2.8% 2.5% 2.4% 75 16 70 12 65 8 60 4 55 0 Aug-05 Feb-06 Aug-06 Feb-
Slide 68: Institutional - good underlying growth, impacted by provisioning
Institutional - good underlying growth, impacted by credit risk on derivatives and provisioning For personal use only Profit Before Provisions Comments: • NII income increased 14% in +18% spite of volatility in the markets business and (65%) increasing funding costs 267 157 • Other income increased
Slide 69: Institutional – Full Year 2008 business unit performance
Institutional – Full Year 2008 business unit performance For personal use only PBP - Core relationship businesses recorded increased profits, markets impacted by $m credit risk on derivatives Adjusted* Adjusted^ 41% 38% 31% 226 319 485 671 18% 15% 911 large 696 535 495 (15%) 454 430 440 226 large 19
Slide 70: Institutional – Second half 2008 business unit performance
Institutional – Second half 2008 business unit performance (half on half) For personal use only PBP - Core businesses continuing to grow underlying profit in challenging markets $m Adjusted* Adjusted^ 19% 11% 5% 151 167 328 343 495 6% 5% 416 (64%) 259 275 241 254 141 large 29 large 50 -79 -3 -10 Wor
Slide 71: Institutional – Strong balance sheet growth
Institutional – Strong balance sheet growth on both sides of the book For personal use only Strong lending growth, slowing to more Strong customer deposit growth across normalised levels in second half businesses Growth Growth ($bn) 27.1% ($bn) 15.9% 120 FY08 2H08 90 FY08 2H08 105.4 79.6 99.2 80 75.
Slide 72: Institutional - Business restructuring around customer franchise
Institutional - Business restructuring around strong customer franchise New Institutional organisational structure For personal use only Strong and improving cross sell… GMD Institutional Alex Thursby (Acting) No. 1 Cross Sell Bank status maintained Cross Sell Effectiveness1 (%) 61% Products 60% 59%
Slide 73: New Zealand profit impacted by slowing domestic economy
New Zealand profit impacted by slowing domestic economy and global liquidity squeeze For personal use only Profit Before Provisions Comments: +5% NZ Banking (5%) • The New Zealand economy has 12% slowed sharply through 2008 and is now in a protracted downturn. 978 The household sector led NZDm 263 2
Slide 74: New Zealand - Strong Institutional and Rural results
New Zealand - Strong Institutional and Rural results, Retail most impacted by adverse business conditions For personal use only NZ Banking PBP 9% NPAT -5% NZ Businesses PBP 5% NPAT -12% % Growth NZDm 1% 28% 426 9% 389 1% 22% 302 (18%) 304 (16%) 16% 263 (13%) 216 177 12% 153 151 37% (7%) 113 59 28 AN
Slide 75: New Zealand - Measured balance sheet growth
New Zealand - Measured balance sheet growth and a diverse funding base Lending Contribution by Business • Lending: Retail volumes have slowed due to For personal use only (% growth Sep 08/ Sep 07) weaker housing activity. Growth in the business and rural sectors reflects a more positive environment
Slide 76: Asia Pacific – Strategic investment delivering strong results
Asia Pacific – Strategic investment delivering strong revenue and NPAT results For personal use only Profit Before Provisions Comments: 46% Net Interest Income Cash profit • Net interest income growth driven 52% largely by a 53% growth in average lending assets, funded through large 194 148 increase
Slide 77: Asia Pacific – delivering across all regions
Asia Pacific – delivering across all regions (2008 Full Year) For personal use only Retail Asia Business PBP 2008 Growth % NPAT 2008 Growth % •71.6% growth in revenue, offset by Retail Asia 67 -8% 25 -11% 53.3% cost increase, primarily from Vietnam branch Asia 174 172 +207% expansion partnerships +1
Slide 78: Asia Pacific – strong momentum in second half
Asia Pacific – strong momentum maintained in the second half (2H08 HoH) For personal use only Retail Asia Business PBP 2H08 Growth % NPAT 2H08 Growth % •NPAT impacted by FTE and branch Retail Asia 31 (15%) 9 (44%) fitout costs associated with Vietnam Asia partnerships 112 +80% 111 +82% Asia Partners
Slide 79: Asia Pacific – balance sheet growth across the region
Asia Pacific – balance sheet growth across the region, retaining a net funding position in Asia Pacific Deposits & Other Borrowings For personal use only Loans ($m) ($m) Region Region 82% 66% 32% 13,253 34% 19,106 10,070 4,912 15,429 7,300 11,508 8,251 3,620 6,535 2,477 5,947 3,946 4,480 5,822 7,195
Slide 80: Asia Pacific – Executing the growth strategy
Asia Pacific – Executing the growth strategy Investment in front office staff to boost For personal use only Region product capability & sales strength (FTE growth) • Regional hubs in HK and Singapore extended to house 18% regional, product and support function leadership Back office growth 33% 4,47
Slide 81: INGA – Solid growth in operating profits
INGA – Solid growth in operating profits offset by decline in capital investment earnings due to difficult investment markets For personal use only 12% YOY growth achieved in Tough markets conditions contributing difficult environment ($m) to 2H08 FUM decline* ($b) 12% YOY Growth 44 12 271 243 (4) F
Slide 82: Structure and sustainability
For personal use only Structure and sustainability 82
Slide 83: One ANZ – new structure provides competitive advantage
‘One ANZ’ – new structure provides competitive advantage in the changed landscape For personal use only Western economies slowing Customers seek ANZ to Pressure on funding versus growth in Asia have ‘one view’ of their costs & liquidity affairs Consolidation prevalent in A primary internal focus ban
Slide 84: One ANZ – benefits of restructure
For personal use only ‘One ANZ’ – benefits of restructure Simplified structure, Bringing ANZ closer to An agile structure clearer accountability our customers Greater spans of responsibility Simplifying our business and Fewer reporting layers and decision-making authority creating ‘One ANZ’ will all
Slide 85: Taking a responsible business approach
Taking a responsible business approach to the challenges and opportunities we face For personal use only Investing in our communities Customer service • Highest customer satisfaction of all major Total Community Investment Total Community & banks Spend per employee ($) Investment Spend ($m) responsi
Slide 86: Economic data
For personal use only Economic data 86
Slide 87: Australian economy – key indicators
Australian economy – key indicators For personal use only Sub trend growth ahead Demand for credit from households and Gross Domestic Product business is declining Annual % ANZ System (banks & NBFI’s) credit aggregates1 6 forecasts: 25 Annual % 5 20 Change 4 15 3 2 10 1 5 0 0 00 01 02 03 04 05 06 07
Slide 88: The New Zealand business has weathered a challenging environment
The New Zealand business has weathered a challenging environment this year For personal use only The economy is clearly in a downturn …leading to a 2 tier economy favouring RBNZ Monetary Policy Statements1 some businesses more than others Annual % RBNZ MPS System (banks & NBFI’s) credit aggregates1
Slide 89: Summary of forecasts: Australia and New Zealand
Summary of forecasts: Australia and New Zealand For personal use only Australia New Zealand 2007 2008 2009 2010 2007 2008 2009 2010 GDP 4.5 1.7 2.4 1.9 2.9 1.7 0.1 1.9 Inflation 1.9 4.8 3.1 2.4 1.8 5.1 2.1 2.8 Unemployment 4.3 4.2 5.7 6.4 3.5 4.2 5.5 6.2 Current A/C -6.1 -3.9 -6.2 -5.7 -8.7 -8.6 -7.
Slide 90: For personal use only
For personal use only 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 and does not purport to be complete. It is not intended to be relied upon as advice to investors or p
Australia and New Zealand Banking Group — FY2008 Earnings Presentation on 6ix