Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — 1H12 Earnings Presentation
132 slides from Anz's earnings presentation, May 2, 2012
Slide 1: Half Year Results
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Results Presentation & Investor Discussion Pack
Slide 2: Index
Index For personal use only Half Year Result Overview CEO Presentation 3 CFO Presentation 12 Additional Financial Information Net Interest Margin 28 Balance Sheet 36 Software Capitalisation 39 Divisional Performance Australia Division 40 Asia Pacific, Europe & America Division 59 Institutional Divis
Slide 3: Mike Smith, Chief Executive Officer
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Mike Smith Chief Executive Officer
Slide 4: Overview of financial performance
Overview of financial performance For personal use only 1H12 Growth Growth AUDm vs 2H11 vs 1H11 Underlying Profit 2,973 5% 6% Operating Income 8,704 4% 3% Expenses 4,020 3% 5% Provisions 565 3% -14% Statutory Net Profit After Tax 2,919 8% 10% EPS (cents) 112.2 3% 2% Dividend per Share (cents) 66 n/a
Slide 5: Our Super-Regional Strategy is built on three pillars
Our Super-Regional Strategy is built on three pillars For personal use only Diversification Connectivity 1. Revenue 1. Trade & Capital Flows a. Focus Markets • Trade +25% • Indonesia +17% • Cash Management +19% • Singapore +5% x • FX +23% • India +71% • Capital Markets +12% • Greater Chi
Slide 6: Australia Division
Australia Division For personal use only Underlying profit growth (AUDm) 1H12 v 2H11 Australia Division -7% Net Interest Margin Profit composition NPAT Contribution (AUDm) 2.70% 13% 2.60% Retail 2.50% 48% Commercial 2.40% 39% 2.30% Wealth 1H11 2H11 1H12 Net Loans & Advances1 Customer Deposits AUDb R
Slide 7: New Zealand Businesses
New Zealand Businesses For personal use only Underlying profit growth (NZDm) 1H12 v 2H11 New Zealand Businesses 11% Cost to income ratio Profit before provisions (NZDm) New Zealand Businesses 810 52% 761 772 Pro Forma NZD 716 50% 667 48% 46% 44% 42% 1H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12
Slide 8: Asia Pacific, Europe & America (APEA) Division
Asia Pacific, Europe & America (APEA) Division For personal use only Underlying profit growth (USDm) 1H12 v 2H11 APEA Division 21% APEA revenue (pro forma USD) Customer deposits & lending 20% Net loans and advances Customer Deposits 1,820 USDb (including acceptances) 18% 1,596 1,656 80 74 1,306 1,38
Slide 9: Institutional Division
Institutional Division For personal use only Underlying profit growth (AUDm) FY11 v FY10 Institutional Division 24% Institutional revenue mix ($m) Cross border income AUDm By Product By Geography 3,000 2,612 2,769 2,612 2,769 2,430 2,430 2,000 Cross Domestic 1,000 Border Booked 19% 81% 0 1H10 1H11 1
Slide 10: Strengthened capital position, well diversified funding base
Strengthened capital position, well diversified funding base For personal use only Strong Capital Position Diversified Funding Base Common Equity Tier 1 Ratio Equity & Hybrid Debt Customer Funding Tier 1 Ratio Term Funding >1 year Term Funding <1 year 11.3% 10.9% Short Term Funding 10.1% 14% 4% 13%
Slide 11: Key points
Key points For personal use only • Competitive advantages emerging from connectivity and from diversification into higher growth geographies • Australian and New Zealand environment challenging – opportunities remain but need to reshape business for future • Balance sheet management distinctive – lo
Slide 12: Peter Marriott, Chief Financial Officer
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Peter Marriott Chief Financial Officer
Slide 13: First Half 2012
First Half 2012 For personal use only $m Performance 1H12 v 2H11 199 2,973 14 2,919 46 143 2,834 54 4% 3% 2,691 Up 5% Up 8% 2H11 Non-Core 2H11 Profit Provisions Tax & OEI 1H12 Non-Core 1H12 Statutory Items Underlying Before Underlying Items Statutory Profit Profit Provisions profit Profit Performanc
Slide 14: Group income growth strong assisted by Markets trading income recovery
Group income growth strong assisted by Markets trading income recovery offset by Australia margin pressure For personal use only Pro Forma Income growth 1H12 v 2H11 Institutional APEA Total Income Growth New Zealand Australia Ex-Trading1 Ex-Trading1 7.1% 5.0% 4.1% Global Markets 2.7% Trading & Balan
Slide 15: Global Markets income recovered with continued growth in sales
Global Markets income recovered with continued growth in sales and normalisation of trading income For personal use only Global Markets HOH Income Growth Global Markets Income Mix by Product Total Income Sales Income 10% 11% 17% Other 45% 10% 8% 8% 15% 14% 16% 42% Capital Markets 3% 53% 43% Fixed In
Slide 16: Net Interest Margin – First Half 2012
Net Interest Margin – First Half 2012 For personal use only Movement 1H12 v 2H11 (bps) 244.2 0.7 1.7 238.3 2.1 0.7 4.5 1.0 279.5 Down 4.9 bps ex-Markets 274.6 Down 5.9 bps 2H11 Funding Funding Costs Deposits Assets Other Markets 1H12 & Asset Mix Movement 1H12 v 1H11 (bps) Funding & 1H11 Funding Cost
Slide 17: Net Interest Margin – Divisional Trends
Net Interest Margin – Divisional Trends For personal use only Net Interest Margin 1H12 v 2H11 Net Interest Margin Institutional ANZ Group ex-markets Australia Division ex-Markets Australia Division NZ Businesses 3.40% APEA ex-markets 9.9% Institutional ex-markets 3.5% Down 13 bps Down 10 bps 3.20% -
Slide 18: NIM declined in Q2 partly due to one offs
NIM declined in Q2 partly due to one off‟s For personal use only Contribution to Net Interest Margin ex-Markets Movement 2Q12 v 1Q12 1Q12 Australia New APEA Institutional Group 278.8 Zealand Centre 0.5 -8.5 -5.1 -1.3 bps -1.2 -1.4 • Deposit costs • Repricing • Mix change • Deposit • Dividend 2Q12 vs
Slide 19: Positive JAWS in most divisions; action underway on costs in Australia
Positive „JAWS‟ in most divisions; action underway on costs in Australia For personal use only Pro Forma Income & Expense Growth Pro Forma Income & Expense Growth HOH by Division 1H12 v 2H11 Income Growth Expense Growth 16% Income growth Expense growth 11% 5.5% ex-Trading & 6% Balance Sheet 3% 3% 3%
Slide 20: There has been a ramp up in restructuring activity
There has been a ramp up in restructuring activity For personal use only Underlying Restructuring Cost 1H12 Underlying Restructuring ($m) Cost Breakdown Other 74 8% 20% Institutional Australia APEA 8% 58% 15 6% 8 New Zealand Funded from GST refund 1H11 2H11 1H12 and existing provisions 20
Slide 21: A greater focus on simplification and productivity
A greater focus on simplification and productivity whilst continuing to invest for growth For personal use only Operating Expense Growth Pro Forma 1H12 v 2H11 78 21 4,020 70 22 70 3,899 • Technology infrastructure upgrade • IT security investment • Institutional Transaction Banking and Markets • APE
Slide 22: Individual Provision Charge lifted by transfers
Individual Provision Charge lifted by “transfers" For personal use only Individual Provision Charge ($m) IP net of CP & CVA "transfers" related to “Transfers” to Individual Provision ($m) legacy exposures and natural disasters arising in prior periods Institutional 121 "Transfers" to IP 717 Manageme
Slide 23: Individual Provision Charge – underlying trends reasonably stable
Individual Provision Charge – underlying trends reasonably stable For personal use only Individual Provision Charge by Division ($m) IP Charge net of CP Transfers CP & CVA "transfers" related to legacy exposures and natural disasters Australia Institutional New Zealand APEA Ex-Institutional 370 20 3
Slide 24: Collective Provision release principally due to exposures being crystallised
Collective Provision release principally due to exposures being crystallised For personal use only Collective Provision Charge Modelled Collective Provision Composition ($m) Charge Drivers 1H12 ($m) 1H11 2H11 1H12 100 Institutional Growth 74 50 Australia Growth 0 Other Growth -4 Institutional -50 Ri
Slide 25: Net impaired assets continue to reduce
Net impaired assets continue to reduce, increase in new impaired driven by two single names in Institutional For personal use only Net Impaired Assets New Impaired Assets by Division by Division $m $m 6,000 3,500 3,126 4,969 3,000 5,000 4,685 4,504 2,436 3,884 2,500 2,319 2,335 4,000 3,629 2,000 1,8
Slide 26: Outlook
Outlook For personal use only Net Interest Margin ex-Markets Expense Growth 2.78% 2.81% 2.80% 2.79% 6% 2.69% 2.70% 2.55% 4% 3% 2% 2.35% 2H10 1H11 2H11 1H12 1H09 2H09 1H10 2H10 1H11 2H11 1Q12 2Q12 Global Markets Revenue Total Provision Charge $m $m 3,056 Second Half First Half 400 Sales Trading & Bal
Slide 27: Additional Financial Information
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Investor Discussion Pack Additional Financial Information
Slide 28: NIM movement summary
NIM movement summary For personal use only Basis points (bps) Group Regions Divisions Australia NZ APEA Australia Division NZ Businesses APEA Global Institutional HOH PCP HOH PCP HOH PCP HOH HOH PCP HOH PCP HOH HOH PCP Starting NIM 244.2 247.2 261.4 259.4 240.0 235.4 139.1 258.4 260.3 253.3 249.0 15
Slide 29: Net Interest Margin – Divisional Trends
Net Interest Margin – Divisional Trends For personal use only Net Interest Margin 1H12 v 2H11 Net Interest Margin Institutional ANZ Group ex-markets Australia Division ex-Markets Australia Division NZ Businesses 3.40% APEA ex-markets 9.9% Institutional ex-markets 3.5% Down 13 bps Down 10 bps 3.20% -
Slide 30: Net Interest Margin - Group
Net Interest Margin - Group For personal use only NIM movement 1H12 v 1H11 bps 244.2 0.7 2.1 1.7 238.3 0.7 1.0 Ex-markets down 4.9 bps 4.5 Down 5.8 bps 2H11 Funding & Funding Costs Deposits Assets Other Markets 1H12 Asset Mix Key drivers of movement Negative asset mix impacts with an increase in low
Slide 31: NIM - Australia Division
NIM - Australia Division For personal use only NIM movement 1H12 v 2H11 bps 258.4 1.6 3.9 245.0 6.7 0.9 0.3 Down 13.4 bps 2H11 Funding & Funding Costs Deposits Assets Other 1H12 Asset Mix NIM movement 1H12 v 1H11 bps 260.3 1.4 5.2 3.7 245.0 1.9 10.5 Down 15.3 bps 1H11 Funding & Funding Costs Deposit
Slide 32: NIM – New Zealand Businesses
NIM – New Zealand Businesses For personal use only NIM movement 1H12 v 2H11 bps 4.3 265.3 4.4 4.1 253.3 0.7 1.6 Up 12.0 bps 2H11 Funding & Funding Costs Deposits Assets Other 1H12 Asset Mix NIM movement 1H12 v 1H11 bps 4.4 265.3 18.1 2.7 249.0 0.3 9.3 Up 16.3 bps 1H11 Funding & Funding Costs Deposit
Slide 33: NIM – APEA Division
NIM – APEA Division For personal use only bps NIM movement 1H12 v 2H11 155.1 157.8 12.4 2.1 4.5 5.3 3.6 9.0 Ex-markets down 2.6 bps Up 2.7 bps 2H11 Funding & Funding Costs Deposits Assets Other Markets 1H12 Asset Mix 33
Slide 34: NIM – Institutional Division
NIM – Institutional Division For personal use only NIM movement 1H12 v 2H11 bps 189.4 0.9 183.5 4.8 3.7 0.2 2.2 4.1 Ex-Markets down 10.0 bps Down 5.9 bps 2H11 Funding & Funding Costs Deposits Assets Other Markets 1H12 Asset Mix NIM movement 1H12 v 1H11 bps 202.9 5.0 183.5 7.1 6.1 Ex-Markets down 30.
Slide 35: Net Interest Margin - Geography
Net Interest Margin - Geography For personal use only bps Australia Geography NIM movement 1H12 v 2H11 261.4 0.6 0.4 0.2 251.7 2.5 5.4 1.9 2H11 Funding & Funding Costs Deposits Assets Other Markets 1H12 Asset Mix New Zealand Geography NIM movement 1H12 v 2H11 bps 3.8 250.0 3.9 3.8 0.4 2.3 240.0 0.5
Slide 36: Balance Sheet – Customer Lending & Deposits
Balance Sheet – Customer Lending & Deposits For personal use only Net Loans & Advances Customer Deposits (incl. Acceptances) $b $b Loan / Deposit Ratio 450 450 180% 167% 400 400 160% 350 350 134% 140% 300 300 120% 250 250 100% 200 200 80% 150 150 60% 100 100 40% 50 50 20% 0 0 0% Sep 08 Sep 09 Sep 10
Slide 37: Balance Sheet - Composition by Geography
Balance Sheet - Composition by Geography For personal use only Net Loans & Advances Customer Deposits (incl. Acceptances) Australia APEA APEA Commercial Institutional APEA Retail & Wealth & Institutional Retail & Wealth 14% 2% APEA Commercial 5% 18% & Institutional Australia 8% Commercial Australia
Slide 38: Balance Sheet - Composition by Segment
Balance Sheet - Composition by Segment For personal use only Net Loans & Advances Customer Deposits (incl. Acceptances) New Zealand Australia Australia Commercial Institutional Commercial New Zealand Commercial 18% 12% 10% 5% New Zealand Retail & Wealth 7% Commercial 14% Australia Australia 13% Inst
Slide 39: Software capitalisation
Software capitalisation For personal use only Capitalised software balance ($m) Capitalised costs – by division 1,743 1,572 1,349 Australia 23% 26% APEA ex-Insto 4% Institutional 11% New Zealand 36% Group Centre Mar 11 Sep 11 Mar 12 Software capex v Amortisation ($m) Net book value – by division 368
Slide 40: Divisional Performance: Australia Division
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Divisional Performance Australia Division
Slide 41: Australia Division – Consistent customer focus and market positioning
Australia Division – Consistent customer focus and well- established market positioning For personal use only 1. Driving customer growth and improving Underlying PBP productivity and efficiency • Delivering on the transformation agenda for the distribution $m network, reducing network costs and alig
Slide 42: Australia Division – Financial performance
Australia Division – Financial performance For personal use only Underlying NPAT movement – 1H12 v 2H11 $m 1,464 63 41 1,365 11 55 11 Down 7% 2H11 Net Other Expenses Provisons Tax and 1H12 Interest Income OEI Underlying NPAT movement – 1H12 v 1H11 $m 107 11 1,365 1,350 12 41 50 Up 1% 1H11 Net Other
Slide 43: Australia Division – Operating Income and Expenses
Australia Division – Operating Income and Expenses For personal use only Operating income movement - 1H12 v 2H11 $m 104 4,145 70 4,071 97 11 Down 2% 2H11 Volume Wholesale Deposit Other 1H12 Funding Pricing Operating Income Operating expenses movement - 1H12 v 2H11 $m Includes some one-offs 40 1,813
Slide 44: Australia Division – loans and deposits
Australia Division – loans and deposits For personal use only Net loans and advances (including acceptances) • Lending up 4% HOH and 7% PCP $b 241.5 224.9 231.2 • Mortgages up 5% HOH and 8% PCP 250.0 • Commercial up 3% HOH and 7% PCP 200.0 150.0 Small Business Banking up 6% HOH and 13% PCP 100.0
Slide 45: Australia Division – Deposits
Australia Division – Deposits For personal use only Customer deposit composition Retail deposit composition 100% 13% 13% 13% 100% 80% 10% 10% 9% 9% 9% 10% 60% 26% 29% 30% Decreased 13% 13% 12% 40% reliance on 80% term 51% 49% 48% 20% deposits 0% 30% 33% Mar 11 Sep 11 Mar 12 60% 36% Commercial deposi
Slide 46: Retail – Strengthening the franchise
Retail – Strengthening the franchise For personal use only 1H12 v 1H12 v ANZ Market Share1 Movement 2H11 1H11 Traditional banking market share Income -4% -1% 20 25 Expenses 2% 4% 20 15 Profit Before Provisions -8% -6% Net loans & advances incl. acceptances 5% 8% 10 Customer deposits 5% 11% Sep 09 Ma
Slide 47: Retail - Focused on growth by building deep relationships
Retail - Focused on growth by building deep relationships with customers For personal use only MFI Customer Satisfaction remains …supporting leading performance in highest amongst peers, exceeding 80% … numbers of products per customer (%) MFI Customers1 # Products per customer1,3 82 2.3 80 78 2.2 7
Slide 48: Retail - Focusing on digital and online channels
Retail - We are focusing on digital and online channels to meet customer expectations For personal use only • Online now the channel of choice for an increasing Branch OTC transactions number of customers million OTC transactions • Branch transactions are declining at the rate of 5.5 ~4% - 5% per an
Slide 49: Retail – Mortgages
Retail – Mortgages For personal use only Dynamic Loan to Valuation Ratio Portfolio Statistics % Portfolio 60% Total Number of Mortgage Accounts 851k 50% Total Mortgage FUM $178b 40% Portfolio >90% LVR: • Mar 12 = 4% 30% • Sep 08 = 7% % of Total Group Lending 43% 20% Owner Occupied Loans - % of Portf
Slide 50: Retail - Mortgage pricing
Retail - Mortgage pricing For personal use only Criteria used to assess Interest Change in cost of funds over the RBA Cash Rates Rate since the Global Financial Crisis ANZ‟s average cost for term wholesale funding between 1 October 2011 to 31 March 2012 increased by 15 bps from 116 basis points abov
Slide 51: Commercial – Executing to a clearly articulated strategy
Commercial – Executing to a clearly articulated strategy For personal use only Targeting sectors where we have deep industry Commercial Banking specialisation Underlying Net profit after tax • Natural Resources & Infrastructure downstream business growth in WA and QLD $m • Agriculture sector growth
Slide 52: Commercial overview
Commercial overview For personal use only 1H12 v 1H12 v Movement 2H11 1H11 Net loans & advances (incl. Income 1% 4% acceptances) by business Business Banking Expenses 4% 3% 33% Profit Before Provisions -1% 5% Regional Commercial Net loans & advances incl. acceptances 3% 7% Banking 30% Customer depos
Slide 53: Commercial – Super regional advantage
Commercial – Super regional advantage For personal use only Our super regional platform and core Cross-border referrals capabilities are driving cross-sell and 600 43% increase new-to-bank acquisition Super regional platform 400 • ANZ is the only bank able to connect Commercial customers across Asia
Slide 54: Commercial - Small Business banking
Commercial - Small Business banking For personal use only Leveraging ANZ distribution networks 1H12 lending book composition by and enhancing customer experience key segments • Acquiring new-to-Commercial customers by tapping 21% Retail into the OnePath and Esanda distribution Construction networks,
Slide 55: Commercial - Business banking
Commercial - Business banking For personal use only Leverage capability and create 1H12 lending book composition by capacity to drive growth and control key segments costs Property 34% • Growing the balance sheet by focusing on winning new- to-bank Trading companies with higher, more complex 10% Ret
Slide 56: Commercial - Regional Commercial banking
Commercial - Regional Commercial banking For personal use only Capitalising on opportunities for growth 1H12 lending book composition by and supporting customers in need key segments Regional Commercial1 Agriculture • Leveraging bank-wide sector expertise in Resources and Retail Infrastructure to id
Slide 57: Commercial - Esanda
Commercial - Esanda For personal use only Market leader in vehicle finance and Esanda Group lending asset finance composition by assets (Mar 12) • Largest provider of auto finance to the automotive dealer network and market leading Commercial Broker in asset finance in Australia • Strong new busines
Slide 58: Wealth (OnePath, Investments & Insurance and ANZ Private)
Wealth (OnePath superannuation, Investments & Insurance and ANZ Private) For personal use only Business Performance1 Funds under management • NPAT down 9% reflecting higher funding costs, reduced (end of period) trading volumes in E*Trade and increased operating $b expenses • Net funds management an
Slide 59: Divisional Performance: APEA Division
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2011 Divisional Performance Asia Pacific, Europe & America (APEA) Division
Slide 60: APEA an increasing contributor to group revenue
APEA an increasing contributor to group revenue through continued execution of Super Regional strategy For personal use only APEA Revenue APEA contributed 20%1 of Group revenue in 1H12… Pro Forma (USDm) 20% • NPAT growth of 21% HoH (11% PCP) 1,820 • Jaws were +5% with income up 11% and expenses incr
Slide 61: APEA performance a result of strong income momentum
APEA performance a result of strong income momentum and effective cost management For personal use only NPAT movement – 1H12 v 2H11 USDm 35 88 11 21 432 63 49 358 50 45 Up 21% 2H11 Net Other Markets Markets Partnerships Expenses Provisions Tax and 1H12 Interest Income Trading Sales OEI Ex Markets &
Slide 62: Revenue growth driven by priority geographies, segments and products
Revenue growth is driven by focus on our priority geographies, customer segments and products For personal use only Geographies Customer Segments Products Franchise Markets Institutional Institutional & Commercial Strategic Priorities • Greater China • Indonesia • Natural Resources • Financial • Cas
Slide 63: Strong expense discipline to fund revenue generating headcount
We utilise strong expense discipline in order to fund deployment of revenue generating headcount For personal use only A focus on reducing back-office costs while continuing to invest in revenue-generating capabilities… APEA FTE (including contract employees) ~12,100 Movement Sep 2010 to Mar 2012 ~1
Slide 64: Optimising footprint to fund growth investments
In addition, we are continuing to optimise our footprint in order to fund growth investments For personal use only Continuing to rationalise sub-scale …in order to fund additional growth businesses… investment • Sold Wing, our Cambodia mobile Additional investment 1H121 payments platform, to focus o
Slide 65: Connectivity is a key differentiator driving cross-border revenue
Connectivity is a key differentiator for ANZ, driving cross-border revenue growth across the network For personal use only Intra APEA connectivity becoming APEA Cross-Border Income increasingly important (USDm) • ANZ‟s APEA business intra region cross-border 22% CAGR revenues have achieved CAGR of 4
Slide 66: APEA contribution to 20% of ANZ Group revenue, 25-30% by 2017
Focus on Asia has grown APEA‟s contribution to 20% of ANZ Group revenue, on our way to 25-30% by 2017 For personal use only APEA Contribution to Group Revenue Driving 25 to 30% of Group earnings by 2017 By Segment By Geography 20% 20% Australia & NZ revenue 4% derived from APEA 4% managed customers1
Slide 67: APEA grows deposit base, strong credit quality
APEA continues to grow its deposit base, with strong credit quality in the loan book For personal use only • Significant volume growth APEA Institutional Risk Grade profile • Retail Asia deposits up 20% HOH by Exposure at Default • 31% of APEA lending book represents funded trade lines. These have a
Slide 68: APEA Institutional revenue up 26%
APEA Institutional revenue up 26% on continued client acquisition and deepening wallet share For personal use only Revenue up 26% on prior comparative period APEA Institutional Client Revenue • Growth across all products and sectors, in particular Pro Forma2 Trade, Cash Management and Foreign Exchan
Slide 69: Building out the Commercial segment
We continue to build out the Commercial segment utilising Institutional product capabilities For personal use only Commercial Client revenue growing1 Commercial segment revenues up 59% PCP Market Sales Other Client Revenue as customer franchise strengthens USDm 65 Country build out +43% CAGR • Focus
Slide 70: APEA Retail – Focus on affluent and emerging affluent
APEA Retail – Continued focus on growing affluent and emerging affluent while repositioning the portfolio For personal use only Delivering growth amidst portfolio reshaping Underlying growth in core customers • Revenue up 4% HoH through period of portfolio repositioning • Fee income represents 38% o
Slide 71: Accounting charges impacted partnership performance
Accounting charges impacted partnership performance which is led by four significant contributors For personal use only Partnerships NPAT 1H12 v 2H11 (USDm) 176 35 24 165 10 141 125 32 18 2H11 Reported Accounting & 1 2H11 Adjusted Earnings growth 1H12 Adjusted Gain on SSI impairment Accounting 1H12
Slide 72: Divisional Performance: Institutional Division
12 For personal use only HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Divisional Performance Institutional Division
Slide 73: Institutional growing NPAT by diversifying into non-lending revenue
Institutional is growing NPAT by diversifying into non- lending revenue streams For personal use only Diversifying revenue streams to reduce reliance Institutional Revenue Mix ($m) on lending • Trade & Supply Chain revenue up 22%1 HOH By Product By Geography $m • Cash management revenue up 9% 3,000
Slide 74: Institutional NPAT up 23% HoH
Institutional NPAT up 23% HoH as a result of improved Markets revenue and effective expense control For personal use only Pro forma NPAT movement – 1H12 v 2H11 JAWS +13% $m 82 222 1,123 34 915 71 4 73 64 Up 23% 2H11 Net Other Markets Markets Sales Expenses Provisons Tax and 1H12 Interest Income Trad
Slide 75: Focus on efficiency enabling investment in front-line areas
Focus on efficiency enabling Institutional to invest in targeted front-line areas, delivering revenue growth For personal use only Institutional FTE including contractors ~6,000 ~5,900 ~5,900 FY10 Markets Transaction Global Relationship Enablement FY11 Markets Transaction Global Relationship Enablem
Slide 76: Capturing greater share of international flows and Asian trade
Continuing to capture greater share of international flows into Australia and fast growing intra Asian trade For personal use only Institutional Cross Border Income Thrown $m 800 APEA Australia New Zealand Institutional Income „Thrown‟ – cross border income thrown by geography 1H12 600 400 Domestic
Slide 77: Continued focus on APEA, target segments and products
Continued focus on APEA, target customer segments and products that drive revenue growth For personal use only Geographies Customer Segments Products APEA growth driving geographic Continued strong performance in Reducing reliance on balance sheet diversification Financial Institutions and Natural l
Slide 78: Priority Customer Segments – capture trade flows
Priority Customer Segments – capture trade flows to/from Asia while maintaining domestic position For personal use only Natural Resources Infrastructure Agriculture • Our focus is on capturing • Dominant infrastructure specialist in • A primary focus on Agri customers Australia/NZ - Asia/Pacific tra
Slide 79: Financial Institutions – building Super Regional platform
Financial Institutions – building Super Regional platform to capture growing investor demand For personal use only We are building markets and Greater Transaction Banking & transactional banking capabilities to Markets contribution Financial Institutions capture investor shift to diversify Operating
Slide 80: Transaction Banking – superior client connectivity
Transaction Banking – delivering superior client connectivity central to Super Regional strategy For personal use only Payments & Cash Management Payments & Cash Management Average Deposit Volumes 80 $m Continuing to deliver enhanced connectivity to clients • Transactive full functionality now embed
Slide 81: Global Markets - diversification and client driven revenue
Global Markets - continued focus on diversification and growing client driven revenue For personal use only Since 2010, we have been executing on our Global Markets Revenue strategy to diversify our business increasing our pro forma FX adjusted 800 $m product offering and global footprint Sales Trad
Slide 82: Global Markets customer sales income at record highs
Global Markets customer sales income at record highs For personal use only Trading & Balance Sheet Income Sales Income (FX Adjusted) (FX Adjusted) $m Quarterly Sales Income $m Quarterly Trading & Balance Sheet Income 400 Quarterly Average 2008 400 Quarterly Average 2008 Quarterly Average 2009 Quarte
Slide 83: Global Capital Markets – build distribution capabilities
Global Capital Markets – continue to build distribution capabilities and strengthen market position For personal use only Extended leading position in Corporate and frequent issuer bonds domestic bond markets league table rankings • No. 1 bond issuer in Australia with 21.7% market Category 2011 Q1 2
Slide 84: Continued lending growth with stable credit quality
Continued lending growth with stable credit quality and margin contraction For personal use only Institutional Lending Volumes Institutional Risk Grade Profile & Net Interest Margin by Exposure at Default Australia APEA $b New Zealand NIM ex-Mkts (RHS) 100 96 3.50% 91 84 90 80 3.00% 62% 65% 68% 71 7
Slide 85: Balance Sheet strengthening as LDR improves
Balance Sheet strengthening as LDR improves, with Asia Trade Finance a key driver of lending growth For personal use only Institutional Lending and Deposits Institutional Lending Growth Net Loans & Advances Customer Deposits Mar 12 vs Sep 11 (incl. acceptances) $b $4b (5%) Growth HOH $2b (2%) Growth
Slide 86: Institutional maintaining strong credit quality
Institutional maintaining strong credit quality as impaired assets decline For personal use only Institutional Total Provision Charge Institutional Net Impaired Assets $m As % GLA $m As % GLA 500 0.60% 4,000 5.0% 434 3,561 450 4.5% 3,500 0.50% 400 3,010 4.0% 310 3,000 2,669 350 3.5% 0.40% Increase i
Slide 87: NIM – Institutional Division
NIM – Institutional Division For personal use only Institutional Division Net Interest Margin Movement 1H12 v 2H11 bps 189.4 Lower mix of free funds and greater mix of wholesale funding Impact of strong deposit competition 0.9 4.1 183.5 4.8 3.7 0.2 2.2 Ex-Markets Down 10.0 bps 299.0 289.0 Down 5.9 b
Slide 88: Recognised as a leading Institutional bank in Asia Pacific
Recognised as a leading Institutional bank in the Asia Pacific region For personal use only AWARDS FOR IFR ASIA AWARDS FX POLL PFI AWARDS EXCELLENCE BEST TRADE BANK IN BEST DOMESTIC PROVIDER ASIA PACIFIC INFRASTRUCTURE AUSTRALIA, NEW ZEALAND LOAN HOUSE OF THE YEAR OF FX SERVICES IN AUSTRALIA DEAL OF
Slide 89: Divisional Performance: New Zealand Businesses
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Divisional Performance New Zealand Businesses
Slide 90: New Zealand Businesses - Simplification & Efficiency
New Zealand Businesses - Simplification & Efficiency For personal use only Simplifying the business Profit before Provisions • Continuing to simplify the management structure NZDm • Progressing with process and product simplification • Moving to one IT system 810 761 772 716 Improving customer and s
Slide 91: New Zealand Businesses – Financial Performance
New Zealand Businesses – Financial Performance For personal use only NPAT movement – 1H12 v 2H11 NZDm 17 515 33 4 1 3 463 Up 11% 2H11 Net Other Expenses Provisons Tax and 1H12 Interest Income OEI NPAT movement – 1H12 v 1H11 NZDm 10 515 41 1 2 4 469 Up 10% 1H11 Net Other Expenses Provisons Tax and 1H
Slide 92: New Zealand Businesses - Balance sheet management
New Zealand Businesses - Balance sheet management For personal use only Funding Net Interest Margin • Funding gap has reduced by $1.9b YTD, largely 3.00% driven by an increase in customer deposits – at call and savings accounts up 14% 2.50% 2.00% Retail • Mortgages – market growth subdued at +0.9% 1
Slide 93: Simplification program central to becoming NZ's best bank
Simplification program central to ANZ becoming New Zealand‟s best bank For personal use only STRATEGIC FOCUS Deliver on our simplification agenda so we are easy to do business with and the most convenient and supportive bank for NZ and New Zealanders NZ Simplification Program New Zealand‟s best bank
Slide 94: Super Regional capabilities provide real differentiation
Super Regional capabilities provide real differentiation For personal use only Leveraging our Super Regional capabilities Strong growth in migrant banking customer segment with ~5,000 new customers added through this channel Australian retail accounts can now be opened from New Zealand within 20 min
Slide 95: Retail & Wealth - simplifying our business
Retail & Wealth - simplifying our business to make banking easier for customers and staff For personal use only Simplification initiatives undertaken across Share of Mortgage registrations business growing steadily since Sep 20111 • Focus on sales management disciplines – mortgage 36% pipeline manag
Slide 96: Commercial – driving greater segment connectivity
Commercial – driving greater segment connectivity to unlock value For personal use only Key highlights ANZ has a strong market share in • Maintained #1 market share in the small business small business banking sector1 banking sector 33% • Awarded CANSTAR Best Agribusiness Bank 23% 19% 18% Enhanced c
Slide 97: New Zealand Businesses - credit quality
New Zealand Businesses - credit quality For personal use only Net impaired assets Total provision charge NZDm NZDm 1.89% 351 400 300 165 98 119 1.63% 200 102 1,669 100 1.49% 0 1.31% 1,442 1.34% 1,298 -100 1H10 2H10 1H11 2H11 1H12 1,165 1,153 IP Charge CP Charge 90+ Days arrears 1.20% Mortgages Comme
Slide 98: Treasury
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Investor Discussion Pack Treasury
Slide 99: Strengthened capital position; well diversified funding base
Strengthened capital position; well diversified funding base For personal use only Strong Capital Position Diversified Funding Base Common Equity Tier 1 Ratio Tier 1 Ratio Equity & Hybrid Debt Customer Funding Term Funding >1 year Term Funding <1 year 11.3% 10.9% Short Term Funding 10.1% 12% 12% 14%
Slide 100: Strengthened capital levels for Basel III implementation
Continued strengthening of capital levels places ANZ in a strong position for upcoming Basel III implementation For personal use only Current capital levels are strong Well placed to meet Basel III CET1 target (Mar-12) under APRA‟s draft capital standards Common Equity Tier 1 Ratio (CET1) Basel III
Slide 101: Solid organic capital generation underpins strong CET1
Solid organic capital generation underpins strong CET1 position For personal use only Capital Position (Common Equity Tier 1 Ratio) 1.06% 8.92% 8.49% 8.52% (0.37%) (0.27%) (0.02%) Portfolio Growth/Mix (26bp) +8.2b Risk Migration 5bp -2.2b Portfolio Review 5bp -1.5b Non-credit RWA (11bp) +3.5b Net or
Slide 102: Tier 1 position strengthened through organic capital generation
Tier 1 position strengthened through organic capital generation For personal use only Capital Position (Tier 1 Ratio) 1.06% 11.27% 10.94% (0.37%) 10.51% (0.34%) (0.02%) Portfolio Growth/Mix (33bp ) +8.2b Risk Migration 7bp -2.2b Portfolio Review 6bp -1.5b Non-credit RWA (14bp) +3.5b Net organic up 3
Slide 103: Reconciliation of capital position under Basel III
Reconciliation of ANZ‟s capital position under Basel III For personal use only ANZ capital ratios : Basel II to Basel III CET1 Tier-1 Total Capital APRA Mar-12 Basel II 8.9% 11.3% 12.6% Dividend not provided for (net of DRP) 0.4% 0.4% 0.4% Investments in ADI and overseas equivalents -0.4% -0.4% 0.0%
Slide 104: Well diversified funding profile
ANZ has a well diversified funding profile with an increasing weighting to customer funding For personal use only Strong Funding Composition Offshore short-term Commercial Paper makes up just 3% of total Short Term Wholesale Customer Funding Group funding Funding Term Debt < 1 year Residual Sharehol
Slide 105: FY12 debt issuance well ahead of plan
FY12 debt issuance is well ahead of plan; portfolio costs continue to increase For personal use only ~80% FY12 term wholesale debt issuance Portfolio term funding costs will completed continue to increase A$B 3m BBSW 30 Issuance Maturities 180bp 25 160bp Indicative annual issuance volumes 140bp 20 F
Slide 106: Lower structural funding gap - a competitive advantage
Lower structural funding gap - a growing competitive advantage For personal use only ANZ Peer 1 Peer 2 Peer 3 Loan – Deposit Ratio (%) 134 160 153 141 Loan – Deposit Gap ($bn) 104 186 164 153 Australia Household Funding 111 193 125 179 Gap ($bn) • ANZ is building an increasingly $bn Australian House
Slide 107: Term funding portfolio increasingly diversified
ANZ‟s term funding portfolio is increasingly diversified with a declining reliance on offshore funding For personal use only Term Debt Issuance Term Debt Outstandings Weighted avg. Weighted avg. tenor : 4 yrs tenor : 5 yrs 10% 12% 13% 13% 14% 33% 18% 25% 20% 34% 29% 68% 23% 36% 32% 31% 35% 28% 44% 3
Slide 108: Liquid assets exceed total offshore wholesale debt
Liquid assets of $99b exceed total offshore wholesale debt of $85b For personal use only Strong liquidity position ($b) ANZ Total Offshore Wholesale Debt securities 19.9 27.2 8.1 22.5 10.2 3.3 66.7 71.4 71.3 60.2 62.7 34.7 Sep 08 Sep 09 Sep 10 Sep 11 Mar 12 Mar 12 Prime Liquidity Portfolio Other Eli
Slide 109: Hedging has lessened the impact of the stronger A$
Hedging has lessened the impact on earnings of the stronger $A For personal use only Earnings Composition by Region EPS Impact & Average Translation Rates % Group Exchange Underlying Rate Profit 0.2% 100% 1.40 90% 1.30 80% 1.20 70% 60% 1.10 -0.4% 50% 1.00 -0.6% 40% 0.90 30% 0.80 20% 10% 0.70 -1.2% 0
Slide 110: Risk Management
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Investor Discussion Pack Risk Management
Slide 111: Provision Charge and Impaired Assets
Provision Charge and Impaired Assets For personal use only Total Provision Charge New Impaired Assets (IP charge by Division, total CP charge) by Division $m $m 1,200 3,500 1,098 3,126 1,000 3,000 2,436 722 2,500 2,319 2,335 800 565 660 551 2,000 1,824 600 1,500 400 1,000 Driven 200 by two 500 large
Slide 112: Individual Provision Charge
Individual Provision Charge For personal use only Individual Provision Charge Individual Provision Charge by Segment composition $m $m 1,200 1,500 1,062 762 609 717 594 1,062 1,000 1,000 500 0 800 762 -500 717 1H10 2H10 1H11 2H11 1H12 609 New Increased Writebacks & Recoveries 594 600 Individual Prov
Slide 113: Individual Provision Charge lifted by transfers
Individual Provision Charge lifted by “transfers" For personal use only Individual Provision Charge ($m) IP net of CP & CVA "transfers" related to “Transfers” to Individual Provision ($m) legacy exposures and natural disasters arising in prior periods Institutional 121 "Transfers" to IP 717 Manageme
Slide 114: Individual Provision Charge – underlying trends
Individual Provision Charge – underlying trends reasonably stable For personal use only Individual Provision Charge by Division ($m) IP Charge net of CP Transfers CP & CVA "transfers" related to legacy exposures and natural disasters Australia Institutional New Zealand APEA Ex-Institutional 370 20 3
Slide 115: Collective Provision release
Collective Provision release principally due to exposures being crystallised For personal use only Collective Provision Charge Modelled Collective Provision Composition ($m) Charge Drivers 1H12 ($m) 1H11 2H11 1H12 100 Institutional Growth 74 50 Australia Growth 0 Other Growth -4 Institutional -50 Ri
Slide 116: Collective Provision Charge
Collective Provision Charge For personal use only Collective Provision Charge by Source $m $m CP Charge by Division 1H12 150 36 (40) 65 (58) (152) 60 (12) (26) (101) (13) 100 40 20 50 0 -20 0 -40 -50 -60 -80 -100 -100 -150 -120 -140 -200 174 -160 Australia New Institutional APEA -250 Zealand & Group
Slide 117: Collective Provision Charge
Collective Provision Charge For personal use only Collective Provision Charge by Source Lending Portfolio Economic Cycle 1H12 Risk Impact Growth Mix & Concentration Total Australia Division 7 24 (8) (35) (12) Institutional (139)1 37 0 11 (101) New Zealand (10) (2) (1) (13) (26) APEA & Group Centre (
Slide 118: Credit Risk Weighted Assets
Credit Risk Weighted Assets For personal use only Total Credit Risk Weighted Assets Credit Risk Weighted Assets (AUDb) Movement 1H12 v 2H11 (AUDb) 8.2 248.8 250.2 250.2 248.8 1.5 3.1 2.2 233.5 233.2 220.4 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 11 Growth Data FX Risk Mar 12 Review Impact 118
Slide 119: Impaired Assets
Impaired Assets For personal use only Gross Impaired Assets Gross Impaired Assets by Type by Size of Exposure $m $m 8,000 6,561 Impaired Loans NPCCD Restructured 6,561 6,221 5,581 5,343 6,000 8,000 4,000 7,000 6,561 6,561 2,000 6,221 0 6,000 5,581 5,343 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 5,000 > $10
Slide 120: Watch & Control Lists and Risk Grade Profiles
Watch & Control Lists and Risk Grade Profiles For personal use only Group Risk Grade profile by Watch & Control List Exposure at Default Index Watch List by Limits Mar 2009 Watch List by No. Groups 6% 6% 6% 6% 6% = 100 Control List by Limits 9% 9% 9% 8% 8% Control List by No. Groups 180 12% 12% 13%
Slide 121: Total lending exposures – by Geography
Total lending exposures – by Geography For personal use only Exposure at default (EAD) Other North 31% East Asia 19% Other South East Asia 18% Hong Kong 32% Singapore Australia 11% Asia 65% 17% New Institutional Zealand Trade 26% Other Institutional 64% 10% 1% Retail 3% 3% Pacific UK & Europe Americ
Slide 122: Total lending exposures – by Sector
Total lending exposures – by Sector For personal use only Exposure at default (EAD) % in Non Category EAD as a % of group total Performing Sep-11 Mar-12 Sep-11 Mar-12 Consumer Lending 45.2% 45.7% 0.4% 0.3% 14% Finance, Investment & 14.4% 14.4% 0.3% 0.2% Insurance 7% Property Services 6.9% 7.0% 2.5%
Slide 123: Australia 90+ Day Delinquencies
Australia 90+ Day Delinquencies For personal use only Australia Retail Australia Division 90+ day delinquencies 90+ day Delinquency Balance ($m) 2,000 Total Mortgage Portfolio NSW & ACT Mortgages QLD Mortgages VIC Mortgages 1,500 WA Mortgages Total Credit Cards 1,000 1.25% 500 0 1.00% Mar 11 Sep 11
Slide 124: Australia – Mortgages
Australia – Mortgages For personal use only Dynamic Loan to Valuation Ratio Portfolio Statistics % Portfolio 60% Total Number of Mortgage Accounts 851k 50% Total Mortgage FUM $178b 40% Portfolio >90% LVR: • Sep 08 = 7% 30% • Mar 12 = 4% % of Total Australia Region Lending 60% 20% % of Total Group Le
Slide 125: Australia Commercial
Australia Commercial For personal use only Australia Commercial 90+ day delinquencies 3.0% Business Banking Regional Commercial Banking Esanda 2.5% Small Business Banking Total Commercial 2.0% 1.5% 1.0% 0.5% 0.0% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Regional Commercial Banking Australia Commercial Len
Slide 126: New Zealand Businesses
New Zealand Businesses For personal use only Net impaired assets Total provision charge NZDm NZDm 1.89% 351 400 300 165 98 119 1.63% 200 102 1,669 100 1.49% 0 1.31% 1,442 1.34% 1,298 -100 1H10 2H10 1H11 2H11 1H12 1,165 1,153 IP Charge CP Charge 90+ Days arrears 1.20% Mortgages Commercial Rural 0.80%
Slide 127: Credit Intermediation Trades
Credit Intermediation Trades For personal use only Life to Date Position as at Notional Notional 31 March 2012 Purchased Principal Mark to Protection Credit Risk Credit Risk Amount on No. Market Principal on on Corresponding (USDm) Amount Derivatives Derivatives Sold Protection Counterparty Rating (
Slide 128: Credit Intermediation Trade Portfolio
Credit Intermediation Trade Portfolio For personal use only • Cumulative Credit Risk on Derivative expense for the Credit Credit Intermediation Trades Intermediation Trade portfolio as at 31/3/2012 was AUD 459m (down AUD 52m from 30/9/2011) • Credit markets have been quite volatile since mid 2011, h
Slide 129: Economic Updates
For personal use only 12 HALF YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 May 2012 Investor Discussion Pack Economic Updates
Slide 130: Economic updates
Economic updates For personal use only Australia New Zealand 2011 2012 2013 2014 2011 2012 2013 2014 GDP 2.0 3.0 3.1 3.2 1.2 1.9 3.0 2.9 Inflation 3.5 2.2 3.2 3.0 4.61 1.6 2.5 2.7 Unemployment 5.2 5.4 4.9 4.8 6.6 6.2 6.0 5.7 Cash rate 4.75 3.75 3.75 3.75 2.50 2.50 3.50 4.25 AUD/USD 0.97 1.10 1.10 0.
Slide 131: Growth Forecasts – Asia
Growth Forecasts – Asia For personal use only Emerging Asia GDP Growth Forecasts 2007 2008 2009 2010 2011 2012 2013 China 13.1 9.6 9.1 10.1 9.2 9.0 9.3 India 9.5 7.4 7.0 8.8 7.1 7.3 8.5 NIEs Hong Kong 6.4 2.4 -2.7 7.0 5.0 4.4 5.1 Korea 5.1 1.5 0.2 6.2 3.9 3.4 4.9 Singapore 8.6 2.3 -0.8 14.5 5.0 3.0
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 — 1H12 Earnings Presentation on 6ix