Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Debt Investor Presentation (2020)
105 slides from Anz's debt investor presentation, 2020
Slide 1: 2020 Full Year Results Debt Investor Update
2020 FULL YEAR RESULTS FULL YEAR ENDED 30 SEPTEMBER 2020 DEBT INVESTOR UPDATE AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522
Slide 2: Contents
CONTENTS 2020 FULL YEAR RESULTS CEO and CFO Results Presentations 2 CEO Presentation 2 CFO Presentation 7 Treasury 28 Customer Support (COVID-19) 40 Risk Management 51 Housing Portfolio 68 Corporate Overview and Environment, Social & Governance (ESG) 79 Carbon Policy 85 Economics 92 All figures with
Slide 3: CEO Presentation: Shayne Elliott
2020 FULL YEAR RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER
Slide 4: Financial Snapshot
FINANCIAL SNAPSHOT FY20 FY20 v FY19 Statutory Profit ($m) 3,577 -40% Cash Profit (Continuing operations)1 ($m) 3,758 -42% Return on Equity (%) 6.2 -471bps Earnings Per Share (cents) 132.7 -42% Cash Profit (Continuing operations) ex. large / notable items ($m) 5,297 -21% Dividend Per Share (cents) 60
Slide 5: Well Prepared for the Environment
WELL PREPARED FOR THE ENVIRONMENT CET1 AND ADDITIONAL BUFFERS 58bps ($2.5b) increase in capital (CET1) in 2H20 $64b Capacity to generate future profit ~$10b PBP illustrative based on FY207 174bps CET1 capital generated from PBP in FY204 $49b CP Balance $5b Mgmt Buffer $1.6b increase in CP balance in
Slide 6: Record Level of Investment
RECORD LEVEL OF INVESTMENT TOTAL INVESTMENT SPEND1 CAPITALISED SOFTWARE BALANCE2 $b $b 1.77 3 24% 1.40 1.18 1.22 1.15 30% 2 35% 42% 41% 76% 1 70% 59% 65% 58% 0 FY16 FY17 FY18 FY19 FY20 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- 08 10 12 14 16 18 19 20 Investment Expensed Investment Capitalised ANZ Peer
Slide 7: Customer Behaviour
CUSTOMER BEHAVIOUR CUSTOMER DEPOSITS OFFSET ACCOUNTS - AUSTRALIA Retail & Commercial $b $b 329 308 295 33 27 28 Sep-19 Mar-20 Sep-20 CREDIT CARDS – AUSTRALIA & NEW ZEALAND $b 8 8 6 Sep-19 Mar-20 Sep-20 Sep-19 Mar-20 Sep-20 6
Slide 8: CFO Presentation: Michelle Jablko
2020 FULL YEAR RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER
Slide 9: Overview
OVERVIEW CASH PROFIT CONTINUING OPERATIONS CASH PROFIT1 CASH EPS1 ROE1 CET1 RATIO (LEVEL 2) $m cents % % 6,809 6,487 6,470 233 11.7 11.4 11.4 11.3 223 228 11.0 10.9 10.6 3,758 133 6.2 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Sep-17 Sep-18 Sep-19 Sep-20 1. FY17 has not been restate
Slide 10: Liquidity & Funding
LIQUIDITY & FUNDING CUSTOMER DEPOSITS LIQUIDITY COVERAGE RATIO NET STABLE FUNDING RATIO End of period $b Average End of period 567 143% 552 137% 139% 139% 512 124% 493 115% 116% 118% 259 223 100% 100% 217 205 Regulatory Regulatory Minimum Minimum 308 329 288 295 Mar-19 Sep-19 Mar-20 Sep-20 1H19 2H19
Slide 11: Capital
CAPITAL CET1 RATIO (APRA LEVEL 2) % Pro-Forma CET1 ratio3 0.4 Credit impacts 29bps 0.8 0.1 ~11.4 11.4 -0.2 -0.2 0.0 -0.1 11.2 -0.1 -0.1 11.3 10.8 Sep-19 Mar-20 Profit before Underlying Market Risk Credit Net DTA Risk Asset Other2 Interim Sep-20 Sep-20 provisions business & IRRBB impairment on CIC Mi
Slide 12: Financial Performance
FINANCIAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS GROUP PROFIT DRIVERS CONTINUING OPERATIONS EX L/N FY20 v FY19 $m PBP NPAT 6,470 Total Group ex Large / Notable -1% -21% Divisional performance Australia Retail & Commercial -7% -26% -1,308 -14 Institutional +29% +4% -87 New Zealand Division (NZ
Slide 13: Net Interest Margin
NET INTEREST MARGIN CONTINUING OPERATIONS GROUP NET INTEREST MARGIN (NIM) bps 169 -6 2 159 0 -3 157 -2 -1 -2 -10bps -12bps 1H20 Impact of rates Asset & Liquidity Wholesale Asset pricing 2H20 Markets Large / 2H20 net of repricing deposit mix funding & underlying1 Balance Sheet Notable items deposit p
Slide 14: Margin Considerations
MARGIN CONSIDERATIONS LOW RATE ENVIRONMENT CONSIDERATIONS $b ~234 • Continued impact of low rates on replicating ~203 ~55 portfolio ~163 ~53 ~53 ~179 • Central bank actions ~150 ~110 Sep-19 Mar-20 Sep-20 • Changes in business and deposit mix Low rate deposits <25bps Capital (excluding intangibles) a
Slide 15: Expenses
EXPENSES CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS EXPENSE DRIVERS $m BAU costs down $281m (absorbing inflation of $128m) 321 8,614 47 8,574 8,527 -172 -42 -26 -41 flat +1% FY19 FX FY19 Personnel Premises Technology Other Investment FY20 FX adjusted 14
Slide 16: Investment Spend
INVESTMENT SPEND CONTINUING OPERATIONS EXPENSED & CAPITALISED BY CATEGORY $m $m 939 939 825 833 833 115 24% 825 62 85 95 24% 32% 119 75 578 151 578 33 163 186 27% 77 132 78 94 76% 111 86 76% 68% 35 93 78 73% 66 360 310 315 255 1H19 2H19 1H20 2H20 1H19 2H19 1H20 2H20 Investment Expensed Investment Ca
Slide 17: Provision Charge & Balance
PROVISION CHARGE & BALANCE CONTINUING OPERATIONS TOTAL PROVISION CHARGE COLLECTIVE PROVISION BALANCE $m $m 5,008 1,674 80 4,501 570 50 541 3,378 3,376 1,513 43 38 1,048 1,064 369 374 1,590 1,132 1,169 669 393 402 2,845 13 4 2,320 626 1,834 1,795 380 398 395 1H19 2H19 1H20 2H20 Mar-19 Sep-19 Mar-20 S
Slide 18: Capital & Dividends
CAPITAL & DIVIDENDS IMPACT OF CREDIT PORTFOLIO MIGRATION RWA IMPACT ON CAPITAL PREVIOUS EXPECTATION1 CURRENT EXPECTATION Base case Base case Downside Total CET1 impact (FY20 & FY21) ~110bps ~65bps ~100bps - FY20 CET1 (actual) 18bps 18bps - FY21 CET1 ~50bps ~82bps Drivers of CET1 impact2 - Institutio
Slide 19: Large / Notable Items
LARGE / NOTABLE ITEMS $m FY19 FY20 1H20 2H20 TOTAL -231 -1,539 -1,011 -528 Divestments 308 23 27 -4 Gain/(Loss) on sale from divestments 205 -34 -34 Divested business results 103 57 27 30 Customer remediation -475 -279 -91 -188 Restructuring -54 -115 -74 -41 Accelerated software amortisation -138 -1
Slide 20: Expense Management
EXPENSE MANAGEMENT CONTINUING OPERATIONS TOTAL EXPENSES BY DIVISION TOTAL EXPENSES BY CATEGORY FULL TIME EQUIVALENT STAFF $b $b 000s Continuing Continuing ex L/N Continuing Continuing ex L/N Continuing +3% +1% +3% +1% 0% 9.4 9.4 8.5 8.6 9.1 9.4 9.4 8.5 8.6 37.9 37.6 37.5 9.1 1.1 1.2 1.3 1.0 1.1 1.1
Slide 21: Customer Remediation
CUSTOMER REMEDIATION CUSTOMER REMEDIATION CUMULATIVE CUSTOMER REMEDIATION CONTINUING OPERATIONS CONTINUING & DISCONTINUED OPERATIONS 2,088 PRE TAX $m PRE TAX $m 1,832 1,579 548 485 546 422 928 753 181 256 1,540 119 1,157 1,286 153 220 672 51 572 352 29 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 86 1,59
Slide 22: Investments in Associates
INVESTMENTS IN ASSOCIATES SHARE OF ASSOCIATES’ PROFIT $m $223m excl. large / 800 625 notable items 600 482 517 541 465 433 436 395 400 300 262 183 155 200 0 -200 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Bank of Tianjin (BOT) Shanghai Rural Commercial Bank (SRCB) Other3 P.T. Bank P
Slide 23: Australia Retail & Commercial
AUSTRALIA RETAIL & COMMERCIAL FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Balance sheet Income Expenses / FTE Credit Quality / RWAs Profit and Returns NLAs1 ($b) & NIM NII/OOI2 contribution ($m) Expenses ($m) Total Provisions ($m) Cash Profit ($m) FY19 FY20 FY19 FY20
Slide 24: Institutional
INSTITUTIONAL FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Balance sheet Income Expenses / FTE Credit Quality / RWAs Profit and Returns NLAs1 ($b) & NIM Customer & Non-customer ($m) Expenses ($m) Total Provisions ($m) Cash Profit ($m) FY19 FY20 FY19 FY20 FY19 FY20 FY1
Slide 25: Institutional
INSTITUTIONAL CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS INSTITUTIONAL INCOME COMPOSITION1 NET LOANS & ADVANCES1,2 $m $m 190 152 162 158 3,060 2,791 122 2,657 107 109 111 2,541 20 18 19 14 1,508 26 34 48 32 940 1,164 0 0 0 0 826 Mar-19 Sep-19 Mar-20 Sep-20 CF Transaction Banking Markets O
Slide 26: Institutional: Markets
INSTITUTIONAL CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS MARKETS INCOME COMPOSITION DRIVERS OF FRANCHISE TRADING REVENUE GROWTH $m 1,508 1. Customer-led revenue growth resulting from supporting customer hedging activity, while the market was trading at wider bid-offer spreads 131 2. Reven
Slide 27: New Zealand Division
NEW ZEALAND DIVISION FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Balance sheet Income Expenses / FTE Credit Quality / RWAs Profit and Returns NLAs1 (NZDb) & NIM NII/OOI2 contribution (NZDm) Expenses (NZDm) Total Provisions (NZDm) Cash Profit (NZDm) FY19 FY20 FY19 FY2
Slide 28: New Zealand Geography
NEW ZEALAND GEOGRAPHY PROFIT & LOSS / BALANCE SHEET DEPOSITS & WHOLESALE FUNDING Half Year Full Year NZDb Sep-20 NZDm 1H20 2H20 FY19 FY20 TOTAL DEPOSITS 120.9 Operating Income 2,057 1,992 4,326 4,049 Retail & Commercial (New Zealand Division) 98.3 Term deposits 41.4 Net Interest Income 1,581 1,648 3
Slide 29: Treasury
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK TREASURY
Slide 30: Regulatory Capital
REGULATORY CAPITAL CAPITAL UPDATE Level 2 CET1 ratio of 11.3% (~11.4% pro-forma) and 16.7% on an Internationally Comparable basis1), which is well in excess of ‘Unquestionably Strong’ benchmark2 APRA LEVEL 2 COMMON EQUITY TIER 1 RATIO (CET1) Credit impacts of -29bps for the half; % Comprises $
Slide 31: Regulatory Capital
REGULATORY CAPITAL APRA LEVEL 1 CET1 RATIO % Level 2: Level 2: APRA LEVEL 2 VS LEVEL 1 CET1 RATIOS Bps 10.76 11.34 11.35 0.71 Level 2 HoH mvmt 58 0.14 0.14 11.20 Level 1 HoH mvmt 56 -0.16 -0.04 Level 2 vs Level 1 Mvmt 2 -0.07 -0.16 Explained by Cash Profit1 10 Total impact of -27bps Asset Divestment
Slide 32: Internationally Comparable Regulatory Capital Position
INTERNATIONALLY COMPARABLE1 REGULATORY CAPITAL POSITION APRA Level 2 CET1 Ratio– 30 September 2020 11.3% Level 2 CET1 Ratio Corporate undrawn EAD Australian ADI unsecured corporate lending LGDs and undrawn and unsecured CCFs exceed those applied in many jurisdictions 1.7% % LGD adjustments Equity AP
Slide 33: CET1 and Leverage in a Global Context
CET1 AND LEVERAGE IN A GLOBAL CONTEXT CET1 RATIOS1,2 LEVERAGE RATIOS1,2,3 0% 5% 10% 15% 20% 25% 0% 1% 2% 3% 4% 5% 6% 7% 8% SEB OCBC Svenska Handelsbanken Swedbank UOB ABN Amro Intesa Sanpaolo CET1 Danske Bank DBS Regulators globally have ANZ Erste Bank Leverage provided specific COVID-19 Rabobank
Slide 34: Balance Sheet Structure
BALANCE SHEET STRUCTURE1 BALANCE SHEET COMPOSITION NSFR COMPOSITION ~$106b surplus of ASF above Sep-20 Sep-20 regulatory minimum $b 551 Wholesale Funding & Other4 445 Non Financial Liquids Short Term Wholesale Debt & Corporates and Other Assets5 Other Funding2 Liquid and Other Assets 23% (-5% HoH) O
Slide 35: Liquidity Coverage Ratio (LCR) Summary
LIQUIDITY COVERAGE RATIO (LCR) SUMMARY1 LCR COMPOSITION (AVERAGE) MOVEMENT IN AVERAGE LCR SURPLUS4 ($b) FY20 $b 214 Internal RMBS Other ALA2 FY19 FY20 HQLA2 Avg. LCR 140% Avg. LCR 139% 34 -2 154 0 -11 60 Wholesale funding 54 -6 HQLA1 -9 Customer deposits & other3 Liquid Assets Net Cash Outflow FY19
Slide 36: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 • ANZ’s term funding requirements depend on market conditions, balance sheet needs and exchange rates, amongst other factors • RBA Term Funding Facility (TFF) Initial Allocation of $12b fully drawn in 2H20. Remaining TFF comprises Supplementary and Additional Alloca
Slide 37: ANZ's Tier 2 Capital Profile
ANZ’S TIER 2 CAPITAL PROFILE1 ANZ’S TIER 2 CAPITAL REQUIREMENT TO PROGRESSIVELY TIER 2 CAPITAL INCREASE TO MEET TLAC REQUIREMENT Notional amount • Issued AUD $7.0b since July 2019 across AUD, EUR, and USD By Format By Currency • FY21 T2 issuance expected to be ~$4-5b • Required portfolio increase fr
Slide 38: Impacts of Rate Movements
IMPACTS OF RATE MOVEMENTS BILLS/OIS SPREAD CAPITAL & REPLICATING CAPITAL2 & REPLICATING DEPOSITS PORTFOLIO DEPOSITS PORTFOLIO bps (AUSTRALIA) % 50 3.0 45 AUST NZ APEA 40 2.5 35 Volume ($A) ~75b ~27b ~10b 30 2.0 25 Volume change (YoY) ~15b increase ~7b increase Flat 20 1.5 15 Target Duration Rolling
Slide 39: Capital Framework
CAPITAL FRAMEWORK CURRENT REGULATORY PROPOSALS AND RECENT REVISED IMPLEMENTATION DATES1 Original Revised 2019 1H20 2H20 1H21 2H21 Implementation Implementation Date Date RBNZ Capital Framework Finalise 2027 20282 Leverage ratio Finalise 2022 2023 Standardised Approach to Consultation Consultation /
Slide 40: Liquidity and Funding Environment
LIQUIDITY AND FUNDING ENVIRONMENT CURRENT EXCESS LIQUIDITY IS LIKELY TO PERSIST DECLINING FUNDING GAP1 ACROSS AUSTRALIAN SYSTEM $b • Large increase in deposits in 2H20 led to a significant Funding Gap 1 750 reduction (10x higher than a full year during the GFC) across the Australian system 700 • In
Slide 41: Customer Support (COVID-19)
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK CUSTOMER SUPPORT (COVID-19)
Slide 42: Overview
OVERVIEW AUSTRALIA & NZ HOME LOAN AND AUSTRALIA BUSINESS LOAN PORTFOLIO & ACTIVE LOAN DEFERRALS Total ANZ Total active ACTIVE LOAN DEFERRALS1 Portfolio deferrals1 End of month net position (30 Sep-20) (15 Oct-20) Account numbers (000s) Home loans – Australia 125 124 124 Total number of home loans 1,
Slide 43: COVID-19 Customer Support: Australia Home Loan Deferrals
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – HOME LOAN DEFERRALS PORTFOLIO SUMMARY Accounts DEFERRAL ROLL-OFF SUMMARY 1,008k ACTIVE LOAN DEFERRALS1 ~55k loans have completed / exited the 6 month deferral period or advised intended action as at 15 End of month net position October 2020 Accounts (00
Slide 44: COVID-19 Customer Support: Home Loan Deferral Metrics
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – HOME LOAN DEFERRAL METRICS1 Loan repayment deferrals Total AUS. Total Active deferrals Home Loan Of the current ~40k active 6 month loan deferrals: Portfolio 31 Jul 2020 15 Oct 2020 (30 Sep 2020) • ~ 25% have made at least one payment while on deferral
Slide 45: Home Loan Deferrals Portfolio Profiles
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – HOME LOAN DEFERRALS – PORTFOLIO PROFILES REPAYMENT PROFILE LOAN PURPOSE (% of accounts) (% of accounts)3,4 1,008k ~40k1 ~11k accounts accounts accounts 7% 3% 5% 9% 0% 0% 29% 25% 26% 93% 97% 95% 65% 71% 75% Total housing portfolio Initial 6 month deferra
Slide 46: Commercial Business Loan Deferrals
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – COMMERCIAL BUSINESS LOAN DEFERRALS PORTFOLIO SUMMARY Accounts DEFERRAL ROLL-OFF SUMMARY4 236k ACTIVE LOAN DEFERRALS1 $6.8b loans (~15k accounts) have completed / exited the 6 month deferral period or advised intended action End of month net position as
Slide 47: Commercial Loan Deferral Metrics
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – COMMERCIAL LOAN DEFERRAL METRICS 31 July 2020 15 October 2020 All customers are contacted 4-6 weeks pre-expiry. Those with a relationship Assistance Provided Accounts EAD4 Accounts EAD5 manager and any customer deemed ‘at risk’ also receive a phone call
Slide 48: Commercial Business Loan Deferrals Portfolio Profiles
COVID-19 CUSTOMER SUPPORT MEASURES AUSTRALIA – COMMERCIAL BUSINESS LOAN DEFERRALS PORTFOLIO PROFILES BUSINESS LOAN DEFERRALS PROVIDED1 BY SECURITY PROFILE (% OF EAD)2 BY STATE (% OF EAD)3 BY INDUSTRY (% OF EAD) $68b $4b $0.6b $68b $4b $0.6b $68b $4b $0.6b 5% 1% 1% 1% 3% 6% 8% 12% 6% 6% 5% 13% 9% 27%
Slide 49: COVID-19 Customer Support: New Zealand
COVID-19 CUSTOMER SUPPORT MEASURES NEW ZEALAND PORTFOLIO SUMMARY • Financial support provided to ~43,000 personal, home and Accounts business loans customers through repayment deferrals, 529k moving to interest only, or loan adjustments covering NUMBER OF ACTIVE HOME LOANS WITH REPAYMENTS DEFERRED l
Slide 50: New Zealand Housing Repayment Deferral Profiles
COVID-19 CUSTOMER SUPPORT MEASURES NEW ZEALAND HOUSING REPAYMENT DEFERRAL PORTFOLIO PROFILES REPAYMENT PROFILE LOAN PURPOSE LOAN TO VALUE RATIO (% of accounts) (% of accounts) (% of accounts)1 529k 10k 529k 10k 529k 10k accounts accounts accounts accounts accounts accounts 3% 2% 2% 7% 21% 18% 25% 25
Slide 51: Customer Support (COVID-19) Footnotes
CUSTOMER SUPPORT (COVID-19) Page Footnote reference OVERVIEW 1. ‘Home Loans – Australia’, ‘Home Loans – New Zealand’ and ‘Business Loans – Australia’ numbers exclude accounts due to expire / exit where customers have already confirmed they will recommence repayment Australia & New Zealand Home loan
Slide 52: Risk Management
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK RISK MANAGEMENT
Slide 53: Long Run Provisions & Loss Rates
RISK MANAGEMENT LONG RUN PROVISIONS & LOSS RATES TOTAL CREDIT IMPAIRMENT CHARGE $m 1,800 1,500 1,200 900 600 300 0 -300 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 Consumer IP Commercial IP Institutional IP CP Char
Slide 54: Individual Provision Charge
RISK MANAGEMENT INDIVIDUAL PROVISION CHARGE INDIVIDUAL PROVISION CHARGE INDIVIDUAL PROVISION CHARGE BY DIVISION $m $m 1,047 1,047 892 82 787 892 554 81 787 626 826 398 435 86 430 343 626 395 922 380 339 554 1 969 210 812 79 592 807 61 612 594 500 61 55 430 343 380 398 272 395 532 43 495 28 3115 5 35
Slide 55: Collective Provision Balance & Charge
RISK MANAGEMENT COLLECTIVE PROVISION BALANCE & CHARGE MOVEMENT IN COLLECTIVE PROVISION BALANCE YOY COLLECTIVE PROVISION CHARGE $m Collective Provision Charge 592 5,008 $m 1H19 2H19 1H20 2H20 1,018 CP charge 13 4 1,048 669 3,376 46 61 Volume/Mix -28 -51 0 46 -85 Change in Risk -40 19 17 44 $1,717m Ec
Slide 56: Collective Provision (CP) Balance
RISK MANAGEMENT COLLECTIVE PROVISION (CP) BALANCE CP BALANCE BY CATEGORY CP BALANCE BY DIVISION $m 1.39% $m 5,008 1.17% 4,501 0.94% 80 4,501 5,008 50 570 3,376 541 11 696 3,376 38 1,513 374 1,590 104 1,169 4,490 4,312 3,272 2,845 1,795 2,320 Sep-19 Mar-20 Sep-20 Sep-19 Mar-20 Sep-20 Modelled ECL Add
Slide 57: Portfolio Composition and Coverage Ratios
RISK MANAGEMENT PORTFOLIO COMPOSITION AND COVERAGE RATIOS PORTFOLIO COMPOSITION Sovereign Bank Corporate Resi. Mortgage Retail1 Other Gross loans & advances Credit RWA Exposure at default Exposure at default Expected credit loss (Ex. Sovereign & Bank) (Collective Provision balance) $1,010.4b $5.0b 1
Slide 58: Expected Credit Loss: Economic Scenarios
EXPECTED CREDIT LOSS ECONOMIC SCENARIOS – MODELLED OUTCOMES Downside Scenario COLLECTIVE PROVISION BALANCE SCENARIOS5,6 ECONOMIC SCENARIOS BASE CASE1 Characterisation2 Weightings are applied to scenarios to determine CP balance 30 SEP-20 CY2020 CY2021 CY2022 CY2021 CY2022 Sep-20 11% 50% 33% 6% AUSTR
Slide 59: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST NEW IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 2,000 1,784 1,844 1,787 1,570 1,500 1,425 100 1,145 1,117 1,219 963 890 1,000 50 500 0 0 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H2
Slide 60: Risk Weighted Asset and EAD Divisional View
RISK MANAGEMENT RISK WEIGHTED ASSET AND EXPOSURE AT DEFAULT (EAD) – DIVISIONAL VIEW TOTAL RISK WEIGHTED ASSETS CREDIT RWA DRIVERS $b $b 449 429 2.7 417 48 360.0 358.1 6.5 396 396 48 -1.0 391 47 15 37 38 -3.1 -0.5 38 22 12 -2.7 16 16 13 178 156 157 141 139 144 Sep-19 FX Volume UDC Risk Model / CVA (i
Slide 61: Risk Weighted Assets (RWA) & Exposure at Default (EAD)
RISK WEIGHTED ASSETS (RWA) & EXPOSURE AT DEFAULT (EAD) EAD COMPOSITION1 EAD & CRWA MOVEMENT $b $b (Mar-20 movement vs Sep-20) FX Adjusted 1,075 14.3 8.9 4.2 5% 1,010 968 977 5% -0.5 -0.9 -1.2 -0.4 -0.2 944 5% 930 6% 5% 5% -16.2 7% 6% 4% 4% 4% 4% -42.1 30% Aus HL Aus. Non HL NZ Other Institutional 28
Slide 62: Total Portfolio Composition
RISK MANAGEMENT TOTAL PORTFOLIO COMPOSITION % of Portfolio in Non Portfolio Balance EXPOSURE AT DEFAULT (EAD) DISTRIBUTION Category % of Group EAD Performing in Non Performing Sep-19 Mar-20 Sep-20 Sep-19 Mar-20 Sep-20 Sep-20 TOTAL GROUP EAD (Sep-20) Consumer Lending 37.6% 34.6% 37.6% 0.1% 0.2% 0.2%
Slide 63: Segments of Interest
RISK MANAGEMENT SEGMENTS OF INTEREST COMMERCIAL PROPERTY OUTSTANDINGS BY REGION • Growth in the portfolio over the last 5 years has been focused in Australia. At the same time commercial property lending in New Zealand has only increased marginally and APEA has declined $b 7.6% significantly. 6.6% 6
Slide 64: Institutional & Commercial Portfolio
RISK MANAGEMENT INSTITUTIONAL & COMMERCIAL PORTFOLIO Credit Related EXPOSURE AT DEFAULT (EAD) DISTRIBUTION Category GLA Commitments and Contingencies EAD (Sep-20) ($b) ($b) = $630b1 Finance, Investment & Insurance 55 49 Property Services 55 17 9.6% Manufacturing 27 41 Agriculture, Forestry, Fishing
Slide 65: Exposure to Industries Impacted by COVID-19 Downgrades
RISK MANAGEMENT EXPOSURE TO SOME INDUSTRIES MORE IMPACTED BY DOWNGRADES DURING THE COVID-19 PANDEMIC1,2 TOTAL GROUP EAD RETAIL TRADE ACCOMMODATION, CAFES & RESTAURANTS All exposures on an EAD basis in $b 11.4 10.6 13.9 13.9 4% 4% $1,010b (Sep-20) 49% 20% 19% 53% 28% 30% 51% 47% 48% 47% Mar-20 Sep-20
Slide 66: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO INSTITUTIONAL PORTFOLIO SIZE & TENOR BY COUNTRY OF ANZ INSTITUTIONAL INDUSTRY COMPOSITION INCORPORATION1 (EAD2) EAD (Sep-20): A$454.9b2 $b Finance (Banks and Central Banks) 450 Government Admin. 25% 28% Services to Fin. & Ins. 400 Property Services3 2% Bas
Slide 67: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Sep-20): A$99b2 EAD (Sep-20): A$99b2 16% China Finance (Banks & Central Banks) 10% Japan 20% Basic Material Wholesaling 7% Singapore Machinery & Equip Mnfg Hong
Slide 68: Australian Commercial Banking Portfolio Dynamics
RISK MANAGEMENT AUSTRALIAN COMMERCIAL BANKING1 PORTFOLIO DYNAMICS PROVISION CHARGE BOOK COMPOSITION (NET LOANS & ADVANCES) $m $b 57.1 57.1 57.1 57.1 2.0 2.0 2.3 2.5 250 291 14.3 13.8 13.0 12.3 11 40.8 41.3 41.8 42.3 155 169 162 123 -15 1H19 2H19 1H20 2H20 Mar-19 Sep-19 Mar-20 Sep-20 Collective Provi
Slide 69: Housing Portfolio
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK HOUSING PORTFOLIO
Slide 70: Australia Home Loans: Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW (UNLESS OTHERWISE STATED METRICS ARE BASED ON BALANCES) Portfolio1 Flow2 Portfolio1 FY18 FY19 FY20 FY19 FY20 FY18 FY19 FY20 Number of Home Loan Average LVR at Origination7,8,9 67% 67% 69% 1,011k 983k 1,008k 119k3 170k3 accounts1 Average Dynamic LVR (excl. offs
Slide 71: Australia Home Loans: Portfolio Growth
AUSTRALIA HOME LOANS PORTFOLIO GROWTH HOME LOAN FUM COMPOSITION1,2 LOAN BALANCE & LENDING FLOWS1 $b $b 14 271 272 275 13 269 36 264 265 264 6 9 8 8 275 9 7 7 21 265 -53 37 31 26 22 8 43 49 10 17 14 22 60 29 57 33 52 54 49 Sep-19 New Sales Net OFI Refi Redraw & Repay / Other Sep-20 44 excl. Refi-In I
Slide 72: Australia Home Loans: Portfolio and Flow Composition
AUSTRALIA HOME LOANS PORTFOLIO1,2 & FLOW3 COMPOSITION (% of TOTAL PORTFOLIO BALANCES) BY PURPOSE BY ORIGINATION LVR4 Portfolio Flow Flow 3% 3% 2% 1% 18% 17% 16% 32% 30% 30% 29% 17% 16% 18% 65% 67% 68% 70% 65% 67% 66% Sep-18 Sep-19 Sep-20 FY20 FY18 FY19 FY20 Owner Occupied Investor Equity Manager <80
Slide 73: Australia Home Loans: Portfolio Dynamics
AUSTRALIA HOME LOANS PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE1,2,3 72% of accounts ahead of repayments % composition of accounts (Sep-20) 31% 0 1 14 16 13 Active COVID-19 deferrals 26% 26 25 30 New Accounts: Less than 6 months old Structural: Loa
Slide 74: Australia Home Loans: Dynamic Loan to Value Ratio
AUSTRALIA HOME LOANS PORTFOLIO DYNAMICS DYNAMIC LOAN TO VALUE RATIO BASED ON TOTAL PORTFOLIO ACCOUNTS 1,2,3,4,5 % of total Portfolio Accounts >90% 60 Net of offset balances 50 • 6.9% of portfolio 40 • 55% ahead of repayments 30 • 51% with LMI 20 NEGATIVE EQUITY 10 Net of offset balances 0 0-60% 61-7
Slide 75: Australia Consumer Portfolio
AUSTRALIA CONSUMER PORTFOLIO PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES1,2,4 HOME LOAN DELINQUENCIES1,2,3,4 % of Total Portfolio Balances % of Portfolio Segment Balances 5.0 2.5 4.0 2.0 3.0 1.5 2.0 1.0 1.0 0.5 0.0 0.0 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- 15 16 17
Slide 76: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE SEPTEMBER FULL YEAR 2020 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 20 (% New Business FUM Oct-19 to Sep-20) Gross Written Premium ($m) $96.5m LVR<80% Not LMI Insured Net Claims Paid ($m) $41.6m 87% Loss Rate
Slide 77: Stress Testing Tail Risk in the Australian Mortgage Portfolio
STRESS TESTING TAIL RISK IN THE AUSTRALIAN MORTGAGE PORTFOLIO • ANZ conducts regular stress tests of its loan portfolios to meet risk management objectives Assumptions Year 1 Year 2 Year 3 and satisfy regulatory requirements. Unemployment 9% 12% 13.2% rate • Stress tests are highly assumption-driven
Slide 78: New Zealand Home Loans
NEW ZEALAND HOME LOANS PORTFOLIO OVERVIEW1 Portfolio Flow Portfolio FY18 FY19 FY20 FY19 FY20 FY18 FY19 FY20 Number of Home Loan Accounts 526k 527k 529k 118k 105k Average LVR at Origination 58% 56% 58% Total FUM NZD81b NZD85b NZD90b NZD19b NZD20b Average Dynamic LVR3 41% 42% 41% Average Loan Size NZD
Slide 79: New Zealand Home Loans: Arrears Trends
NEW ZEALAND HOME LOANS HOME LENDING & ARREARS TRENDS1 NZ DIVISION 90+ DAYS DELINQUENCIES HOUSING FLOWS HOUSING PORTFOLIO % 1.5 18% 15% 13% 1.0 39% 40% 42% 0.5 82% 85% 87% 61% 60% 58% 0.0 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- FY18 FY19 FY20 Sep-18 Sep-19 Sep-20 09 10 11 12 13 14
Slide 80: Corporate Overview and ESG
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK CORPORATE OVERVIEW AND ENVIRONMENT, SOCIAL & GOVERNANCE (ESG)
Slide 81: Our Purpose
OUR PURPOSE One of the ways we are bringing our purpose to life is through helping to act on complex issues that matter to society and are core to our business strategy. A commitment to fair and responsible banking underpins our approach. CHOICES ABOUT WHO WE SERVE CHOICES ABOUT HOW WE OPERATE • WHO
Slide 82: Creating Value for Our Stakeholders
CREATING VALUE FOR OUR STAKEHOLDERS CUSTOMERS COMMUNITY • >8.5m total retail, commercial • ~$140m contributed in and Institutional customers community investment3 EMPLOYEES SHAREHOLDERS • $326b in retail & commercial • 66,402 volunteering hours customer deposits in Australia • 38,579 people employed
Slide 83: Snapshot of FY20 ESG Target Performance
SNAPSHOT OF FY20 ESG TARGET PERFORMANCE Our ESG targets support 11 of the 17 United Nations Sustainable Development Goals. This year we have achieved or made good progress against 79%* of our targets, and not achieved 21%*. Achieved In progress / partially Not achieved achieved ESG target Progress O
Slide 84: Sustainability Performance Trends
SUSTAINABILITY PERFORMANCE TRENDS COMMUNITY INVESTMENT1 MONEYMINDED & SAVER PLUS SUSTAINABLE SOLUTIONS $50B TARGET³ Total community investment ($m) Estimated # of people reached Funded and facilitated ($b) 142 140 88,308 90,724 9.08 131 137 80,074 7.6 0.06 65,549 4.6 1.45 61,367 90 4.5 2.4 7.57 2016
Slide 85: External Reporting
EXTERNAL REPORTING RECOGNITION In 2020 received SAM Silver Class distinction with a score of We achieved a CDP Member of the Ranked amongst the top Ranked amongst the Top 82 (out of 100) in the 2019 Dow climate disclosure score FTSE4Good Index 100 companies for 10 Best Workplaces to Jones Sustainabi
Slide 86: Carbon Policy
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK CARBON POLICY
Slide 87: Our Approach to Climate Change
OUR APPROACH TO CLIMATE CHANGE We understand the impact – positive and negative – our financing has on climate change. Through our lending decisions, we support companies and projects that contribute to reducing emissions and are resilient to a changing climate. OUR PRIORITY AREAS 2. 1. Support 3. H
Slide 88: Our 2020 Climate Change Statement
OUR 2020 CLIMATE CHANGE STATEMENT We support the Paris Agreement’s goal of transitioning to net zero emissions by 2050. Our 2020 Climate Change Statement outlines our approach and strengthened commitments that seek to support a global transition to net zero emissions. PRIORITY AREAS HOW ARE WE MAKIN
Slide 89: Our Pathway to 2030
OUR PATHWAY TO 2030 Our response to supporting the transition has evolved over time, and to date, we’ve made strong progress. By 2030 2020 Our portfolio and approach will look 2019 like this: 2015 New commitments to support efforts to achieve net zero carbon by 2050: • Our power generation direct le
Slide 90: How Our Lending Is Supporting the Paris Goals
HOW OUR LENDING IS SUPPORTING THE PARIS GOALS EXPANDING OUR LENDING SUPPORT TO THE RENEWABLE ENERGY SECTOR; WHILE EXPOSURES TO THERMAL COAL MINING HAS REDUCED BY ~70% IN 5 YEARS DIRECT LENDING POWER GENERATION PORTFOLIO RESOURCES PORTFOLIO September 2015 September 2020 $b THERMAL COAL EXPOSURE (EAD)
Slide 91: Summary of Climate-Related Financial Disclosures (TCFD)
SUMMARY OF OUR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) Through our TCFD reporting, we seek to provide information on our approach to climate change and ability to manage the associated risks and opportunities. Below is a summary of future focus areas and actions. . TCFD Theme Focus Areas 2021/2
Slide 92: Implementation of Customer Transition Plan Target
IMPLEMENTATION OF CUSTOMER TRANSITION PLAN TARGET Background • We are committed to encourage and support 100 of our largest emitting customers in the energy, transport, buildings and food, beverage and agricultural sectors to establish or strengthen their low carbon transition plans, by 2021. How wi
Slide 93: Economics
2020 FULL YEAR RESULTS INVESTOR DISCUSSION PACK ECONOMICS
Slide 94: Australia Forecast Table
ECONOMICS AUSTRALIA FORECAST TABLE 2017 2018 2019 2020F 2021F Australia – annual % growth GDP 2.4 2.8 1.8 -4.3 1.6 Headline CPI (% y/y) 1.9 1.9 1.6 0.8 1.2 Core CPI (%y/y) 1.8 1.9 1.6 1.2 0.9 Employment (%y/y) 3.3 2.3 2.2 -2.8 -0.5 Unemployment (ann. avg) 5.5 5.0 5.2 7.3 8.8 RBA cash rate (% year en
Slide 95: Australian Economy
AUSTRALIAN ECONOMY GDP GROWTH1 GLOBAL GDP GROWTH COMPARISON1 CONSUMER PRICE INFLATION2 AUSTRALIAN GOVERNMENT BUDGET BALANCE2 Per cent of nominal GDP 94 Sources: 1. ANZ Research “Australian Economic Insight”, September 2020 2. RBA Chart Pack September 2020 Not for distribution into the United States
Slide 96: Australian Economy and Population
AUSTRALIAN ECONOMY AND POPULATION POPULATION GROWTH1 – AUSTRALIA AND G7 COVID-19 NEW CASES2 % yoy 2.5% 2.0% Australia 1.5% 1.0% G7 weighted average 0.5% 0.0% 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 COVID-19 POLICY MEASURES2 HOUSEHOLD SAVING
Slide 97: Australian Labour Market
AUSTRALIAN LABOUR MARKET UNEMPLOYMENT AND UNDEREMPLOYMENT1 JOB VACANCIES AND ADVERTISEMENTS1 (Per cent of labour force) WAGE PRICE INDEX GROWTH1 EMPLOYMENT AND HOURS WORKED2 96 Sources: 1. RBA Chart Pack September 2020 2. RBA Speech: “The Economic Outlook”, August 2020 Not for distribution into the
Slide 98: Commodity Prices
COMMODITY PRICES1 RBA INDEX OF COMMODITY PRICES BASE METALS, RURAL, AND OIL PRICES SDR, 2016/17 Average = 100, log scale Weekly BULK COMMODITY PRICES TERMS OF TRADE* Free on board basis 2016/17 average = 100, log scale 97 Sources: 1. RBA Chart Pack September 2020 Not for distribution into the United
Slide 99: Australian Housing Dynamics: A Cooling Market
AUSTRALIAN HOUSING DYNAMICS: A COOLING MARKET HOUSING PRICE FORECASTS BY STATE1 HOUSE PRICE GROWTH2 12 6 Month Change Year on Year Change 5 Year Cumulative Change Housing prices, y/y % change (calendar year) 10 8 All All All Aug 2020 Houses Units Houses Units Houses Units dwellings dwellings dwellin
Slide 100: Australian Housing Dynamics
AUSTRALIAN HOUSING DYNAMICS PRIVATE RESIDENTIAL BUILDING APPROVALS1 FIRST HOME BUYERS SHARE OF FINANCE2 Monthly 25 First Home Owners' Boost First Home 20 Owners' Grant % share of total housing finance 15 NSW & Victoria reduce stamp duty 10 5 0 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 First-home
Slide 101: Australian Housing: Household Debt and Income
AUSTRALIAN HOUSING HOUSEHOLD DEBT AND INCOME HOUSEHOLD DEBT AND DEPOSITS1 HOUSEHOLD DEBT-TO-INCOME RATIOS2 % of annual household disposable income HOUSEHOLD MORTGAGE BUFFERS3 HOUSEHOLD MORTGAGE DEBT INDICATORS2 Sources: 1. ABS, RBA. Housing Debt refers to ratio of housing debt to annualised househol
Slide 102: Australian Housing: Low Levels of High LVR Lending
AUSTRALIAN HOUSING LOW LEVELS OF HIGH LVR LENDING - ISOLATED NEGATIVE EQUITY1 ADIs’ HIGH LVR LOANS1 LOANS IN NEGATIVE EQUITY2 Share of new loan approvals Share of balances, June 2019 CURRENT DYNAMIC LVR DISTRIBUTION3 DISTRIBUTION OF HOUSEHOLD DEBT4 Share of balances, February 2020 By income quintile
Slide 103: Key Contacts
KEY CONTACTS Key contacts Adrian Went Scott Gifford Mostyn Kau Group Treasurer Head of Debt Investor Relations Head of Group Funding +61 3 8654 5532 +61 3 8655 5683 +61 8655 3860 +61 412 027 151 +61 434 076 876 +61 478 406 607 Adrian.went@anz.com scott.gifford@anz.com Mostyn.kau@anz.com John Needham
Slide 104: Important Notice
IMPORTANT NOTICE Background information only This document has been prepared by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (the "Bank") for the information of intended recipients only (being persons who meet the requirements described in the following paragraphs). This docu
Slide 105: Important Notice
IMPORTANT NOTICE United States: This document is only for investors who are (x) outside the United States and are not U.S. Persons (as defined in Regulation S under the Securities Act of 1933 as amended (the “Securities Act”)) in compliance with Regulation S; or (y) “qualified institutional buyers”
Australia and New Zealand Banking Group — Debt Investor Presentation (2020) on 6ix