Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — H1 2013 Earnings Presentation
132 slides from Anz's earnings presentation, Apr 30, 2013
Slide 1: Half Year Results: Results Presentation & Investor Discussion Pack
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Results Presentation & Investor Discussion Pack
Slide 2: Index
Index For personal use only Half Year Result Overview CEO Presentation 3 CFO Presentation 10 Additional Financial Information 23 Treasury 42 Risk Management 52 Divisional Performance Australia 73 International and Institutional Banking 88 New Zealand 107 Global Wealth 118 All figures are presented o
Slide 3: Mike Smith, Chief Executive Officer
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Mike Smith Chief Executive Officer
Slide 4: Focus on differentiated growth, productivity and shareholder returns
Focus on differentiated growth, productivity and shareholder returns For personal use only Diversified, low risk growth outcomes and 1. Growth opportunities Step change in productivity and cost 2. Productivity management 3. Shareholder Driving improved ROE and shareholder returns Returns 4
Slide 5: We have built scale, capability and momentum in Asia
We have built scale, capability and momentum in Asia For personal use only ANZ has built a substantial business in Asia A top 4 Corporate Bank in Asia USDm Asia Operating Income Greenwich Associates Large Corporate Survey Overall Relationship Quality 70% 2,109 +46% CAGR 1,840 +11% PCP 17% 60% Bank A
Slide 6: A differentiated strategy that is delivering for shareholders and customers
A differentiated strategy that is delivering for shareholders and customers For personal use only ANZ has built a substantial business in Asia Established network to support faster growing regional flows in trade, capital and wealth Markets / No. Staff Japan & Korea – 200 China – 800 Asia-Europe Asi
Slide 7: Diversified, low risk growth outcomes and opportunities
Diversified, low risk growth outcomes and opportunities For personal use only Australia New Zealand 12 month growth vs system1 12 month growth vs system2 1.3x 1.6x 1.2x 1.4x Mortgages Household Deposits Mortgages Deposits International & Institutional Banking Global Wealth Operating Income Mix 1H13
Slide 8: Step change in productivity and cost management
Step change in productivity and cost management For personal use only Cost to Income Ratio Operating Expense Growth Group 1H13 v 2H12 1H13 v 1H12 Australia Division International & Institutional Banking Division Group Australia IIB New Zealand Division 55% -1% -2% -2% -3% 50% -8% -10% New Zealand Gl
Slide 9: Shareholders are benefitting from ANZ's momentum driving increased returns
Shareholders are benefitting from ANZ‟s momentum driving increased returns For personal use only Return on Equity Diverse Funding Mix 16.1% 29% 19% 19% 20% 15.2% 15.5% 15.5% 14.7% 13% 14% 15% 22% 6% 5% 5% 7% 16% 12% 11% 14% 1H11 2H11 1H12 2H12 1H13 57% 61% 61% 50% Ordinary Share Dividends Paid $m 3,
Slide 10: Shayne Elliott, Chief Financial Officer
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Shayne Elliott Chief Financial Officer
Slide 11: 1H13 financial performance
1H13 financial performance For personal use only Cash Profit Movement 1H13 v 2H12 ($m) $m ROE 14.7% 89 ROE 15.5% 352 3,182 151 110 2,934 152 Up 2% Down 5% Down 8% Down 13% Up 13% Up 8% 2H12 Net Interest Other Expenses Provisions Tax & OEI 1H13 Cash Income Operating Cash Profit Income Profit Cash Pro
Slide 12: 1H13 financial performance by Division
1H13 financial performance by Division For personal use only Cash Profit by Division 1H13 v 2H12 ($m) 7% 26% 24% 20% 34 78 247 3,182 88 199 2,934 2H12 Cash Australia IIB New Zealand Global Wealth Group Centre 1H13 Cash Profit Profit Cash Profit by Division 1H13 v 1H12 ($m) 1H12 1H13 New Global Cash
Slide 13: Operating Income and Net Interest Margin
Operating Income and Net Interest Margin For personal use only Operating Income Mix Net Interest Margin Net Interest Income Other Operating Income ANZ Group ex-markets Australia Division NZ Businesses 27% 26% 3.50% 31% IIB Division ex-Markets 54% 3.00% 73% 74% 69% 2.50% 46% 2.00% ANZ Australia New Z
Slide 14: Progressing productivity agenda and improving credit quality
Progressing productivity agenda and improving credit quality For personal use only Operating Expenses normalised for Provision Charge one-off items1 Individual Provision Charge (LHS) $m Collective provision Charge (LHS) -1% Total Provision Charge as % Avg. net Advances (RHS) 4,100 $m 4,069 1,000 0.7
Slide 15: Delivering ANZ's strategy
Delivering ANZ‟s strategy For personal use only Super Regional Strategy To become the best connected and most respected bank across the region Capture faster Diversify revenue Strengthen our Drive operational growing regional streams by product, position in Australia efficiency and flows in trade, c
Slide 16: Strengthening our position in our home markets - Australia
Strengthening our position in our home markets - Australia For personal use only Household deposits growth1 Household lending growth1 Indexed Sep 2009 = 100 Indexed Sep 2009 = 100 150 ANZ Peer 1 Peer 2 Peer 3 149 150 ANZ Peer 1 Peer 2 Peer 3 144 142 140 140 132 130 131 130 122 123 120 120 118 110 11
Slide 17: Strengthening our position in our home markets - New Zealand
Strengthening our position in our home markets - New Zealand For personal use only Lending & deposit growth Mortgage Growth v System1 1H13 v 2H12 ANZ System Lending Deposits 3.9% 6% 2.5% 2.2% 3% 1.7% 2% 1% 0.8% 0.5% Retail Commercial 1H12 2H12 1H13 Small Business Banking Cost to income ratio Lending
Slide 18: Capturing faster growing regional flows in trade, capital and wealth
Capturing faster growing regional flows in trade, capital and wealth For personal use only Significant growth achieved since Volume growth has remained strong commencing super regional strategy Asia Volume growth (1H13 v 1H12) USDm Asia Operating Income 26% 28% 18% 20% 11% 2,109 1,840 International
Slide 19: Driving operational efficiency and productivity
Driving operational efficiency and productivity For personal use only Operating Expenses Movement by Division $m 4,386 Invested over $400 million in growth and transformation initiatives across the bank Includes $64m during the half related to NZ Simplification Includes $8m Includes $14m software re
Slide 20: Focused on increased productivity
Focused on increased productivity For personal use only Cost to Income Ratio Australia Operations 50% Growth 1H13 v 1H12 5% 48.0% 48% 47.7% 47.4% 47.3% -13% Expense Volume 46% IIB Operations 44.4% Growth 1H13 v 1H12 8% 44% FY14 CTI Target adjusted for prior period one-off items1 42% -13% 1H11 2H11 1
Slide 21: Credit quality in line with expectations
Credit quality in line with expectations For personal use only Global Institutional Sub Investment Gross Impaired Assets Grade Exposures continue to decline $m 160 40% Institutional (% of sub-investment grade lending) 5,600 -10% 5,353 5,400 5,196 140 35% 5,200 5,000 120 30% 4,685 4,800 CP / Credit R
Slide 22: Driving capital efficiency and superior returns for shareholders
Driving capital efficiency and superior returns for shareholders For personal use only Capital levels are well positioned Return on Equity (CET1) movement 1H13 v 2H12 15.5% 1.3% 15.5% 14.7% 0.5% 10.3% 9.8% 10.0% ROE up 80 bps 9.5% 8.2% 7.8% 8.0% 1H12 2H12 Earnings Additional 1H13 7.5% Growth Equity
Slide 23: Additional Financial Information
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Additional Financial Information
Slide 24: Overview of financial performance
Overview of financial performance For personal use only 1H13 Growth vs Growth vs $M 2H12 1H12 Cash Profit 3,182 +8% +10% Operating Income 9,086 Flat +4% Expenses 4,034 -8% -2% Provisions 599 -13% +5% Statutory Net Profit After Tax 2,940 +7% +1% EPS (cents) 117 +7% +7% Dividend per Share (cents) 73 n
Slide 25: Adjustments between Statutory Profit and Cash Profit
Adjustments between Statutory Profit and Cash Profit For personal use only 1H13 $M Statutory profit 2,940 Adjustments between statutory profit and cash profit Treasury shares adjustment 53 Revaluation of policy liabilities 19 Economic hedging 192 Revenue and net investment hedges 16 Structured credi
Slide 26: Cash Net Profit after Tax
Cash Net Profit after Tax For personal use only Net Profit after Tax Net Profit after Tax by Division Movement 1H13 v 2H12 Movement 1H13 v 2H12 $m $m 34 89 78 247 352 3,182 3,182 151 199 110 88 2,934 2,934 152 Up Down Down Down Up Up Up Up Up 2% 5% 8% 13% 13% 7% 26% 24% 20% Cash Profit up 8% 2H12 Ne
Slide 27: Return on Equity and Economic Profit
Return on Equity and Economic Profit For personal use only Return on Equity Economic Profit Movement 1H13 v 2H12 Movement 1H13 v 2H12 1.3% 248 15.5% 15.5% 35 0.5% 14.7% 1,412 65 46 1,240 ROE up 80 bps Economic Profit up 14% 1H12 2H12 Earnings Additional 1H13 2H12 Cash Economic Imputation Cost of 1H1
Slide 28: Key drivers of income growth in 1H13
Global Markets, Australia Retail and Corporate & Commercial Banking the key drivers of income growth in 1H13 For personal use only Operating Income by Division Australia Movement 1H13 v 2H12 • Above system growth in mortgages and strong growth in $m C&CB • Active margin management 9,128 outweighing
Slide 29: Continue to diversify operating income by customer, product and geography
Continue to diversify operating income by customer, product and geography For personal use only Operating Income Mix by Division (1H13) Operating Income Mix by Geography (1H13) Additional 4% of Network Transaction revenue1 sourced from APEA Banking Retail Asia Global Pacific Loans 8% Asia Partnershi
Slide 30: Key drivers of operating income
Key drivers of operating income For personal use only Operating Income Operating Income Mix by Line of Business movement 1H13 v 2H121 Other $m 5% 7% Payments & Cash Management 51 9,086 Term Deposits Clearing & 20% 17% 144 International Payments Merchant Cash Management & Acquiring Savings Accounts R
Slide 31: Operating Income by line of business
Operating Income by line of business For personal use only Financing & Capital Management Payments & Cash Management $m 27 5,412 $m 18 1,625 12 28 63 3 11 1,553 20 5,284 73 7 Up 2% Down 4% 2H12 Mortgages Business Cards Personal Trade & Other 1H13 2H12 Clearing & Cash Mgmt. Term Merchant 1H13 Loans L
Slide 32: Growth in Institutional and Wealth increasing contribution of Other Operating Income
Growth in Institutional and Wealth increasing contribution of Other Operating Income For personal use only Net Interest Income Operating Income Mix movement 1H13 v 2H12 Other Operating Income Net Interest Income 111 36 6,236 15% 15% 36 1 31% 6,126 46% NII Up 2% 2H12 Australia IIB New Other 1H13 92%
Slide 33: Net Interest Margin – movement summary
Net Interest Margin – movement summary For personal use only Group Divisions Geographies New New bps Australia IIB Australia Zealand Zealand 2H12 NIM ex-Markets 267 250 259 291 276 260 Funding & Asset Mix 2 0 1 -1 3 1 Funding Costs -5 -4 -3 -10 -6 -2 Deposits -2 -2 1 -4 -2 2 Assets 4 9 -7 0 8 -7 Oth
Slide 34: Margins – Group performance
Margins – Group performance For personal use only Net Interest Margin movement 1H13 v 2H12 Key drivers of NIM movement bps Funding & Asset Mix 2H12 NIM 1H13 NIM • Reduced reliance on wholesale Incl. Markets Incl. Markets funding 228 225 2 Funding Costs • Lower earnings on capital and 267 1 rate inse
Slide 35: Net Interest Margin – Divisional trends
Net Interest Margin – Divisional trends For personal use only Divisional Margin Contribution Australia Division movement 1H13 v 2H12 movement 1H13 v 2H12 NIM ex. Mkts. bps NIM bps 2 9 253 3 267 0 267 250 0 2 0 4 3 2 NIM ex-markets flat Up 3 bps 2H12 Australia New IIB Global Corporate 1H13 2H12 Fundi
Slide 36: Net Interest Margin drivers and volume trends
Net Interest Margin drivers and volume trends For personal use only Net Interest Income 1H13 v 2H12 Net Interest Margin Group Ex-Markets Australia Division ANZ Group ex-markets flat Up 3 bps Australia Division 2.4% 2.3% NZ Division IIB Division ex-Markets 1.2% 3.50% 0% Volume Margin Volume Margin 3.
Slide 37: Operating Expenses
Operating Expenses For personal use only Operating Expenses by Division Operating Expense growth movement 1H13 v 2H12 1H13 v 2H12 1H13 v 1H12 $m 4,386 -1% -2% -2% -3% 43 -8% -10% 168 Group Australia IIB 71 1H13 v 2H12 1H13 v 1H12 36 4,034 34 Down Down Down Down Down -2% 3% 10% 13% 7% 15% Operating E
Slide 38: Operating Expense trends
Operating Expense trends For personal use only Operating Expenses by Category Operating Expenses movement 1H13 v 2H12 Mix by Category 1H13 4,386 6 Other 7 16% Restructuring 2% 207 Computer 15% 58% Personnel 4,034 79 65 9% Premises Operating Expenses Mix by Division 1H13 Australia Group Centre 5% 36%
Slide 39: Continue to diversify balance sheet and increase proportion of customer funding
Continue to diversify balance sheet and increase proportion of customer funding For personal use only Customer Lending & Deposits by Geography Customer Lending1 movement 1H13 v 2H12 Customer Lending1 Customer Deposits $m 6 442 $b 1 Loan to Deposit Ratio 7 500 Sep 2008 Mar 2013 442 171% 128% 450 428
Slide 40: Balance Sheet composition by Geography
Balance Sheet composition by Geography For personal use only Customer Lending1 by Geography Customer Deposits by Geography Australia APEA Institutional Retail & Wealth APEA APEA Commercial Retail & Wealth & Institutional APEA Commercial 11% 1% & Institutional 23% 10% 4% Australia Commercial 14% APEA
Slide 41: Balance Sheet composition by Segment
Balance Sheet composition by Segment For personal use only Customer Lending1 by Segment Customer Deposits by Segment Australia Commercial New Zealand Australia Commercial New Zealand Institutional 14% Commercial 15% 6% 2% New Zealand Retail & Wealth Australia 10% Commercial Institutional 11% Austral
Slide 42: Treasury
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Treasury
Slide 43: Strongly capitalised under new Basel rules
Strongly capitalised under new Basel 3 rules For personal use only Capital levels are well positioned (CET1) Capital overview • ANZ remains at the upper end of global peer 10.0% 10.3% group under new B3 rules 9.5% 9.8% • Well placed in regards to capital targets and 2.5% Capital Conservation focused
Slide 44: Organic capital generation and capital initiatives have improved capital levels
Organic capital generation and capital initiatives have improved capital levels For personal use only Capital Position (APRA Basel 3 Common Equity Tier 1) 10.30 1.01 0.16 8.02 8.18 (0.31) 0.01 (0.18) (0.53) Portfolio growth 25bp Risk Migration (incl EL vs EP) flat Non credit RWA 6bp Up 16bps Sep-12
Slide 45: Structural liquidity position strengthened
Structural liquidity position strengthened – driven by growth in customer funding and shortened asset tenor For personal use only Deposit growth has stabilised Shortened asset tenor 29% 19% 19% 20% 16% 19% 23% 26% 7% 10% 13% 14% 15% 14% 14% 22% 8% 6% 1% 7% 5% 5% 2% 6% 8% 3% 7% 12% 11% 4% 16% 14% 80%
Slide 46: Lowest structural funding gap provides funding flexibility
Lowest structural funding gap provides funding flexibility For personal use only ANZ Westpac NAB CBA Loan – Deposit Ratio (%) 128% 148% 146% 141% Loan – Deposit Gap ($b) 97 167 156 157 Australia Household Funding Gap ($b) 112 184 126 170 Australian Household Funding Gap ANZ has achieved a substantia
Slide 47: A sustainable term wholesale funding profile
A sustainable term wholesale funding profile For personal use only Issuance Maturities $b 26 26 24 24 Indicative annual issuance volume 18 17 16 15 13 12 11 7 7 FY15 FY08 FY09 FY10 FY11 FY12 FY14 FY16 FY17 FY18 1H13 2H13 FY19+ Senior Unsecured Government Guaranteed Covered Bonds Subordinated Issuanc
Slide 48: Portfolio wholesale funding costs stabilising, deposit costs remain relatively high
Portfolio wholesale funding costs stabilising, deposit costs remain relatively high For personal use only Retail deposit and wholesale funding Term Wholesale Funding Portfolio Costs margins (to 3mth BBSW) 200bp 150bp 150bp 100bp 50bp Actual portfolio cost 0bp Sep 2011 Mar 2012 Sep 2012 Mar 2013 Fore
Slide 49: Strong liquid asset position
Strong liquid asset position For personal use only Liquidity Portfolio Basel 3 Liquidity Rules 122 ● In January 2013, the Basel Committee 115 announced revised details on the Liquidity Coverage Ratio (“LCR”) including amendments 39 to the outflow assumptions 91 38 75 31 15 ● APRA is yet to finalise
Slide 50: Hedging has partially offset the impact of sustained $A strength
Hedging has partially offset the impact on earnings of sustained $A strength For personal use only 1H13 Earnings composition by Currency EPS impact from Hedging Non AUD & NZD 17% 0.60% Hedges in place for ~70% FY13 TWD earnings MYR PGK Other 0.10% IDR CNY USD AUD 65% -0.40% NZD 18% Hedges in place f
Slide 51: Capital and Replicating Portfolio – Earnings impacted by lower interest rates
Capital and Replicating Portfolio – Earnings impacted by lower interest rates, but portfolio management mitigates full impact For personal use only Australia Capital and Replicating Portfolio Portfolio Earnings & Spread to Cash bps Contribution to Group NIM % (ex Markets) 6 Portfolio 45 HOH Impact:
Slide 52: Risk Management
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Risk Management
Slide 53: Credit quality in line with expectations
Credit quality in line with expectations For personal use only Credit Quality trends Provision Charge $m Individual Provision Charge (LHS) • The 1H13 Provision charge of $599m Collective provision Charge (LHS) Total Provision Charge as % Avg. net Advances represents a 13% reduction HOH 2,000 1.60% 1
Slide 54: Collective Provisioning Coverage reflects Global Institutional Portfolio credit quality improvement
Collective Provisioning Coverage reflects Global Institutional Portfolio credit quality improvement For personal use only Global Institutional Sub Investment Grade1 Trend in Global Institutional composition Exposures continue to decline $b Global Institutional Credit Exposure CRWA 160 40% Rate2 400
Slide 55: Individual Provision Charge
Individual Provision Charge For personal use only Individual Provision Charge by Segment Individual Provision Charge Composition $m $m 1,062 915 1,200 1,500 761 618 722 595 595 1,062 1,000 500 1,000 915 0 -500 800 761 1H10 2H10 1H11 2H11 1H12 2H12 1H13 722 New Increased Writebacks & Recoveries 618 5
Slide 56: Collective Provision Charge by Source
Collective Provision Charge by Source For personal use only Lending Portfolio Economic Cycle & 1H13 ($m) Risk Impact Growth Mix Concentration Total Australia Division (13) 32 (3) 0 16 International & (11) 31 (3) 0 17 Institutional Banking New Zealand Division 5 4 (14) (25) (30) Global Wealth (1) 1 1
Slide 57: Continued improvement in Credit RWA rate
Continued improvement in Credit RWA rate For personal use only Group Exposure at Default Global Institutional Exposure at Default and Credit Risk Weighted Assets and Credit Risk Weighted Assets Exposure at Default ($b) Exposure at Default ($b) Basel II Credit Risk Weighted Assets ($b) Basel II Credi
Slide 58: Risk Weighted Assets
Risk Weighted Assets For personal use only Total Risk Weighted Assets Total Risk Weighted Assets movement 1H13 v 2H12 $b Market & Operational Risk Weighted Assets 14.1 2.4 322.6 $b 6.0 300.1 0.0 Credit Risk Weighted Assets 323 309 Up 7% 300 48 285 2H12 Basel II Basel III Markets & Operational 1H13 2
Slide 59: Credit Risk Weighted Assets
Credit Risk Weighted Assets For personal use only Credit Risk Weighted Assets Credit Risk Weighted Assets ($b) movement 1H13 v 2H12 ($b) Basel II Credit Risk Weighted Assets 9.0 0.1 275.0 254.9 14.1 Collective Provision as a % of CRWA (Basel II) 2.1 Collective Provision as a % of CRWA (Basel III) 0.
Slide 60: Control List and Risk Grade Profiles
Control List and Risk Grade Profiles For personal use only Group Sub-Investment Grade1 Exposures Control List as % Exposure at Default Index Sep 08 = 100 300 28% 28% 250 26% 26% 200 150 24% 100 6% 23% 6% 22% 50 6% 0 6% 13% 13% Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 5%
Slide 61: Gross Impaired Assets
Gross Impaired Assets For personal use only Gross Impaired Assets by Type Gross Impaired Assets by Size of Exposure $m Impaired Loans NPCCD Restructured $m > $100m $10-$99m < $10m 8,000 8,000 Avg. $375m 7,000 6,561 6,561 decline HOH 7,000 6,561 6,561 6,221 since 2H10 6,221 6,000 5,581 6,000 5,581 5,
Slide 62: Impaired Assets
Impaired Assets For personal use only New Impaired Assets by Division Net Impaired Assets by Division $m $m 3,500 3,126 6,000 4,968 4,686 3,000 5,000 4,503 2,319 2,437 2,356 3,884 2,500 3,630 3,423 1,831 1,847 4,000 3,142 2,000 1,571 3,000 1,500 1,000 2,000 500 1,000 0 0 1H10 2H10 1H11 2H11 1H12 2H1
Slide 63: Total lending exposures by Geography
Total lending exposures by Geography For personal use only Exposure at Default by Exposure by Geography Line of Business Australia Total Exposure at Default (Mar 13) - $693.2b1 Australia New Zealand APEA Retail 28% $437.1 $111.5 $144.6 55% Commercial 17% Institutional New Zealand UK & Europe New Zea
Slide 64: Total lending exposures by industry sector
Total lending exposures by industry sector For personal use only Exposure at Default (EAD) % in Non as a % of group total Category EAD Performing ANZ Group Sep 12 Mar 13 Sep 12 Mar 13 Total EAD (Mar 13) Consumer Lending 41.0% 40.4% 0.3% 0.2% $693.2b Finance, Investment & 14.9% 16.8% 0.5% 0.2% Insura
Slide 65: Global Agriculture
Global Agriculture For personal use only Agriculture Exposure by Sector (EAD) Agriculture Exposure by Geography Agriculture Total EAD (Mar 13) As a % of Group EAD Australia $29.2b 4.2% 14% 57%1 42% APEA 10% New Zealand 1% 37% 14% Agriculture Security Levels 3% 6% 5% 9% 7% 4% 10% 11% 8% 17% 4% 6% 4%
Slide 66: Manufacturing
Manufacturing For personal use only Risk Rating Profile (% EAD) Exposure Mix by Geography (EAD) Manufacturing 14% 25% Total EAD (Mar 13) As a % of Group EAD 37% $41.9b 6.1% 86% 75% 63% 14% 11% 10% 16% Group Australia APEA 1 Investment Grade Sub-Investment Grade 35% 41% 43% 49% Total Exposure by Geog
Slide 67: Resources
Resources For personal use only Resources Exposure by Sector (% EAD) Resources Exposure by Geography (EAD) Resources Australia Total EAD (Mar 13) As a % of Group EAD 20% $12.5b 1.8% Asia 5% 8% 56% New Zealand 18% 19% Europe, America, Pacific & Other Includes 35% Resources Exposure by Geography (EAD)
Slide 68: Commercial Property credit exposure
Commercial Property credit exposure For personal use only Commercial Property Exposure Commercial Property Exposure by Sector Gross Loans and Advances by Region $b % GLA 35 8.0% 30% Offices 30.9 30.2 Retail 29.3 7.8% 30 28.2 27.8 26.1 3.5 Residential 0.8 3.0 3.8 26% 1.1 7.6% 25% Industrial 25 1.0 6.
Slide 69: Australia 90+ day delinquencies
Australia 90+ day delinquencies For personal use only Australia Retail 90+ day delinquencies Total Mortgage Portfolio NSW & ACT Mortgages QLD Mortgages VIC Mortgages WA Mortgages Total Credit Cards 2.0% 1.5% 1.0% 0.5% 0.0% Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13
Slide 70: Australia Division - Mortgages
Australia Division - Mortgages For personal use only Portfolio statistics Dynamic Loan to Valuation Ratio % Portfolio Total Number of Mortgage Accounts 860k 60% Portfolio >90% LVR Total Mortgage FUM $188b 50% = 4.5% (Mar 13) % of Total Australia Region Lending 60% 40% 30% % of Total Group Lending 43
Slide 71: New Zealand - Mortgages
New Zealand - Mortgages For personal use only Portfolio statistics Dynamic Loan to Valuation Ratio Total Number of Mortgage Accounts 474k 0-60% 9% Total Mortgage FUM NZD 57b 61-70% 12% % of Total New Zealand Lending 56% 41% 71-80% % of Total Group Lending 10% 21% 81-90% Owner Occupied Loans - % of P
Slide 72: New Zealand Geography – credit quality
New Zealand Geography – credit quality For personal use only Net impaired assets Total provision charge NZDm NZDm 1,685 400 325 300 1,463 131 105 200 85 98 96 43 1.74% 1,307 100 1,230 0 1,169 1.50% -100 1.38% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 990 1.26% 1.23% 884 IP Charge CP Charge 1.02% 90+ days d
Slide 73: Australia
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Australia
Slide 74: Australia Division
Australia Division For personal use only Strategic context ANZ Australia outcomes Strengthening the Franchise Performing strongly across our portfolio • A strong domestic franchise is critical to the • A strong 1H13 result, broadly based across our businesses1: success of ANZ‟s super regional strate
Slide 75: The Australian Franchise continues its trend of above system volume growth
The Australian Franchise continues its trend of above system volume growth For personal use only Household deposits growth1 Household lending growth1 Indexed Sep 2009 = 100 Indexed Sep 2009 = 100 150 ANZ Peer 1 Peer 2 Peer 3 149 150 ANZ Peer 1 Peer 2 Peer 3 144 142 140 140 132 130 131 130 122 123 12
Slide 76: Margin management, cost control and asset quality ensuring growth in returns
With a focus on margin management, cost control and asset quality ensuring growth in returns For personal use only Net interest margin & Net interest income Cost to Income ratio Net Interest Income (LHS) NIM (RHS) % $m % 41.8 3,300 2.60 39.9 3,200 2.55 37.9 3,100 2.50 3,000 2,900 2.45 2,800 2.40 1H1
Slide 77: Strong broad based 1H13 performance
Strong broad based 1H13 performance For personal use only • A strong 1H13 result with volume, margin Australia Division Cash Profit2 and expense management all contributing • Above system asset growth in Retail $m +7% (Mortgages) and strong asset growth in 1,500 C&CB (Business Banking, Small Busines
Slide 78: Retail
Retail For personal use only • 6% growth HOH in cash profit reflecting strong volume growth combined with NIM expansion and Cash Profit movement – 1H13 v 2H126 tight cost management • ANZ grew overall market share from 12.9% to 14.3% $m 28 over the 2 years to Mar 2013 and ranks second 27 826 among t
Slide 79: Strong mortgage performance
Strong mortgage performance For personal use only • Strong volume growth Mortgages growth Increase in mortgage market share from 14.5% (Feb 12) to 14.7% (Feb 13)1 Mortgage FUM Number of accounts Above system mortgage growth for 13 $b „000 consecutive quarters1 188 884 Leveraging our network ca
Slide 80: Balancing proprietary and broker mortgage channels
Balancing proprietary and broker mortgage channels For personal use only Trend improving in ANZ Proprietary/Broker • Program of initiatives executed to strengthen sales mix… proprietary mortgage capability Leveraging our network capability and driving growth from alternative proprietary channels 4
Slide 81: Broad based performance in delivering the Retail result
Broad based performance in delivering the Retail result For personal use only Deposit growth1 strong driven by Savings, Personal Loans momentum accelerating predominantly Progress Saver $b Term Savings Online Savings Transaction $m +17% 2,503 100 +10% 80 10% 10% 10% 13% 2,287 13% 13% 60 24% 27% 2,13
Slide 82: Corporate & Commercial Banking growing strongly
Corporate & Commercial Banking growing strongly For personal use only • 1H13 cash profit up 8% HOH driven by strong asset growth and tight cost control Cash Profit movement – 1H13 v 2H123 • Strong volume growth with net loans and $m 7 589 advances up 9% and deposits up 7% over the 33 3 7 12 months t
Slide 83: Corporate & Commercial Banking remains well managed
Corporate & Commercial Banking remains well managed For personal use only • Strong growth in cross sell revenue led by sales Whole of customer focus delivering 11% of mortgages to C&CB customers up 36% and cross sell revenue growth Trade up 15% PCP Retail Institutional Wealth $m • Credit quality is
Slide 84: Corporate & Commercial Banking is winning business through customer growth
Corporate & Commercial Banking is winning business through customer growth driven by a differentiated value proposition For personal use only • Leveraging ANZ‟s super regional advantage and ANZ FastPay - Australia‟s first mobile „connectivity‟ brand awareness (cross border payment App for small busi
Slide 85: Strong productivity focus continues, allowing targeted investment in Banking on Australia
Strong productivity focus continues, allowing targeted investment in Banking on Australia in 2H13 For personal use only • Expenses down 3% HOH and 2% PCP, CTI down 200 bps HOH and 390 bps PCP to 37.9% Operating Expenses • Australia Operations expenses down 7% HOH $m 2H12 included and 13% PCP, while
Slide 86: The Banking on Australia program
The Banking on Australia program For personal use only The „Banking on Australia‟ program responds to changing customer expectations and the competitive domestic banking landscape. It‟s about putting customers in control of their finances and making it easy for them to bank with us. Investing $1.5 b
Slide 87: Banking on Australia
Banking on Australia For personal use only Embracing the digital Simplifying products, Transforming & Leveraging the Building the capability age to meet customer processes and rejuvenating our connectivity and super of our people to meet expectations improving productivity distribution channels regi
Slide 88: International & Institutional Banking
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack International & Institutional Banking
Slide 89: IIB growing in line with strategy while improving productivity
IIB growing in line with strategy while improving productivity For personal use only • Income growth continues Operating Income growth 1H13 v 2H12 IIB income growth of 3%, with Asia organic franchise income up 8% 16% 16% Improved connectivity and growing volumes 6% have countered margin pressure
Slide 90: Increasing earnings diversity and focusing on higher return products and segments
Increasing earnings diversity and focusing on higher return products and segments For personal use only Increasing contribution of flow and value Diversifying Income by Geography added product 1H13 1H13 Australia Asia Pacific, 23% Transaction Europe & Global Loans 26% Banking America 21% 46% 40% 30%
Slide 91: Maintaining a leading position in Australia / New Zealand and gaining recognition in Asia
Maintaining a leading position in Australia / New Zealand and gaining recognition in Asia For personal use only Leading in Priority products Winning Flow & Value Added Deals Foreign Exchange & Commodities Number 1 primary supplier of spot FX and forward FX in Leveraging ANZ‟s Australia (East & Par
Slide 92: Connectivity is a key differentiator for ANZ
Connectivity is a key differentiator for ANZ, driving cross-border activity around the network For personal use only Cross-Border Lending Growth 1H13 v 2H12 Europe & America Asia Pacific Australia / New Zealand 36% 16% 11% 10% 7% 3% Referred Received Referred Received Referred Received Total 1H13 Cr
Slide 93: We have built scale, capability and momentum in Asia
We have built scale, capability and momentum in Asia For personal use only ANZ has built a substantial business in Asia A top 4 Corporate Bank in Asia Greenwich Associates Large Corporate Survey Markets / No. Staff Overall Relationship Quality 70% Japan & Korea – 200 17% China – 800 60% Bank A 11% 1
Slide 94: A focus on growth and scale in Asia to drive improved returns
A focus on growth and scale in Asia to drive improved returns For personal use only Significant growth achieved since Volume growth has remained strong commencing super regional strategy Asia Volume growth (1H13 v 1H12) USDm Asia Operating Income 26% 28% 20% 17% 11% 2,109 1,840 International Retail
Slide 95: Underlying volume growth and disciplined cost management offsetting margin headwinds
Underlying volume growth and disciplined cost management assisting to offset margin headwinds For personal use only AUDm 50 198 6 1,199 141 1,093 51 952 IIB Cash 65 32 Profit Movement 1H13 v Normalised Cash Profit up 10% 2H12 Cash Profit up 26% 2H12 2H12 2H12 Margin Partnerships Underlying Operating
Slide 96: Improving income quality whilst continuing to drive volume growth
Improving income quality whilst continuing to drive volume growth For personal use only Improving quality of earnings through Driving volumes growth to counter margin growth of Non-Interest Income pressures and mix changes in our business IIB Operating Income Net Interest Margin ex-Markets AUDb 4.00
Slide 97: Disciplined cost management helping to fund investment in further growth
Disciplined cost management helping to fund investment in further growth For personal use only • Delivered positive income / expense JAWS both HOH and PCP Delivering improved operational leverage • Rebalancing coverage model to reflect changed IIB Operating Expense Growth1 business mix - FTE Reducti
Slide 98: Productivity gains invested in our Asia network
Productivity gains invested in our Asia network For personal use only Balancing our growth profile Investing in our growth markets through investment in APEA IIB Operating Expenses1 IIB Full Time Equivalent Employees2 AUDm Continue to invest in priority segments 15,274 Asia FTE Growth 1H13 v 1H12 1,
Slide 99: Continuing to grow and strengthen balance sheet
Continuing to grow and strengthen balance sheet For personal use only IIB Customer Deposits IIB Customer Lending1 Loan-deposit ratio Sep-12: 69% Asia Funded Trade Mar-13: 68% Growth of +19% HOH AUDb AUDb 160 +18% CAGR 152 160 143 140 133 140 +13% CAGR 120 120 109 103 98 100 100 93 80 80 80 60 60 40
Slide 100: Institutional lending book continues to diversify and de-risk
Institutional lending book continues to diversify and de-risk For personal use only Lower provision charge 1H13 due to absence Institutional lending portfolio of large single names continues to improve AUDm Institutional Risk Grade Profile by Exposure at Default 700 Defaulted Sub Investment Grade 1
Slide 101: Growth is focused toward higher return products
Growth is focused toward higher return products For personal use only IIB Return on Equity (Regulatory Capital1) % Basel III Capital Usage Mix 2H12 Basel II 1H13 Basel II 1H13 Basel III 24 5% Other 21 19 3% Retail 17 14 15 14 10 11 18% 7 Partnerships 2 IIB Transaction Global Global Commercial Bankin
Slide 102: Global Markets – significant and well diversified growth
Global Markets – significant and well diversified growth For personal use only Building client franchise in priority segments Growing FX market share (Foreign Exchange Client Turnover) Financial Institutional clients on-boarding grew 43% ANZ Market Growing Commercial Asia presence - income doubled 3
Slide 103: Global Transaction Banking – growth in line with strategy
Global Transaction Banking – growth in line with strategy For personal use only ANZ Transactive transactions and cash Progressing strategic agenda volumes continue to grow Capturing trade flows throughout Asia Total Value (LHS) Total Txn Volume (RHS) Reducing reliance on Net Interest Income AUDb Mil
Slide 104: Retail Asia – building momentum across product range
Retail Asia – building momentum across product range whilst managing costs effectively For personal use only Retail Asia growing income1 Growing quality client base and volumes and increasing efficiency Normalised1 Revenue +8% HOH (+9% PCP) Mortgages Deposits Loan balances +16% HOH (+41% PCP) Invest
Slide 105: Commercial Asia - delivering strong revenue growth with improved productivity
Commercial Asia - delivering strong revenue growth with improved productivity For personal use only Continued strong growth momentum Commercial Asia Operating Income Transaction Banking Markets Sales Lending & Other Income growth of 32% HOH (39% PCP), 2 year CAGR of 45% AUDm 100 Growing and diversif
Slide 106: Asia Partnerships
Asia Partnerships For personal use only Partnerships Cash Profit movement 1H13 v 2H12 AUDm 217 10 182 4 186 20 5 2H12 Reported BoT Dilution Seasonal Accounting 2H12 Adjusted Earnings 1H13 Reported Gain impacts adjustments2 growth Partnerships Cash Profit Adjusted Cash Profit contribution from Key Pa
Slide 107: New Zealand Division
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack New Zealand Division
Slide 108: Harnessing the benefits of scale to compete in a lower growth, highly competitive market
Harnessing the benefits of scale to compete in a lower growth, highly competitive market For personal use only As the largest bank in New Zealand … … we are harnessing the benefits of scale to drive greater value Gross Loans and Advances (NZDm)1 ● Simplify the business and reduce duplication One m
Slide 109: Maintained momentum through a period of significant change
Maintained momentum through a period of significant change For personal use only Consideration up1 Frontline Engagement Increased Cross Sell 76% Growth 1H13 v 1H12 35% 27% • ANZ@work +63% 63% • Merchant services +12% • Trade +10% • Kiwisaver FUM +35% 2010 1H13 2010 1H13 • Insurance sales +34% Mortga
Slide 110: Driving greater efficiency in a challenging revenue environment
Driving greater efficiency in a challenging revenue environment For personal use only New Zealand Division Net Profit after Tax movement 1H13 v 2H12 NZDm 54 509 497 14 76 485 12 14 27 3 409 Normalised NPAT up 5% NPAT up 22% 2H12 Projects 2H12 NII OOI Operating Provisions Tax & OEI 1H13 Projects 1H13
Slide 111: Focus on cross sell in NZ Retail & Commercial
Focus on cross sell in NZ Retail & Commercial supporting growth across New Zealand franchise For personal use only New Zealand Division New Zealand Geography NZDm NZDm 1,347 1,742 48 1,760 14 1,317 3 30 41 Income down 2% Income up 1% 2H12 Rate Volume OOI 1H13 2H12 NZ Businesses Wealth, 1H13 1 Normal
Slide 112: Net Interest Margin
Net Interest Margin For personal use only Managing margins against a challenging New Zealand Division competitive landscape Net Interest Margin ● Net Interest Margin down 10bps HOH 2.70% ● Reduction reflects two key drivers: 2.60% Tactical campaign at the time of systems 2.50% merger and brand cha
Slide 113: Strengthening the balance sheet
Strengthening the balance sheet For personal use only New Zealand Division A focus on improving balance sheet quality Customer Lending & Deposits NZDb Lending1 Deposits ● Lending balances increased 1% in the first half, 100.0 primarily from above-system mortgage growth Loan to Deposit Ratio 88.0 89.
Slide 114: Retail – continued to grow through the period of brand & system conversion
Retail – continued to grow through the period of brand & system conversion For personal use only Maintained our focus during conversion Growing market share1 ● Lending FUM has grown ~$300m since brand 1H12 1H13 announcement in September 2012 30.3% ● ANZ remains #1 among peers for „unprompted 30.0% a
Slide 115: Retail - growing share in mortgages whilst maintaining strong lending standards
Retail - growing share in mortgages whilst maintaining strong lending standards For personal use only Mortgage Growth vs System1 Winning share in Auckland ANZ System Share of Auckland new registrations Rolling 12 months2 35.0% 3.9% 30.0% 25.0% 2.5% 20.0% 2.2% 15.0% 1.7% 10.0% 0.8% 5.0% 0.5% 0.0% Mar
Slide 116: Commercial – growth and improvement in asset quality
Commercial1 – growth and improvement in asset quality delivering a better return For personal use only Small Business Banking Small Business Banking continues to grow Lending & Deposit FUM ANZ Main Bank Share2 • 90% of businesses in New Zealand employ 5 or Customer Lending fewer staff (31% of employ
Slide 117: Next phase focused on leveraging our scale
Next phase focused on leveraging our scale For personal use only Harness Scale Leverage Scale Scale advantage 2010 - 2012 2013-2015 2016+ Leverage scale through a focus on service, efficiency and cross sell • Continue to drive productivity benefits Deploying a new modular branch design that from sim
Slide 118: Global Wealth Division
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Global Wealth Division
Slide 119: 1H13 Strategic scorecard
1H13 Strategic scorecard For personal use only Scorecard Comments Grow relationships with existing ANZ • Net increase in Wealth solutions held by bank customers: customers of 9% PCP Wealth solutions sold to ANZ customers • ANZ Smart Choice Super exceeding 800 account Size of ANZ Financial Planni
Slide 120: Headline result
Headline result For personal use only Cash Profit movement – 1H13 v 2H12 • Cash Profit up 20% 7 1 31 29 203 HOH1 and 15% PCP 169 24 • Movement this half 2 8 mainly due to increase in net funds management Up 20%1 and insurance income and a 2H12 Net Other Net Funds Expenses Expenses Provisions Tax and
Slide 121: Business drivers
Business drivers For personal use only Funds Under Management Inforce Premiums Life & General $b +8% +10% $b 51.7 54.8 1.9 51.0 1.7 1.8 8.4 8.8 9.4 NZ NZ 42.9 45.4 1.6 1.7 1.8 Australia 42.6 Australia 1H12 2H12 1H13 1H12 2H12 1H13 Liquidity Cost to Income $b Deposits Loans % -280 bps 9.7 9.4 10.0 69
Slide 122: Deepening relationships with existing ANZ Customers
Deepening relationships with existing ANZ Customers For personal use only Wealth Solutions to Bank Customers1 Direct Investments Growth in wealth solutions held by ANZ customers Smart Choice Super KiwiSaver1 (PCP) ANZ Customers ANZ Customers („000) („000) 10% +278% 9% +16% 7% Australia New Zealand T
Slide 123: Productivity
Productivity For personal use only Operating Expense growth HOH Comments 5% • In 1H13, operating expenses declined by 7% 4% HOH, key factors impacting operating expenses were: Annualised benefits from simplification initiatives commenced in FY12 Efficiency benefits from continued -7% leveraging
Slide 124: Strong performance in Life Insurance
Strong performance in Life Insurance For personal use only Retail Life Insurance Life Insurance Inforce Lapse Rates • Maintained double digit growth in Life $m Australia New Zealand Insurance, Inforce up +10% 10% YoY 1.4 1.4 1.3 • Retail Life lapse rates 19.3% NZ 15.5% 16.8% are responding to 13.3%
Slide 125: Funds Management Australia
Funds Management Australia For personal use only Market Share1 Comments • As anticipated, vertical integration as a response to regulation is driving net outflows 7.80% 7.40% from open market advisers • We responded to this by focusing on improving the productivity of our bank and aligned channels •
Slide 126: Distribution
Distribution For personal use only Size of ANZ Financial Planning Comments Advisers • ANZ Financial Planning has a clear strategy to +1% penetrate the ANZ customer base 374 377 345 NZ 47 56 • We are on track to grow the adviser foot print 47 (32 advisers added in 1H13) Australia 327 298 321 • In Aus
Slide 127: Wealth Distribution Asia
Wealth Distribution Asia For personal use only Wealth Sales1 Comments Private Banking and Retail Wealth Sales 1H13 key achievements: ($b) • Continued optimisation of wealth solutions 16.0 +20% including Mutual Funds and Bancassurance • Actively supporting positive market 14.0 13.5 sentiment in relat
Slide 128: ANZ Smart Choice Super
ANZ Smart Choice Super For personal use only ANZ Smart Choice Super – a low cost and innovative solution Visibility • See your super alongside other Over 17,000 accounts already accounts opened • Never lose your super again • 24/7 access 36% of these have rolled over Choice & Control their exist
Slide 129: Economics
For personal use only 13 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 30 April 2013 Investor Discussion Pack Economics
Slide 130: Economic updates
Economic updates For personal use only Australia New Zealand 2012 2013 2014 2015 2012 2013 2014 2015 GDP 3.5 2.7 2.8 3.5 2.4 2.8 2.8 2.3 Inflation 2.0 2.1 2.1 2.4 0.8 1.3 1.9 2.2 Unemployment 5.3 5.7 5.7 5.4 7.3 6.9 6.3 6.1 Cash rate 3.50 2.75 2.5 3.0 2.50 2.50 3.00 3.75 AUD/USD 1.04 1.05 1.03 0.95
Slide 131: Growth Forecasts – Asia
Growth Forecasts – Asia For personal use only Emerging Asia GDP Growth Forecasts 2007 2008 2009 2010 2011 2012 2013 2014 China 13.1 9.6 9.1 10.1 9.3 7.8 7.8 8.0 India 9.7 8.1 6.5 9.7 7.5 5.1 5.7 6.6 NIEs Hong Kong 6.4 2.4 -2.7 7.0 5.0 1.4 3.7 4.2 Korea 5.1 1.5 0.2 6.2 3.6 2.0 2.6 4.8 Singapore 8.6 2
Slide 132: 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 — H1 2013 Earnings Presentation on 6ix