Anz Group Holdings Limited · ASX:ANZ
Anz — Debt Investor Presentation (June 2003)
67 slides from Anz's debt investor presentation, Jun 16, 2003
Slide 1: on ang
on ang _— — _— = La Loy 7 ee We re ee SS pee NG a . _ _ o o a a . _ - a a Mes o se =e ay oo r——— —””——_SB oo rrr————T Oo rr——"—C ee a a CC eLrrrmrr— “RE / _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ / _ _ _ _ _ _ _ _ _ _ _ _ / / - / - / / / _ / / / / - / / / / / i Le yy TM RE WOLD. Aen
Slide 2: Group overview
formation
Slide 3: Group Overview
Slide 4: 2003 Interim Results
Slide 5: A respectable result
" Arespectable result = respectable resull, with good underlying momentum ~ Strong interest income driven by asset growth — - Non-interest i income impacted by one-offs _ = a meseg well controlled — :
Slide 6: Portfolio performance
-ortfolio performance
Slide 7: Result driven by asset & deposit growth, non-interest income impacted by one offs
_ Result driven by asset & deposit growth, _ __ hon-interest income impacted by one offs — _ Interest _ Non Interest : Income Income | 8 (35) i ©§| Alli 24. Provisioning — 8. dat * Sep-02 excludes significant items
Slide 8: Expenses well controlled, cost income ratio flat
- Expenses. well controlled, cost i income | __ ratio flat — | : 7 . Underlying h spend held ack due to lower - as growth - amortisa ion i. Restructuring costs of _ _ $32m taken, i in He . Continued focus on Ses “business: _
Slide 9: Provisioning charge reflects conservative management
Provisioning charge reflects conservative _ Management — . ELP Charge | ; Lp rate dows 3bp= ELP adjustment rr—C Be == = =moercage ee & : BLP BPS _ _ ____ improved risk © _ | profile: 246 O41 | ae Nii i oo | 258 252 256 is ruing gone level of ELP, reflecting _ ongoing global — economic uncertainty. i
Slide 10: Other issues
Ot ner issue nentary information
Slide 11: A diversified portfolio performing well
: A diversified portfolio performing well | - Consumer Finance _ Asia Pacific Structured Finance — é NPAT increase. * Excludes funding costs
Slide 12: Wealth management JV performance
IV performance - good i insurance and _ 5 months to Sep 02 © ING Australia NPATS Semi- — annualised | - Insurance Management | ~~tV. Capital __ Investment * Movements on a semi-annualised basis _ expense ee offset by FM eo ‘Life Insurance business performing welldueto Improved service, efficiency, _
Slide 13: Investment in INGA JV
investment i in INGA jv __Unrecognised __ profit on sale of ANZ EM. “| carrying value _ 1 May 02 1501 __ cost savings in Opening eres and — : INGA 360 (approx) ppd : value oe 21 99° 26% EYABC Valuation Carrying value 31 MarchO3. 1612 | Reduction in erpecations
Slide 14: Outline
Slide 15: Arrears profile close to historical lows
Slide 16: Mortgage portfolio healthy
_ Mortgag s portfolio healthy* High quality a arrears p ofile _ _ Increasing flexibility to service Australia & NZ - 60 i _ . : 2000 112003 __
Slide 17: Domestic corporates well placed
_ Domestic corporates well placed - Domestic corporates _ remain lowly geared Gearing rati (Debt to Equity)* Series _ break grade profile” _ Al Obn ‘41.4bn Mar‘o2 ee CC and Lower 1.2% _ ae
Slide 18: Top exposures
Top. 10 exposures. a - Top 10 committed ‘Top 10 exposures ~ exposures —r—r—,CC Le _ Position of — top10. exposures | asatSep 02 | _pepo2 var - 750 «= 1000 _~ _=Unfunded _ _ excludes non-recourse and - : ————C _ uncommitted facilities: -
Slide 19: Single name provisions
_ single p provisions Provisions: ‘Significantimpact from” _ single customers | a _Mar- Sep- Mar- Sep- ‘Mar- Sep- Mar- Sep- Mar-! Sep- i 88 SS 99 eo 00 Ol OL 02 02 (028° i — a _ Provisions by size. oo uring ‘the half
Slide 20: Non-accrual loans continue to fall
‘Non-accrual loans continue to fall, reflecting overall health of portfolio Historic Geographic $m : ‘ross Non. Accrual” $m __ Gress Non-Accrual Loans Loans (LHS) . 1000 _ __| te02 “es Non-Accrual Loans/ Loans| . 2000 | 1543. | & advances (RHS) : | 2001 1301 | — oe eo | [Mar 08 ~ 1153 1999 2000 2001
Slide 21: New non-accruals down 50%
New non-accruals down 50% on 1 March - New non-accrual ae ny source | Energy : _pbomecic Corporate - f@ Asset Finance Consumer Fpence (a Other Offshore _ (Other : -
Slide 22: Existing and future problem loans well provided for
_ Existing and future problem loans well _ Provided for “sP/nas ANZ Mar CBA Dec NAB Sep wee 03... (02) { =P 02 :
Slide 23: i
i
Slide 24: ANZ's capital position remains strong
_ANZ’s capital position remains strong _Orves of ACE ratio. _ Earnings Dividend | (47) - — RWA. Other growth oe (0.29) T Spo2—“(‘CO™ésOCMeros _ Buybacks likely if ACE ratio above target range peer Conipo rison ANZ (Mar- _ 03) ‘ACE/RWA . CBA NAB _ Wec (Dec (Mar- (Mar- 02) ~=—-:03) 03)
Slide 25: Outlook
ee _ ‘Australian & NZ economies to perform relatively well, despite weakness i in offshore markets - Mortgage growth to be more subdued, moving cue -_ 8-12% pa growth rate, offset by moderate rebound i in business lending © : _. + Specific provisions below ELP , Cost growth rate to increase, but rem
Slide 26: Supplementary information
pplemen itary. inf A nN
Slide 27: Determining the term debt funding requirement
Determining the term debt funding | . Importance of stable funding 2 oe Businesses required to meet a 2000 2001 2002-2002, 2002 ~~ 203 ~~ Self funding ratio-CFI es CHM _ amon to total funding) +e eee * Wholesale funding ratio - TFL _ _ (term wholesale funding to _ term lending) © . . Securitisation
Slide 28: ANZ's term funding requirement and strategy for 2003
_ -ANZ's term funding requirement and / strategy for 2003 . A$7 billion term debt funding requirement, since revised asi2 billion -a mix of senior debt, subordinated debt and securitisation _ dependent on maintenance af CFI oes : ° Ags billion raised since 1s October 2002 oe Maintain a 1 prodent app
Slide 29: Benefits of a consistent and widely communicated rate
- Benefi its of a consistent and widely — _ communicated fate Re can Ss ole a = oe st & 2 i oF a Ss tor i 2. WB: s _ Asset swap margin 0s) | NovOl Feb02 May-02 Aug02 Novo2 Fepo3 Mees _ ANZ 4.875% 07-Feb07 =m ANZ 5.125% 07-Mar-06 a _——ANZ.5.5% 23-Feb-05 (LHS) m= ANZ 4.45% ee . iBoxx € Bank Index Gis)
Slide 30: The strategy to date has served us well
_ The strategy to date has so ; | Highest penetration of ‘ investors of any of our -domestic _ pects . ° Diverse investor base is Strong correlation between successfully executed public _ _ _ Iesnante and reverse erauics received _. Most prosctive of ‘Australian major r banks to regularly __ update
Slide 31: 3.02%
3.02%
Slide 32: ake
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Slide 33: Slide 33
Slide 34: Result review
t review * Portfoli ther issues
Slide 35: Additional information on businesses
Additional informat n on businesses &
Slide 36: Distinctive strategy and track record
Distinctive strategy and track record ] a clear themes going f forward Core themes _ oo. ANZ relative TSR (base $100) a ee e Leverage real capabilities to build ,, ,../ sustainable strategic position _ * Grow value by creating a rich $200) portfolio of specialised businesses : : : | gcoo, WANZ &Peer
Slide 37: Leverage real capabilities to build sustainable strategic position
. Leverage real capabilities to build _ . Leverage specialisation as distinctive strategy : . e Leverage leading product capability toi increase share | | e + Leverage superior cost position | ‘To give customers the best deal | - | To give shareholders sustainable and growing returns. : _ . ° , Leve
Slide 38: A rich portfolio of specialised businesses
A rich portfolio of specialised businesses - -— _material improvement in last 2 years” Source of pert High Mortgages oe 2: oe ree E> ae : < { Corporate | Current ANZ Position ° * More sustainable _ portfolio _ foundation ° + Each business has clear | differentiated approach - ° Systematically _ buil
Slide 39: Grow value by creating a rich and diversified portfolio
Grow value by creating a rich and diversified _ Portfolio of specialised businesses Optimise portlle for sustainability, Meeiell and return _ Raise revenue productivity In Personal Banking Litt performace aad productivity 1 n Wealth Management _ Develop sustainable post-interchange catds strategy Re
Slide 40: Aim to make ANZ one of the best and most efficient banks
Aim to make ANZ one 2 of the best — : and most efficient banks in the world = ° Make execution a distinctive capability _ : : : ° Accelerate revenue and productivity momentum in businesses ° Rebalance higher risk segments - . Senne = and olbeass infrastructure on (%) 2 year . _ _ World class efficie
Slide 41: Bold and different, unique performance culture
Bold and different, leveraging a unique | _ performance culture and business approach Distinctive J Lop. decile). Superior Coordination and control {Top quartile). _ Australian average* | Motivation . Systematic improvement * Aim to be distinctive oe financial : . values _ : ¢ Build on preferred emp
Slide 42: Higher interest income, driven by strong asset growth
_ Higher interest income, driven by strong | asset growth © _ * : Average Nowmnes & Deposit 6 | _. Interest Margins . | olumes ee . >. Deposits* == Mar-01 Sep-01 Mar-02 Sep- -02 Mar-03- ' : a Mar-02 Corp & Small Bus. BB ce : : oe es : Asset Fin = +Business Lending includes Cor ate & Small Business.
Slide 43: Underlying non-interest income solid but dominated by one-offs
Underlying non-interest income | _ oot but dominated by one-offs_ 1387 (10 Cards = (10) | “accrual under ne. lcelrrt~<~O~rwswsO~r~—~”r~—S~—~—~—~—r—“‘RCCSC¥ Hi SO =. Uneertying - . i —r—“_OCOCOCOCOCRCCSCiCiCiC ig! — _ Panin : : — : | |8©hF”™hmhmrmrs mm ant 25 igs — [loyalty bond . : _ | costs’ Card 2
Slide 44: Consumer Finance - challenges, but good underlying performance
‘Consumer Finance - - challenges, but good underlying pocormance o Improved underlying - 120); ~~ +~performance (NPBT)* =—ss— 7 “Growth i in Acquiring share g (spend) _ g (spend) : 1Ho0 2H00 1HO1 2H01 aHo2 202 1H03 . 1HOO 2HOO 1H01 2HO1 1HO2 2H02 1HO3_ Diversi in revenue* fyi « “Issues < Loyalty ech
Slide 45: Mortgages - well placed to benefit
_ Mortgages - - well placed t to benefit | _ Broker penetration of none market _ - 80% of broker originated _ customers new to ANZ : * 92% purchase additional ANZ products (89% for — network originated . customers) © And we are . welll placed to _ Participate _ . Low cost income ratio - efficient po
Slide 46: Institutional & Investment Banking - a leading franchise
Institutional & Investment Banking - a leading franchise — smn Consistently strong 4305 _ NPAT ro Mow focused single customer limits | — Maximum — | : 60% of — equivalent domestic limits | Maximum _ secured _ » lending | (80% of | — 60%) Maximum _ unsecured lending | (25% of 60%) institutional m Tra
Slide 47: Corporate and SME - well positioned for upswing
_ Corporate and SME -— - well positioned for upswing in business lending |
Slide 48: Personal banking - impacted by margin squeeze
$m Personal banking - - impacted by margin _ Squeeze on deposits « and fee changes | Volumes Deposit _ Sales Commissions oe Software _ structure & _Amortisation _honourfee ==--s-«§ (6) impact __ 2. _ * Includes tax impact - «Overall oe decline nargins due to Lower i interest totes . over the half :
Slide 49: but strong account growth
"but strong — | 000s + AccessAccounts 0s ~ _ Deposits = ($b). io, | yoo 160 4 1404 — 1204, 100 7 80 604 404 201 0 a 2H 192 . 1H 03 1100 aoe 1HO1- - 1HO2 ae 1HO3 | 1 s 4 Opened (uns). mmm Closed cLH5) —Net (RHS) oe £ ‘New accounts _ - — S up 14% _ | New deposit strategy launched in Aug 01 . Closed ac
Slide 50: Asset Finance - a leading position, developing new momentum
Asset Finance - a leading Position, & . "developing new momentum — e ee Lodeeocer In. recent ae now Paying oF _. Sica diene in unit _ processing costs achieved © delivering strong competitive _ position _ —4h02—-2hO2_—s 1h.
Slide 51: New Zealand - greater autonomy and mandate to reinvest
_ (Newz Zealand - - greater autonomy and : a mandate to reinvest neen _ Performance tapering off ( reater investment required : 100 7 _ONPAT . . / - Increased training, and _ _ _ _ greater number of sales esate 70 ta fa . Genothen brand increase oy involvement _ | * Upgrade bene nelwork, - _and open
Slide 52: Personal - significant opportunity, but clear issues remain
Personal - _ - significant opportunity, but clear eles remain | | - Personal Banking | Australia NPAT ht position RCE rolled out to Victoria & NSW, Ww, to roll out to other states | Strong product capability e More traction required on | __ improving customer proposition _-: fuel Banking completed r
Slide 53: Asia - lending relationships with 85% investment grade
Asia - circa 450 lending relationships — with 85% investment grade © One of a small group of fully eyed ~ foreign banks oS « Restricted transactions. with locals. expected to be lifted gadually with wo _ membership #40 Len ing Relationships, 95% Inv. Gr HONG, KONG . Leading Australian/NZ bank : __ «
Slide 54: A selective asset writing strategy in Asia
A selective asset writing strategy in Asia _ Global MNCs _ : Significant oe currency earnings in freely negotiable urrenci Market capitalisation typically in excess ay USD20O Potential o sic nificant
Slide 55: Additional credit quality information
Slide 56: Pee orcured prior
Pee orcured prior to our 2002 Annual — — es : one a _ Stabilisation _
Slide 57: US energy portfolio - some issues, remains containable
US energy portfolio - some issues, remains containable - Total Limits _ Total Limits : Total Limits Excl O&G Excl O&G Committed — $2.1bn $2.0bn == $2.0bn_—— Limits _ . | $$1.9bn_ — $913m in projects | Total f _Outstandings $1.2bn \ . os $332m in _ Corporate tending — BB+ to BB _ BB. BB. (AUD) Sep-02
Slide 58: Global Telco Portfolio - no material issues expected
Global Telco Portfolio - no material issues expected _ Total Limits Total Limits BBB | _ BBB - BB+ tO BB a BB- : — _>BB- 2 — — (AUD) . | — =. CC . -Sep-02 : <<, - _ _ Mar-03 total 41 B+ to ccc. 19% 2. ae [Non Accrual 48% BY | coc Bl non-accrual
Slide 59: Mortgages - low representation in inner city Sydney and Melbourne
Mortgages — low representation in _ _inner city Sydney and Melbourne 5%] ‘Market Share by location Range of Major peers ANZ share 2 _a 0% - 2 limited sample size “e Tightened assessment criteria _ for inner city oo _ Properties — ° Delinquency pronle of inner city | _ borrowers in line with average
Slide 60: Group risk grade profile
Group risk grade profile ANZ Group - -Outstandings — S149b0 _§158bn_ Total lovesuncet. : __ grade as at Mar-03: | __ $107.7bn or 68.0% _ of the per wolte B+toCCC _ Non Accrual |
Slide 61: Institutional & Corporate Risk Grade Profiles
- Institutional & Corporate | Risk Grade Profiles | BB+ to BB _BB- >BB-_ : —Sep-01 - Mar-02 Se -02 B+etoCCC 27% 2.3% 2.6% Non Accrual 16% 2.0% 1.8%
Slide 62: Specific provisions in most businesses
‘Specific p provisions in most businesses - 1* Halt 2003
Slide 63: Offshore lending assets decreasing
Offshore lending | assets decrea sing as sa L Proportion: of total lending assets
Slide 64: Increased industry diversification
ion ficat ivers try d a a = nas 1% oc 3 6 a = Increased indust
Slide 65: Industry exposures - Australia & NZ
Industry exposures — Australia & NZ | : _ _ _ ening ts ( _ % of Portfolio (RHS scaie) — % in CCR 7D-8G (RHS scale) __ % in CCR 9-10 (RHS scale) __ Forestry & Fishing _
Slide 66: Industry exposures - Australia & NZ
Industry exposures - - Australia & NZ ‘Transpo t & Storage Construction
Slide 67: Real Estate
Real Estate Sep-00 Sep-01 © Mar- Sep-00 Sep-01 Sep-02 Mar-03 ( : Manufacturing -_WholesaleTrade —s€/ ‘Business Servic 2: 0 Sep-01 Sep-02 Mar-03