Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — H1 2018 Earnings Presentation
125 slides from Anz's earnings presentation, May 1, 2018
Slide 1: 2018 First Half Results
2018 FIRST HALF RESULTS RESULTS PRESENTATION & INVESTOR DISCUSSION PACK AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED 1 MAY 2018 Financial information within this Results Presentation & Investor Discussion Pack is on a Cash Profit (Continuing Operations) basis (as defined in the Half Year 31 Mar
Slide 2: Contents
CONTENTS 2018 FIRST HALF RESULTS CEO and CFO Results Presentations 3 CEO Presentation 3 CFO Presentation 14 Strategy & Financial Performance 34 Group Treasury 53 Risk Management 61 Housing Portfolio 78 Business Performance 91 Australia Division Performance 94 Institutional Division Performance 101 N
Slide 3: CEO Presentation: Shayne Elliott
2018 FIRST HALF RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED 1 MAY 2018
Slide 4: Overview: Delivered on our promise to simplify ANZ
OVERVIEW DELIVERED ON OUR PROMISE TO SIMPLIFY ANZ • Focusing where we can win • Divesting non-core assets • Reducing complexity • Reducing fees and interest rates for many core services • Decommissioning redundant technology applications • Progressing customer and process remediation • Re-shaping ou
Slide 5: Financial Snapshot
FINANCIAL SNAPSHOT STRENGTHENED THE BUSINESS, MANAGED COSTS, IMPROVED RETURNS 1H18 Change $m vs 1H17 Statutory Profit 3,323 +14% Cash Profit (continuing operations) Cash Profit After Tax 3,493 +4% Earnings Per Share (cents) 119.4 +4% Return on Equity 11.9% +32bp Dividend Per Share (cents) 80 Stable
Slide 6: Four Priorities
FOUR PRIORITIES 1. Creating a simpler, 2. Focusing on areas better balanced bank where we can win 3. Building a superior everyday 4. Driving a purpose and experience to compete in the values led transformation digital age 6
Slide 7: A Better Balanced Bank
A BETTER BALANCED BANK CAPITAL ALLOCATION SEPTEMBER 15 Pro forma MARCH 20181 (%) Institutional Retail & Commercial Wealth Above allocation based on Regulatory Capital. Institutional shown under 2015 IIB Structure, including Global Institutional and Asia Retail & Pacific. 1. Pro forma incorporates th
Slide 8: Execution Excellence
EXECUTION EXCELLENCE ASIA RETAIL AND WEALTH DIVESTMENTS INSTITUTIONAL AUSTRALIA NEW ZEALAND Delivered on schedule, under budget and with #1 Lead Bank Penetration in Aus & NZ1 a better financial outcome on sale 46% 31% 26% 24% 24% Sale and separation of 6 businesses 28% 25% 2 buyers, 6 countries 9% 2
Slide 9: Competing in a Digital Age
C O M P E T I N G I N A D I G I TA L A G E BUILDING A SUPERIOR EVERYDAY EXPERIENCE • #1 ranked banking app in the Australian App store1 • ~25,000 users joining each day2 • Delivered by our first team to adopt New Ways of Working • Dedicated team focused on maintaining leadership App Rating3 # of Rat
Slide 10: Competing in a Digital Age: Digital Payments
C O M P E T I N G I N A D I G I TA L A G E LEADERSHIP POSITION WITHIN THE DIGITAL PAYMENTS MARKET DIGITAL WALLETS CARDS AVAILABLE WITHIN DIGITAL WALLETS DIGITAL WALLET # TRANSACTIONS DIGITAL WALLET $ TRANSACTIONS Index: Feb 16 = 100 Index: Feb 16 = 100 Index: Feb 16 = 100 000’s 000’s 000’s 20 30 35
Slide 11: Purpose & Values Led Transformation
P U R P O S E & VA L U E S L E D T R A N S F O R M AT I O N • Clear Purpose, Values, Expectations • Long term focus on engaging our people • Rebalancing performance scorecards • Changing what we expect from leaders • Critical driver of long term shareholder value PERFORMANCE SCORECARD1 Highest weigh
Slide 12: Outlook
OUTLOOK • Australia, NZ & regional economies continue to grow • Household debt has increased, at a slowing rate • Credit conditions remain benign across the region • Credit standards tightening • Credit growth in the regulated sector is slowing • Reinforces our strategy and the actions we’ve taken a
Slide 13: Our Focus
OUR FOCUS NO CHANGE TO FY17 1. Capital efficiency 2. Absolute cost discipline 3. Customer experience & innovation 4. Transitioning to New Ways of Working (NWoW) 5. Consolidating improvements in Asia business 6. Engaging with community 7. Final reshaping of non core assets 13
Slide 14: CFO Presentation: Michelle Jablko
2018 FIRST HALF RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED 1 MAY 2018
Slide 15: 1H18 Overview
1H18 OVERVIEW WORKED HARD TO BE A BETTER BALANCED, BETTER CAPITALISED & SIMPLER BANK CASH EARNINGS PER SHARE1 cents • Strengthened capital: CET1 11.0% 3.3 119.4 117.9 0.2 0.2 • $1.5bn share buyback underway -2.2 • 4th consecutive half of absolute cost reduction 2H17 Divested Change in Major business
Slide 16: Agenda
AGENDA 1. DIVESTMENT IMPACTS 2. BALANCE SHEET AND CAPITAL 3. PERFORMANCE OF ONGOING BUSINESSES 4. IFRS 9 UPDATE 16
Slide 17: Divestment Impacts
D I V E S T M E N T I M PA C T S SALE OF WEALTH AUSTRALIA BUSINESSES (DISCONTINUED OPERATIONS) – IMPACT ON CASH PROFIT & CAPITAL PROFIT & LOSS SUMMARY 1H17 2H17 1H18 $m OnePath Life & OnePath Pensions & Investments classified as ‘discontinued ‘Discontinued operations’ 561 731 (617)2 operations’ & sh
Slide 18: Other Divestment Impacts
O T H E R D I V E S T M E N T I M PA C T S FY18 CHANGE IN CONTRIBUTION FROM DIVESTED BUSINESSES (FY18 vs FY17) FY18 change in $m Asia Retail SRCB MCC UDC contribution Divested business results Previous Updated Previous Updated Previous Updated Previous Updated Previous Updated FY18 vs FY17 Cash Prof
Slide 19: Other Divestment Impacts
O T H E R D I V E S T M E N T I M PA C T S 1H17 & 1H18 CONTRIBUTION FROM DIVESTED BUSINESSES $m Asia Retail SRCB MCC UDC TOTAL Divested business results 1H17 1H18 1H17 1H18 1H17 1H18 Announced 1H17 1H18 divestment not Revenue 370 91 58 - 15 - proceeding 443 91 Expenses – Direct* 120 35 120 35 Provis
Slide 20: Balance Sheet & Capital Position
B A L A N C E S H E E T & C A P I TA L P O S I T I O N CAPITAL & LIQUIDITY COMMON EQUITY TIER 1 CAPITAL (CET1) % 0.55 ~11.8 0.72 -0.59 0.08 11.04 -0.29 10.57 $1.1b of $1.5b buyback 10.13 completed to date 15bp above the average of 1H12 to 1H15 (prior to Institutional portfolio rebalancing) Mar-17 Se
Slide 21: Balance Sheet Rebalancing
BALANCE SHEET REBALANCING TOTAL RISK WEIGHTED ASSETS1 INSTITUTIONAL RISK WEIGHTED ASSETS1 $b $b 409 192 397 391 396 169 166 388 23 21 15 11 79 20 66 65 60 58 57 56 55 113 103 101 Mar-16 Mar-17 Mar-18 121 147 International Aus, NZ & PNG 150 161 161 AUSTRALIA & NEW ZEALAND DIVISIONS2 Net Loans & Advan
Slide 22: Risk Adjusted Margins & Returns
RISK ADJUSTED MARGINS & RETURNS NII / AVERAGE CREDIT RWA1 MOVEMENT DIVISIONAL NET INTEREST INCOME / AVG CRWA % % Australia2 New Zealand Institutional1 6.14 6.03 6.02 5.11 0.15 4.57 4.78 4.87 4.52 -0.04 -0.06 2.21 2.07 2.13 2H17 Impact of Impact of Portfolio 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H
Slide 23: Net Interest Margin
NET INTEREST MARGIN GROUP NET INTEREST MARGIN (NIM) bp NIM dilutive but ROE accretive 198 1 2 2 197 Divested NLAs $3.3b, -1 Deposits $3.6b 2H18 impact on NIM expected to be ~1bp -3 -2 -3 193 -1 -1bp 2H17 Funding & Funding costs Major Deposits Assets Treasury 1H18 ex Markets Asia Retail 1H18 Asset mi
Slide 24: Australia Divisional Performance
AUSTRALIA DIVISIONAL PERFORMANCE FINANCIAL SUMMARY REVENUE DRIVERS $m 1H18 Change Retail Business & Private $m vs 1H17 vs 2H17 68 51 2 4,863 168 4,651 -47 -30 Revenue 4,863 4.6% 1.7% Operating Expenses1 1,812 8.6% 5.8% 1H17 Volume Margin Other Volume Margin Other 1H18 Income Income Profit Before Pro
Slide 25: Institutional Divisional Performance
INSTITUTIONAL DIVISIONAL PERFORMANCE1 FINANCIAL SUMMARY REVENUE CONTRIBUTION2 $m 1H18 Change Major Bank Levy: 3,055 2H17-$32m; 1H18 -$77m $m vs 1H17 vs 2H17 2,836 2,582 Revenue 2,544 (16.7)% (1.2)% 2,575 2,544 961 1,364 Operating Expenses 1,371 (3.6)% (1.5)% 1,074 992 920 Profit Before Provisions 1,
Slide 26: Institutional Markets Income
INSTITUTIONAL MARKETS INCOME INCOME CONTRIBUTION MARKETS SALES INCOME $m $m 1,364 483 162 1,074 Includes Major Bank Levy: 2H17-$13m; 1H18 -$37m 961 992 -15 238 356 67 920 -7 451 152 11 -10 439 278 295 -12 361 302 363 196 175 542 542 483 451 439 -35 -67 1H17 Client Product Market 2H17 Market 1H18 exi
Slide 27: New Zealand Divisional Performance
NEW ZEALAND DIVISIONAL PERFORMANCE REVENUE CONTRIBUTION REVENUE DRIVERS NZDm 1H18 Change Retail Commercial 1 16 1,765 NZDm vs 1H17 vs 2H17 17 15 4 13 29 1,670 Revenue 1,765 5.7% 3.2% Operating Expenses 642 0.9% 1.1% 1H17 Volume Margin Other Volume Margin Other Other 1H18 Profit Before Provisions 1,1
Slide 28: Expenses: Drivers & Productivity
EXPENSES DRIVERS & PRODUCTIVITY EXPENSES FULL TIME EQUIVALENT STAFF (FTE) $m Includes Asia Retail legacy costs ($275m # annualised) 16 4,480 52 46,046 44,896 4,411 42,873 -62 -2,023 -75 -914 39,540 -2,419 Includes FTE reductions, property consolidation & other efficiencies -2% 2H17 Divestments Restr
Slide 29: Investment Spend
INVESTMENT SPEND INVESTMENT SPEND COMPOSITION ($m) BY DIVISION ($m) 482 482 469 469 437 437 31% 35% 368 368 31% 270 273 1% 10% 38% 306 9% 198 18% 21% 2% 22% 16% 81 102 76 49 46% 38% 38% 44% 115 110 82 94 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 Business Initiatives Infrastructure / Other Risk & Compl
Slide 30: Investment Spend
INVESTMENT SPEND INVESTMENT SPEND CAPITALISED SOFTWARE BALANCE EXPENSED / CAPITALISED ($m) $b 482 3.0 469 437 28% 368 2.5 Average 58% 66% amortisation period 4.9 years Average amortisation 57% period 3.3 years 2.0 72% 1.5 42% 43% 34% 1.0 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 Capitalised investment
Slide 31: Credit Impairment Charges
C R E D I T I M PA I R M E N T C H A R G E S TOTAL PROVISION CHARGE INDIVIDUAL PROVISION CHARGE $m $m 1,038 -312 1,047 1,500 892 787 554 1,000 430 918 26 500 447 720 0 357 -500 225 Loss rate 1H16 2H16 1H17 2H17 1H18 14bp 479 New Increased Writebacks & Recoveries 216 203 186 196 408 28 COLLECTIVE PRO
Slide 32: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE Actions taken to improve risk profile: • Sold Asia Retail & Wealth businesses (IEL 151bp)1 • Sold Esanda Dealer Finance business (IEL 100bp)2 • Largely exited Emerging Corporate portfolio in Asia (IEL 41bp)1 • Restricted growth in commercial property & unsecured pers
Slide 33: IFRS 9 - Estimated Impact
I F R S 9 - E S T I M AT E D I M PA C T COLLECTIVE PROVISION BALANCE & COVERAGE (ESTIMATED IMPACT) IAS 39 IFRS 9 Based on September 2017 Sep 17 ($m) Equivalent ‘estimate’ ($m) Collective Provision 2,662 ~2,900 to ~3,200 Estimated ~$235m to $535m increase in Collective CP balance / CRWA 0.79% ~0.86%
Slide 34: Strategy & Financial Performance
2018 FIRST HALF RESULTS STRATEGY & FINANCIAL PERFORMANCE AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 35: Four Priorities
FOUR PRIORITIES 1. Creating a simpler, better balanced 2. Focusing on areas where we can win bank 3. Building a superior everyday 4. Driving a purpose and experience to compete in the digital age values led transformation ASSUMPTIONS UNDERLYING THE STRATEGY 1. Constrained sector growth (High househo
Slide 36: Strategic Focus
S T R AT E G I C F O C U S 1. Reduce operating costs and risks by removing product and management complexity 1. Creating a simpler, better 2. Exit low return and non-core businesses. balanced bank 3. Reduce reliance on low-return aspects of Institutional banking in particular. 4. Further strengthen
Slide 37: Strategic Progress
S T R AT E G I C P R O G R E S S 1H18 • Finalised sale of retail and wealth business in Asia along with ANZ’s stake in Shanghai Rural Commercial Bank (SRCB) and half our stake in Metrobank Card 1. Creating a simpler, better Corporation (MCC). balanced bank • Announced sale of the Australian Pensions
Slide 38: Corporate Sustainability
C O R P O R AT E S U S TA I N A B I L I T Y OUR SUSTAINABILITY AGENDA PROGESS ON FY18 SUSTAINABILITY TARGETS As part of our strategic priority to drive a purpose and Funded and facilitated $8.3 billion in low carbon and values-led transformation of the bank, we are prioritising sustainable solutions
Slide 39: ANZ Announced Divestments
ANZ ANNOUNCED DIVESTMENTS GAIN/LOSS ON SALE SUMMARY 1H17 ($m) 2H17 ($m) 1H18 ($m) 2H18 ($m) TOTAL GAIN Asset Actual Actual Actual Expected / LOSS Sale of Asia Retail & Wealth businesses (Cash Profit continuing) • Reclassification of Asia Retail & Wealth to held for sale (284) • Net gain / loss on sa
Slide 40: Other Divestment Impacts
O T H E R D I V E S T M E N T I M PA C T S FY18 CHANGE IN CONTRIBUTION FROM DIVESTED BUSINESSES (FY18 vs FY17) FY18 change in $m Asia Retail SRCB MCC UDC contribution Divested business results Previous Updated Previous Updated Previous Updated Previous Updated Previous Updated FY18 vs FY17 Revenue ~
Slide 41: Discontinued & Large/Notable Items
D I S C O N T I N U E D & L A R G E / N O TA B L E I T E M S FIRST HALF 2018 ($m) GAIN/LOSS ON SALE DIVESTMENT IMPACT 617 3,493 86 0 0 0 3,331 2,876 -121 -85 -18 -24 1H18 Cash Discontinued 1H18 MCC SRCB Asia Retail UDC MCC SRCB Asia Retail Other1 1H18 ex Profit Continuing L/N items SECOND HALF 2017
Slide 42: Financial Performance
FINANCIAL PERFORMANCE CASH PROFIT (CONTINUING OPERATIONS) • $m 1H18 Change Change (ex divested assets)1 $m vs 1H17 vs 2H17 vs 1H17 vs 2H17 Cash Profit (continuing) 3,493 4.1% 1.1% (2.6)% 1.0% Operating Income 9,808 (1.7)% (0.3)% (3.8)% (0.3)% Operating Expenses 4,411 (1.7)% (1.5)% 0.2% (0.2)% Profit
Slide 43: Cash Profit Drivers
CASH PROFIT DRIVERS CASH PROFIT (CONTINUING OPERATIONS) CASH PROFIT - HALF ON HALF PERFORMANCE (1H18 vs 2H17) $m 34 44 8 3,493 7 3,454 7 -61 +1.1% 2H17 Cash Profit Divested business Net interest income Other income Expenses Provisions Taxation & 1H18 Cash Profit (Continuing) Minority interest (Conti
Slide 44: Income Contribution
INCOME CONTRIBUTION GROUP TOTAL AUSTRALIA DIVISION NZ DIVISION (AUD) $m $m $m 9,976 9,840 9,808 4,651 4,784 4,863 1,577 1,595 1,616 173 127 88 602 615 559 338 317 336 886 550 551 4,049 4,169 4,304 1,260 1,259 1,278 1,498 1,707 1,819 1H17 2H17 1H18 1H17 2H17 1H18 Net interest income Other op. income
Slide 45: Risk Adjusted Margins & Returns
RISK ADJUSTED MARGINS & RETURNS GROUP NET INTEREST INCOME (NII) / AVG CRWA1 DIVISIONAL NII / AVG CRWA1 Aus. ~185bp % change due 7.71 RWA changes2 7.12 4.54% 4.59% 4.39% 4.52% 4.57% 6.14 6.02 6.03 4.79 4.72 4.78 4.87 5.11 1.94 2.04 2.07 2.13 2.21 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 Aus.
Slide 46: Net Interest Margin
NET INTEREST MARGIN GROUP TOTAL AUSTRALIA INSTITUTIONAL NEW ZEALAND (ex Markets) -3bp HoH impact from Major Bank Levy -4bp HoH impact -2.4bp HoH from Major Bank impact from 2.73% 2.73% 2.78% Levy Major Bank Levy 2.31% 2.37% 2.30% 2.23% 2.17% 2.14% 2.00% 1.98% 1.93% 1H17 2H17 1H18 1H17 2H17 1H18 1H17
Slide 47: Impacts of Rate Movements
I M PA C T S O F R AT E M O V E M E N T S BILLS / OIS SPREAD 90 DAY MOVING AVERAGE bp 100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bill / OIS 90 Day Moving Average LOWER RETURNS ON CAPITAL AND LOW RATE DEPOSITS % 8 7 6 5 4 3 2 1 0 Mar- Sep- Sep- S
Slide 48: Expenses: Drivers & Productivity
EXPENSES DRIVERS & PRODUCTIVITY EXPENSES ASIA RETAIL LEGACY COST REDUCTION PROFILE $m $m 4,480 16 350 52 On track to meet 275 FY18 reduction -75 4,411 -85 ~140 -62 -75 ~-50 Sep-16 FY17 Sep-17 FY18 FY19 Residual indirect costs (Post FY19) FULL TIME EQUIVALENT STAFF (FTE) # 46,046 44,896 42,873 -2,023
Slide 49: Expenses
EXPENSES EXPENSES BY CATEGORY EXPENSES BY DIVISION FTE BY DIVISION Continuing Operations Continuing Operations Full time equivalent staff # $m $m 4,487 4,480 4,411 4,487 4,480 4,411 50,152 Continuing operations basis1 48,896 126 136 123 2,821 2,622 46,554 701 334 280 146 816 721 2,562 44,015 371 5,5
Slide 50: Balance Sheet
BALANCE SHEET NET LOANS AND ADVANCES (BY DIVISION) $b $b 576 580 592 13 6 4 600 584 596 108 111 574 580 580 105 562 566 132 132 138 550 500 468 468 473 326 334 339 445 447 450 450 436 1H17 2H17 1H18 400 Australia Institutional NZ Other 350 300 CUSTOMER DEPOSITS (BY DIVISION) 250 $b 200 468 468 473 1
Slide 51: Balance Sheet
BALANCE SHEET Change $m Mar 17 Sep 17 Mar 18 Mar 18 vs Sep 17 Mar 18 vs Mar 17 TOTAL GROUP (Continuing Operations) Net Loans and Advances 576,304 580,293 591,948 2% 3% Customer Deposits 468,215 467,630 472,764 1% 1% Risk Weighted Assets 397,040 391,113 395,777 1% 0% CONSISTING OF Asia Retail & Wealt
Slide 52: Cost to Income & Return on Assets
COST TO INCOME & RETURN ON ASSETS RETURN ON ASSETS GROUP AUSTRALIA INSTITUTIONAL NEW ZEALAND % % % % 1.09 1.12 1.13 1.31 1.20 1.23 0.77 0.78 0.79 0.52 0.42 0.38 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1H18 COST TO INCOME GROUP AUSTRALIA INSTITUTIONAL NEW ZEALAND % % % % 45.0 45.5 45.0
Slide 53: Group Treasury
2018 FIRST HALF RESULTS GROUP TREASURY AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 54: Regulatory Capital
R E G U L AT O RY C A P I TA L CAPITAL UPDATE APRA COMMON EQUITY TIER 1 (CET1) Capital Position % APRA CET1 ratio of 11.0% is in excess of APRA’s ‘unquestionably strong’ benchmark1 and well ahead of 2020 implementation. Net Organic Capital Generation +72bps Internationally Comparable2 CET1 ratio
Slide 55: Regulatory Capital Generation
R E G U L AT O RY C A P I TA L G E N E R AT I O N First half Organic Capital Generation COMMON EQUITY TIER 1 average 1H18 GENERATION (bp) Net organic capital generation of +72bps is +15bps stronger 1H12 – 1H17 relative to the average of 1H12 to 1H15 (prior to Institutional Cash Profit1 97 86 portf
Slide 56: Internationally Comparable Regulatory Capital Position
I N T E R N AT I O N A L LY C O M PA R A B L E 1 R E G U L AT O RY C A P I TA L P O S I T I O N APRA Common Equity Tier 1 (CET1) – 31 March 2018 11.0% Corporate undrawn EAD and Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many 1.5% unsecured LGD adjustment
Slide 57: CET1 and Leverage in a Global Context
CET1 AND LEVERAGE IN A GLOBAL CONTEXT CET1 RATIOS1 LEVERAGE RATIOS1,2 5% 10% 15% 20% 25% 30% 3% 4% 5% 6% 7% 8% Swedbank DBS Svenska Handelsbanken Intesa Sanpaolo Nordea UOB SEB Danske Bank OCBC ABN Amro BBVA Morgan Stanley RBS ANZ Standard Chartered RBS Erste Bank Rabobank APRA Top Groupe BPCE ANZ q
Slide 58: Balance Sheet Structure
BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET SOURCES AND USES OF FUNDS Sep 17 to Mar 18 $814b $814b $b Term Funding<12mth, 2% Short Term Assets1 7% Short Term Program Debt SOURCES USES 8% 9.5 Short Term Funding Liquids 23% (inc. FI / Bank Deposits and Repo Funding), 19% 3.2 3.4 0.0 -11.4 Fixed Asset
Slide 59: Funding & Liquidity Metrics
FUNDING & LIQUIDITY METRICS NSFR COMPOSITION NSFR MOVEMENT Mar 2018 Sep 17 v Mar 18 $492b Wholesale $428b % Funding Liquids 0.8% 0.2% 114.9% & Other1 and 0.4% Non Financial Other Assets2 1.0% Corporates 113.9% Other Loans3 -0.2% Retail/SME -1.3% 0.0% Residential Mortgages4 <35% Capital Available Req
Slide 60: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 ISSUANCE MATURITIES $b 32 24 24 23 22 22 22 19 17 13 13 8 8 FY13 FY14 FY15 FY16 FY17 1H18 2H18 FY19 FY20 FY21 FY22 FY23 FY24+ Senior Unsecured Covered Bonds Tier 2 RMBS PORTFOLIO BY TYPE PORTFOLIO BY CURRENCY 8% 6% 1% 15% 22% 32% Senior Unsecured Domestic (AUD, NZD)
Slide 61: Risk Management
2018 FIRST HALF RESULTS RISK MANAGEMENT AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 62: Risk Management: Total & Collective Provision Charge
RISK MANAGEMENT TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE CP BALANCE BY DIVISION $m % $m 1,500 3,000 2,662 0.6 2,579 1,038 1,000 918 Mar18 vs Sep17 $m 720 695 0.4 2,000 510 479 Divisional mvt -102 500 408 0.2 FX impact +19 1,000 0 0.0 -500 -0.2 0 1H15 2H15 1H16 2H16 1H17 2H17 1
Slide 63: Risk Management: Individual Provision Charge
RISK MANAGEMENT INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL LOSS RATES EXPECTED LOSS bp Median IP Loss 300 % Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Rate = 32 bps 200 Australia Div. 0.35 0.33 0.33 0.33 0.31 New Zealand Div. 0.25 0.26 0.26 0.22 0.21 100 Institutional Div. 0.37 0.36 0.35 0.30 0.32 0 Ot
Slide 64: Risk Management: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 4,000 3,173 2,940 2,708 2,719 2,883 3,000 100 2,384 2,034 2,000 50 1,000 0 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Mar- Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 09 10 11 12 13 14 15 16 17 1
Slide 65: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b 409 6.0 0.1 402 1.2 395.8 397 391 396 388 39 391.1 -2.6 38 39 37 38 37 14 18 17 17 16 16 Sep 17 Credit RWA Op RWA IRRBB RWA Mkt. RWA Mar 18 CRWA MOVEMENT 350 352 342 337 343 334 $b 3.5 342.8 3.1 336.8 -0.1 -0.5
Slide 66: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS GROUP EAD1 & CRWAs GROUP EAD1 MOVEMENT $b MAR 18 v SEP 17 ($b) 930 903 889 894 899 903 21.0 930.2 903.1 10.1 -4.0 Sep 17 FX Impact Lending Mvmt. Data/Meth. Mar 18 Review GROUP EAD1 & CRWA GROWTH2 MOVEMENT 38.7% 39.4% 38.0% MAR 18 v SEP 17 ($b) 37.6% 37.3% 36.9% 1
Slide 67: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE INTERNAL EXPECTED LOSS (IEL) (as a % of Gross Lending Assets) Actions taken to improve risk profile: GROUP TOTAL (%) INSTITUTIONAL (%) 0.37 0.37 • Sold Asia Retail & Wealth businesses (IEL 151bp)1 0.35 0.35 0.32 0.30 • Sold Esanda Dealer Finance business (IEL 100bp)2
Slide 68: Portfolio Composition
RISK MANAGEMENT PORTFOLIO COMPOSITION Portfolio % of Portfolio in Category % of Group EAD Balance in Non Non Performing Performing EXPOSURE AT DEFAULT (EAD) AS A % Sep 17 Mar 18 Sep 17 Mar 18 Mar 18 OF GROUP TOTAL Consumer Lending 41.5% 40.5% 0.1% 0.1% $425m Finance, Investment & Insurance 17.2% 18.
Slide 69: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSUMER LENDING RETAIL TRADE WHOLESALE TRADE $b % $b $b % % 400 3.5 80 3.5 80 3.5 3.0 3.0 3.0 300 2.5 60 2.5 60 2.5 2.0 2.0 2.0 200 40 40 1.5 1.5 1.5 100 1.0 20 1.0 20 1.0 0.5 0.5 0.5 0 0.0 0 0.0 0 0.0 Sep-12 Sep-12 Sep-13 Sep-14 Sep-15 Sep-
Slide 70: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSTRUCTION MANUFACTURING AGRI, FORESTRY, FISHING $b % $b % $b % 80 3.5 80 3.5 80 3.5 3.0 3.0 3.0 60 2.5 60 2.5 60 2.5 2.0 2.0 2.0 40 40 40 1.5 1.5 1.5 20 1.0 20 1.0 20 1.0 0.5 0.5 0.5 0 0.0 0 0.0 0 0.0 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep
Slide 71: Group Resources Portfolio
RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR (%) Total EAD (Mar 18): $15.1b 9.4 As a % of Group EAD (Mar 18): 1.6% 8.3 7.2 7.6 4.5 4.6 4.4 3.7 2.6 3.0 2.4 1.8 1.4 1.4 1.0 1.1 1.1 0.9 0.9 1.2 Coal Mining Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining M
Slide 72: Commercial Property Portfolio
RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY COMMERCIAL PROPERTY OUSTANDINGS BY REGION1 SECTOR1 $b % % 100 38.4 37.9 37.7 37.6 37.4 37.5 37.5 8.0 80 3.9 3.6 2.7 2.4 3.0 4.5 4.7 60 7.5 40 8.8 9.5 9.5 9.7 9.7 8.3 8.4 20 7.0 Mar 17 Sep 17 Mar 18 Offices Retail Indus
Slide 73: Residential Development
RESIDENTIAL DEVELOPMENT COMMERCIAL PROPERTY EXPOSURE OVERVIEW PROFILE (Mar 18) Total Residential Limits: $9.7b • Overall Apartment Development limits have increased modestly by $0.06bn (2%) in the first half of 2018. 30% • Growth has been subdued as appetite tightening strategies have taken Apartmen
Slide 74: Group Agriculture Portfolio
RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) NEW ZEALAND1 DAIRY CREDIT QUALITY NZ$b FY17 PD decrease reflects subsequent impact of Total EAD (Mar 18) As a % of Group EAD milk price recovery which is continuing into 1H18. A$930b 3.8% 12.4 12.4 12.1 12.7 12.0 11.6
Slide 75: New Zealand Risk Management
RISK MANAGEMENT NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED NEW ZEALAND GEOGRAPHY TOTAL PROVISION ASSETS CHARGE1 NZ$m NZ$m % 1,451 200 105 2.5 103 99 150 955 2.0 97 70 100 44 30 40 708 1.5 22 31 46 50 19 50 419 491 1.0 368 360 0 0.5 -50 0.0 -100 -39 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Mar
Slide 76: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Mar 18): A$393b2 400 Finance (Banks and Central Banks) Government Admin. 27% 31% Property Services3 350 Services to Fin. & Ins. Basic Mat
Slide 77: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Mar 18): A$92b2 EAD (Mar 18): A$92b2 Finance (Banks & Central Banks) 7% 20% Basic Material Wholesaling 3% Machinery & Equip Mnfg 3% Petroleum,Coal,Chem & Assoc P
Slide 78: Housing Portfolio
2018 FIRST HALF RESULTS HOUSING PORTFOLIO AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 79: Australia Home Loans: Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio1 Flow2 Portfolio1 1H16 1H17 1H18 1H18 1H16 1H17 1H18 Number of Home Loan Average LVR at 976k 992k 1,017k 79k3 71% 70% 68% accounts Origination8,9,10 Total FUM1 $243b $256b $270b $31b Average Dynamic LVR9,10,11 51% 51% 51% Average Loan Size $249k $258
Slide 80: Australia Home Loans: Portfolio Growth
AUSTRALIA HOME LOANS PORTFOLIO GROWTH LOAN BALANCE & LENDING FLOWS1 HOME LOAN COMPOSITION $b $b Payment Owner Investor Equity Loan Total +6% Type Occupied 15 50 4 P&I Loan 146.2 44.0 - 190.2 270 255 -54 Interest Only 28.3 43.2 - 71.5 Equity Loan - - 8.7 8.7 Total 174.5 87.2 8.7 270.4 Mar 17 New Sale
Slide 81: Australia Division: Portfolio Dynamics
AUSTRALIA DIVISION PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE1,2 71% of accounts ahead of repayments % composition of accounts (March 18) Investment:5 Interest payments may receive negative gearing/tax benefits New Accounts: Less than 1 year old 26
Slide 82: Australia Division: Portfolio Performance
AUSTRALIA DIVISION PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES1 HOME LOAN DELINQUENCIES1,3 % % 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Sep Sep Sep Sep Sep Mar 12 12 13 13 14 14 15 15 16 16 17 17 18 12 13 14 15 16 17 18 Home Loans Person
Slide 83: Australia Home Loans: Areas of Interest
AUSTRALIA HOME LOANS AREAS OF INTEREST • Greater focus on Acquisition & Collection management strategies WA OUTSTANDING BALANCE have been applied $b • Exposure to WA has decreased since Mar-16 driven by the 40 economic environment and credit policy tightening (mining town lending, etc) 35 • Currentl
Slide 84: Australia Home Loans: Interest Only
AUSTRALIA HOME LOANS INTEREST ONLY (IO) INTEREST ONLY FLOW COMPOSITION1 • Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan % • 81% of IO customers have net income >$100k pa. (portfolio APRA’s 30% limit introduced March 2
Slide 85: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Pre – application2 Income & Expenses • Effective hardship & collections processes • Full recourse lending Application Know Your Custo
Slide 86: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 ANZ Policy changes Jun'15 LVR cap reduced to 70% in high risk mining towns Jul'15 LVR cap reduced to 90% for investment loans Aug’15 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Apr’16 Introductio
Slide 87: Stress Testing the Australian Mortgage Portfolio
AUSTRALIAN HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO ANZ conducts regular stress tests of its loan portfolios to Assumptions Current Year 1 Year 2 Year 3 meet risk management objectives and satisfy regulatory requirements. Unemployment 5.5% 9.0% 10.5% 11.5% rate Stress tests ar
Slide 88: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE ANZLMI HAS MAINTAINED STABLE LOSS RATIOS MARCH HALF YEAR 2018 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 31 Mar 2018 (% New Business FUM Oct-17 to Mar-18) Gross Written Premium ($m) $81.4m LVR<80% Not Net Claims Paid
Slide 89: New Zealand Mortgages: Portfolio Overview
NEW ZEALAND MORTGAGES PORTFOLIO OVERVIEW 1 Portfolio Growth Portfolio Growth 1H18 v 1H17 1H18 1H18 v 1H17 1H17 1H18 1H17 Number of Home Loan accounts 515k 523k 1.6% Average LVR at Origination2 59% 58% -126bps Total FUM NZ$75b NZ$79b 4.7% Average Loan Size at Origination2 NZ$295k NZ$274k -6.9% Averag
Slide 90: New Zealand Home Lending
NEW ZEALAND HOME LENDING1 FLOW2 PORTFOLIO PORTFOLIO 11% 10% 6% 5% 22% 20% 21% 21% 38% 41% 11% 11% 7% 7% 10% 10% 78% 80% 51% 49% 45% 46% 1H17 1H18 1H17 1H18 1H17 1H18 Branch Broker Mobile mortgage managers Fixed Variable Auckland Christchurch Other Nth Is. Wellington Other Sth Is. Other³ MARKET SHARE
Slide 91: Divisional Performance
2018 FIRST HALF RESULTS DIVISIONAL PERFORMANCE AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 92: Financials: Divisional Contribution
FINANCIALS DIVISIONAL CONTRIBUTION Group Australia Institutional New Zealand REVENUE CONTRIBUTION1 Total Division Division Division Other $m 9,976 9,840 9,808 Other 693 886 785 1H18 v 1H17 -1.7% +4.6% -16.7% AUD: +2.5% +13.3% NZ Div 1,577 NZD: +5.7% 1,595 1,616 Institutional 3,055 2,575 2,544 1H18 v
Slide 93: Financials: Divisional Contribution
FINANCIALS DIVISIONAL CONTRIBUTION Group Australia Institutional New Zealand PROFIT BEFORE PROVISIONS1 Total Division Division Division Other $m 5,489 5,360 5,397 977 104 144 NZ Div -1.7% +2.3% -28.2% AUD: +5.2% +239.8% 1,002 1,028 1H18 v 1H17 NZD: +8.6% Institutional 1,633 1,183 1,173 +0.7% -0.6% -
Slide 94: Australia Division: Financial Performance
AUSTRALIA DIVISION FINANCIAL PERFORMANCE REVENUE EXPENSES TOTAL PROVISIONS $m $m $m 4,863 1,708 1,713 1,812 4,602 4,638 4,651 4,784 1,681 1,669 458 454 468 417 36.5% 36.8% 35.9% 35.8% 37.3% 46 49 60 57 312 325 335 337 344 350 177 192 204 169 62 126 235 213 204 191 124 1H16 2H16 1H17 2H17 1H18 1H16 2
Slide 95: Australia Division: Priorities
AUSTRALIA DIVISION PRIORITIES MOVEMENTS PRIORITIES ACTIONS METRICS FY15 FY16 FY17 1H18 Simplified products # Products decommissioned <10 <10 47 63 Optimised branch footprint # Branches 751 724 684 658 Create a simpler, better More digital branches # Digital branches 5 40 81 99 capitalised, better ba
Slide 96: Australia Division: Delivering Sustainable Results
AUSTRALIA DIVISION DELIVERING SUSTAINABLE RESULTS CONSISTENT GROWTH SUSTAINABLE RETURNS $b $m 326 334 339 1,915 311 316 1,857 1,725 1,739 1,759 188 198 201 204 184 2.81% 2.78% 2.78% 2.73% 2.73% Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 1H16 2H16 1H17 2H17 1H18 NLA Deposits NIM (%) Cash Profit MANAGING OUR
Slide 97: Australia Division: Expenses
AUSTRALIA DIVISION EXPENSES 90 1,812 $m 49 4 1,669 ‘Other’ expense growth solely driven by: Group technology support Asia Retail indirect cost reallocation Investment spend 1H17 Restructuring Personnel & Inflation Other 1H18 Restructuring increase largely relating to Agile ways of working AGILE WAYS
Slide 98: Australia Division: Retail
AUSTRALIA DIVISION RETAIL CONSISTENT GROWTH GROWING IN OUR PRIORITY SEGMENTS $b Retail FUM ($b) , PCP growth (%) $282b NLA $121b Deposits $14b Transact 267 275 282 254 258 P&I +24% +7% I/O -22% $27b Offsets +7% $271b $31b 109 112 117 119 121 Term Deposit OO +10% +4% Inv +1% $49b Savings ~flat $11b M
Slide 99: Australia Division: Business and Private Bank
AUSTRALIA DIVISION BUSINESS AND PRIVATE BANK MANAGING RISK BALANCED GROWTH % $b 1.51% 1.46% 1.46% 1.42% 1.35% 80 82 83 75 76 0.74% 57 58 58 58 58 0.72% 0.64% 0.60% 0.47% 1H16 2H16 1H17 2H17 1H18 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 GIA as a % of GLA IP Loss Rate (annualised) NLA Deposits IMPROVING CRW
Slide 100: Australia Division: Digital
AUSTRALIA DIVISION DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES PEOPLE AND CUSTOMERS 3.6m Industry leading mobile payment services ANZ continues to lead the banking sector with its mobile payment 3.4m 3.3m services delivering more options for customers than any o
Slide 101: Institutional: Creating a Platform for Profitable Growth
INSTITUTIONAL CREATING A PLATFORM FOR PROFITABLE GROWTH $49bn (24%) RWA reduction and ~5,000 client exits SIMPLIFY AND in FY16-17 RIGHT SIZE THE BUSINESS Rebalanced portfolio toward home markets (from 56% to 62% in FY16-17)1 and higher returning products DRIVE PROFITABLE Leading market positio
Slide 102: Institutional: Leading Market Positions
INSTITUTIONAL MAINTAINED OUR LEADING MARKET POSITIONS ACROSS OUR KEY GEOGRAPHIES AUSTRALIA NEW ZEALAND ASIA #1 Lead Bank Penetration1 #1 Lead Bank Penetration1 Top 4 Corporate Bank2 31% 46% 58% #1 Overall 26% Quality 47% 24% 24% 45% 28% = #4 33% 25% 9% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank
Slide 103: Institutional: Profitable Customer Revenue Growth
INSTITUTIONAL PROFITABLE CUSTOMER REVENUE GROWTH AND CONTINUED ABSOLUTE COST REDUCTION, DESPITE MAJOR BANK LEVY AND ASIA RETAIL HEADWINDS REVENUE1 EXPENSES1 TOTAL PROVISION CHARGES $m $m $m -17% -1% -4% -2% 3,055 2,575 2,544 1,422 129 1,392 1,371 2,146 54% 54% 49 2,009 2,038 47% -32 -77 1H17 2H17 1H
Slide 104: Institutional: Excluding Major Bank Levy
INSTITUTIONAL EXCLUDING MAJOR BANK LEVY, ALL BUSINESSES PERFORMING WELL REVENUE CONTRIBUTION1,2 AVERAGE CREDIT RWA $m $b -17% -1% 3,055 -9% -2% 2,575 2,544 150 139 136 1,364 18 Driven primarily by 18 18 1,005 957 Derivative Valuation Adjustments 221 223 211 95 86 84 576 580 582 837 755 808 37 35 34
Slide 105: Institutional: Markets Income
INSTITUTIONAL MARKETS INCOME INCOME CONTRIBUTION1 MARKETS AVERAGE VALUE AT RISK (99% VAR) $m $m 50 -30% -5% 40 1,364 30 20 10 483 0 1,005 1H17 2H17 1H18 957 Traded market risk (LHS) Non-traded interest rate risk (LHS) 451 363 439 VOLATILITY Indexes: rebased to 100 (1H17) 100 209 212 356 90 278 295 8
Slide 106: Institutional: Volume Growth and Risk Adjusted Margins
INSTITUTIONAL VOLUME GROWTH AND HIGHER RISK ADJUSTED MARGINS DRIVING IMPROVED RETURNS VOLUMES1 NIM BY REGION (EXCLUDING MAJOR BANK LEVY)3 $b bps 108 103 107 92 94 95 251 250 254 162 177 172 173 223 221 222 146 145 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H17 1
Slide 107: Institutional: Absolute Cost Reduction
INSTITUTIONAL FOURTH CONSECUTIVE HALF OF ABSOLUTE COST REDUCTION, DESPITE ASIA RETAIL HEADWINDS EXPENSE CONTRIBUTION FTE $m -6% -4% -4% -2% 6,950 6,783 6,505 1,422 1,392 2,462 1,371 2,424 2,353 365 353 366 3,025 2,932 2,775 662 687 655 1,098 1,074 1,011 Mar 17 Sep 17 Mar 18 86 Aus & PNG NZ Internati
Slide 108: Institutional: Improved Portfolio Quality
INSTITUTIONAL IMPROVED PORTFOLIO QUALITY AND BENIGN CREDIT ENVIRONMENT EXPOSURE-AT-DEFAULT1 GROSS IMPAIRED ASSETS NEW IMPAIRED ASSETS $b $m $m +6% +6% -45% -17% -79% -64% 383 380 404 1,143 599 19% 17% 16% 465 757 626 347 58 444 84% 451 303 81% 83% 190 620 31 124 37% 35% 35% 94 14 4 275 229 141 153 4
Slide 109: New Zealand: Financial Performance
NEW ZEALAND FINANCIAL PERFORMANCE1 REVENUE EXPENSES TOTAL PROVISIONS NZDm NZDm NZDm 676 83 1,765 639 636 635 642 1,648 1,672 1,670 1,711 511 517 529 554 495 38.8% 40.4% 38.1% 46 37.1% 36.4% 44 39 22 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 Revenue Revenue/Avg FTE ($
Slide 110: New Zealand Division: Strategic Focus
NEW ZEALAND DIVISION PRIORITIES PRIORITIES ACTIONS METRICS MAR 16 MAR 17 MAR 18 Brand Consideration1 45.8% 51.6% 52.1% Grow customer Migrant Banking Brand Consideration1 65.3% 72.3% 72.3% #1 in service satisfaction and brand consideration Retail Net Promoter Score2 0.1 9.9 15.9 KiwiSaver Provider3 2
Slide 111: New Zealand: Simpler, Better Balanced Bank
NEW ZEALAND STRATEGIC FOCUS – SIMPLER, BETTER BALANCED BANK BALANCE SHEET1 PROFITABILITY & MARGIN2 NZDb Focus on customer deposit growth NZDm encouraging New Zealanders to save 27.4 26.7 700 793 25.4 717 2.37% 2.39% 117.5 123.0 126.2 2.30% 90.1 96.3 100.8 Mar 16 Mar 17 Mar 18 1H16 1H17 1H18 Funding
Slide 112: New Zealand: Strategic Focus - #1 in Service
NEW ZEALAND STRATEGIC FOCUS – # 1 IN SERVICE NET CUSTOMER GROWTH BRAND CONSIDERATION1 New Zealand Division (‘000) #2 #1 #1 37 51.6% 52.1% 31 30 45.8% 1H16 1H17 1H18 Mar 16 Mar 17 Mar 18 Net Retail acquisition (new less defection) ANZ brand consideration RETAIL NET PROMOTER SCORE2 BRAND CONSIDERATION
Slide 113: New Zealand: Environment
NEW ZEALAND ENVIRONMENT GDP1 INFLATION2 Annual average % change % 3.0 4.0% 3.5% 2.5 2.9% 3.0% 3.0% 2.0 2.5% 1.5 1.0 0.5 0.0 2015 2016 2017 2018F 2019F 2020F Mar Sep Mar Sep Mar Sep Mar 15 15 16 16 17 17 18 Inflation expectations Actual CPI HOUSE PRICES3 CONSUMER CONFIDENCE4 Annual % change (3 month
Slide 114: New Zealand: Retail
NEW ZEALAND RETAIL MARKET SHARE • Maintained our leading position in core banking products to support our vision of helping more Kiwis succeed • Focus on well managed sustainable growth means our deposit growth has exceeded that of lending Mortgages1 30.9% • Maintained our #1 market share position w
Slide 115: New Zealand: Commercial
NEW ZEALAND COMMERCIAL COMMERICAL AND AGRI PORTFOLIO (GLA) 1 AGRI PORTFOLIO (GLA)2 NZDb Dairy as a % of total NZ Geography 26% 12.4% 11.9% 11.7% 10.9% 10.0% 9.7% 25 20 Agri 15 50% Property 10 6% Wholesale & Retail Trade 5 3% Manufacturing 0 3% Entertainment, Leisure FY13 FY14 FY15 FY16 FY17 1H18 & T
Slide 116: New Zealand: Digital
NEW ZEALAND DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES PEOPLE AND CUSTOMERS +187k 1.4m 1.4m Delivering more customer functionality more often with 1.3m automated weekly no outage releases digitally active customers 1.2m 1H16 1H17 1H18 Enhancing the home loan cu
Slide 117: New Zealand Geography
NEW ZEALAND GEOGRAPHY CASH PROFIT PROFIT BEFORE PROVISIONS NZDm 1H17 2H17 1H18 1,330 1,301 1,370 NZDm NZDm NZDm Income 2,048 2,029 2,048 2,029 2,107 2,107 Net interest 1,534 1,544 1,572 -718 -728 -737 Other income 514 485 535 1H17 2H17 1H18 Expenses 718 728 737 Revenue Expenses PBP 1,330 1,301 1,370
Slide 118: Wealth Australia: Continuing and Divested Businesses
W E A LT H A U S T R A L I A OVERVIEW OF CONTINUING AND DIVESTED BUSINESSES CONTINUING OPERATIONS DIVESTED BUSINESSES ANZ Wealth Australia One Path Life (OPL) One Path Pensions & Investments (P&I) Advised Life (incl. OneCare) Lender’s Mortgage Insurance Direct Life Insurance Distribution of general
Slide 119: Wealth Australia: Continuing Business
W E A LT H A U S T R A L I A CONTINUING BUSINESS SUMMARY OF BUSINESSES RETAINED FINANCIAL PERFORMANCE ANZ will retain the following businesses within Australia Decline due to: Division post completion: • Non-recurring LMI reinsurance profit share benefit included in 1H17 result and strengthening of
Slide 120: Wealth Australia: Divested P&I and ADG
W E A LT H A U S T R A L I A DIVESTED BUSINESSES - PENSIONS AND INVESTMENTS (P&I) AND ALIGNED DEALER GROUPS (ADG) FINANCIAL PERFORMANCE GROSS MARGIN2 • Prepared on a standalone pro forma basis 1 and excludes ANZ $m Group consolidation adjustments 74.9% 75.8% • Is not comparable with financial perfor
Slide 121: Wealth Australia: P&I FUM and Flows
W E A LT H A U S T R A L I A DIVESTED BUSINESSES – P&I FUM AND FLOWS INFLOWS AND OUTFLOWS BY SOLUTION 1H18 NETFLOWS BY SOLUTION $b $m Open solutions Closed solutions 1H17 2H17 1H18 Inflows Outflows Inflows Outflows Inflows Outflows 321 Open solutions 2.3 (1.8) 2.6 (2.1) 2.1 (2.0) ANZ Smart Choice 1.
Slide 122: Economics
2018 FIRST HALF RESULTS ECONOMICS AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED
Slide 123: Australia Forecast Table
ECONOMICS AUSTRALIA FORECAST TABLE 2014 2015 2016 2017 2018 2019 Australia – annual % growth GDP 2.6 2.5 2.6 2.2 2.8 3.1 Domestic final demand 0.9 1.2 1.9 2.9 2.6 2.2 Headline CPI 2.5 1.5 1.3 1.9 2.2 2.1 Core CPI 2.6 2.2 1.5 1.8 1.9 2.0 Employment 0.7 2.0 1.7 2.2 2.6 2.2 Wages 2.6 2.2 2.0 2.0 2.2 2.
Slide 124: Global & Asia Forecast Tables
ECONOMICS GLOBAL & ASIA FORECAST TABLES GROSS DOMESTIC PRODUCT (YEAR-AVERAGE % CHANGE) 1998-2007 average 2008-2016 average 2017 2018F 2019F United States 3.1 1.1 2.3 2.6 2.1 Euro area 2.4 0.0 2.3 2.4 2.0 United Kingdom 2.9 0.1 1.7 1.4 1.6 Japan 1.0 0.2 1.7 1.2 1.0 China 10.0 8.9 6.9 6.5 6.3 Korea 4.
Slide 125: Further Information
Further Information DISCLAIMER & IMPORTANT NOTICE: 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 upo
Australia and New Zealand Banking Group — H1 2018 Earnings Presentation on 6ix