Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Investor Day (September 2007)
121 slides from Anz's investor day presentation, Sep 19, 2007
Slide 1: Personal Division Strategy Day
For personal use only Personal Division Strategy Day Wednesday, September 19 2007
Slide 2: Agenda
ANZ Personal Strategy Day 19 September 2007 For personal use only AGENDA 10:05 – 10:20 Introduction / Personal Division Brian Hartzer Group MD Personal Division Session 1 10:20 - 10:35 Branch Network Louis Hawke MD Retail Banking 10:35 - 10:50 Rural, Regional and Small Business Rob Goudswaard MD Reg
Slide 3: Personal Division – An overview
For personal use only Personal Division – An overview Brian Hartzer Group Managing Director Personal Division Wednesday, September 19 2007
Slide 4: Personal Division Overview
Personal Division Overview For personal use only Contribution to Personal Division Group NPAT (1H07) Brian Hartzer Personal Customer Businesses 37% Retail Regional, Rural ($709m) Banking & Small Louis Business Hawke Rob Goudswaard Personal Division Product Businesses NPAT contribution* Banking Produ
Slide 5: What we said years ago
What we said 3 years ago For personal use only 2004 commitments What we’ve delivered Personal Division profit has grown from Accelerate the momentum in specialist businesses 99 $474m to $709m (16% CAGR), with strong performances across the board Only major Australian bank to consistently Grow deposi
Slide 6: We have delivered for shareholders…
We have delivered for shareholders… For personal use only Personal division profit growth (PCP) 22% 17% 16% 15% 15% 14% 2007 guidance “PBP growth broadly in line with 2006” FY04 FY05 FY06 FY07 PBP NPAT 6
Slide 7: …with good performance across the Division
…with good performance across the Division Mar 07 v Mar 06* For personal use only PBP NPAT NPAT ($m) Mortgages 10% 7% 191 Banking Products 25% 22% 182 Consumer Finance 30% 39% 146 Regional, Rural, Commercial & Agribusiness 8% 4% 51 Small Business Banking 21% 25% 30 Esanda 15% 36% 61 Investments & In
Slide 8: We are well placed to deal with current market issues…
We are well placed to deal with current market issues… For personal use only A strong deposit franchise • We have a very strong retail deposit franchise--a key component of the group’s funding • Some evidence of flight to quality deposits is emerging, which will help us • Including Esanda debentures
Slide 9: …however basis risk has an impact in the short term
…however basis risk has an impact in the short term For personal use only % % Approximate net reduction in Cash / 30 Day Bill Spread ‘000 7.00 0.50 $30,000 revenue per month 0.45 6.50 $25,000 0.40 Current level 0.35 of additional 6.00 $20,000 basis risk 0.30 5.50 0.25 $15,000 0.20 5.00 $10,000 0.15
Slide 10: Other key 2H07 issues
Other key 2H07 issues For personal use only • E*TRADE – Business performance is strong – Better than expected customer acquisition – Integration on track – Will provide significant growth opportunities for ANZ • Credit quality – Is in good shape: Overall provision rates similar to same time last yea
Slide 11: We've delivered for customers…
We’ve delivered for customers… For personal use only Now Number 2 Market A leader in customer Share position* Satisfaction % (Main Financial Institution*) % 80 22% 18% 14% 70 10% 6% 2% 60 Jun-04 Jun-05 Jun-06 Jun-07 Jul-04 Jul-05 Jul-06 Jul-07 ANZ Peer 1 Peer 2 Peer 3 Peer 4 Source: Roy Morgan Resea
Slide 12: … and invested in our people and culture
… and invested in our people and culture For personal use only Increased frontline staff Staff engagement is high (Total Personal Division FTE) CAGR 6% 13,389 2004 67% 12,385 Approx 65% 2006 70% of 64% 64% 11,840 2007 11,261 increase are 60% 60% 58% frontline 54% 51% 1H04 1H05 1H06 1H07 Personal ANZ
Slide 13: We've dramatically increased our footprint
We’ve dramatically increased our footprint For personal use only 13
Slide 14: Improving productivity and customer experience
Improving productivity and customer experience For personal use only Significant uplift in Lean Six Sigma transformation projects 140 • 25 Lean Six Sigma projects completed in FY07, delivering 120 annualised benefits of ~$30m 100 • Additional 101 projects underway 80 • Benefits delivered to date inc
Slide 15: Business system supports our Brand position
Business system supports our Brand position For personal use only Strategy Financial Performance Convenience “More Employees Convenient Banking” Simplicity Customers Responsibility Products & Brand Distribution Investment 15
Slide 16: Convenience means…
Convenience means… For personal use only Accessibility • More branches • More ATM locations • Longer trading hours • 24/7 call centre Saving Time • Shorter queue times • Mobile lenders come to you • 60 second online credit card approvals (since 2002) • Streamlined application processes 16
Slide 17: Simplicity means…
Simplicity means… For personal use only • Fewer products • Simple fee structure • Clear communications 17
Slide 18: Responsibility: A "sustainable" difference…?
Responsibility: A “sustainable” difference…? For personal use only 18
Slide 19: We've built a strong brand, and high customer advocacy…
We’ve built a strong brand, and high customer advocacy… For personal use only Brand Strength* Net promoter score* 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 -2 Aug- Feb- Aug- Feb- Aug- Feb- Aug- Apr- Oct- Apr- Oct- Apr- Oct- Apr- 04 05 05 06 06 07 07 04 04 05 05 06 06 07 ANZ Highest peer Average of pe
Slide 20: And now it's time to lift the bar
And now it’s time to lift the bar For personal use only 20
Slide 21: And now it's time to lift the bar
And now it’s time to lift the bar For personal use only 21
Slide 22: ANZ Personal in 2010: Australia's Most Convenient Bank
ANZ Personal in 2010: “Australia’s Most Convenient Bank” For personal use only Ö More ATM locations than any major bank Ö 7 day per week banking available in every capital city Ö Small Business Banker available in every branch Ö Premium Personal Bankers across Metro Australia Ö 50 new “Local Link” a
Slide 23: Why invest: Personal Division in 2010
Why invest: Personal Division in 2010 For personal use only • Leading profit growth of any major retail bank (>10% CAGR to 2010) • Clear #2 on main bank relationships Australia’s • Take specialised businesses to Best leadership in chosen markets Performing • Strengthen position as Retail Bank “Austr
Slide 24: Session
For personal use only Session 1 24
Slide 25: An overview of the major product businesses
For personal use only An overview of the major product businesses Brian Hartzer Group Managing Director Personal Division Wednesday, September 19 2007 25
Slide 26: Customer insight drives our product innovation
Customer insight drives our product innovation For personal use only Application processes • 60 second credit card approvals • Personal Loans in 24 hours Fee structures • $5 a month transaction accounts Switching campaigns • 0% balance transfers Security monitoring • Falcon fraud system 26
Slide 27: Session
For personal use only Session 2 27
Slide 28: Why invest: Personal Division in 2010
Why invest: Personal Division in 2010 For personal use only • Leading profit growth of any major retail bank (>10% CAGR to 2010) • Clear #2 on main bank relationships Australia’s • Take specialised businesses to Best leadership in chosen markets Performing • Strengthen position as Retail Bank “Austr
Slide 29: 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
Slide 30: Additional Key Information
For personal use only Additional Key Information 30
Slide 31: Most consumers aren't driven by price
Most consumers aren’t driven by price Why should customers bank with ANZ For personal use only (and not somebody else)?? Importance out of 10 Important, Low but not Fees 8.5 dominant Branches 8.2 convenient Straightforward fees 8.1 People increasingly Staff “time poor” – engaged 8.0 seeking convenie
Slide 32: Multi-brand strategy covers all segments
Multi-brand strategy covers all segments For personal use only Price Driven Service Driven Premium • ANZ brand for non-price-driven segments • Use other brands Prime for other segments • Defend share via price where necessary 20% - 30% 70% - 80% Emerging Prime Sub Prime Un-banked 32
Slide 33: Basis risk
Basis risk For personal use only What is basis risk? Cash / 30 Day Bill Spread • In the context of Australian bank % % mortgages, basis risk is the risk that 7.00 0.50 banks face from pricing mortgages based on the official cash rate set by the RBA, 0.45 while the cost of funding those mortgages 6.5
Slide 34: Basis risk cont…
Basis risk cont… For personal use only What is the impact on ANZ? ‘000 Approximate net reduction in $30,000 revenue per month • ANZ’s mortgage portfolio is around 80% variable rate, and hence exposed to basis risk. $25,000 • As a rough rule of thumb, each basis point $20,000 Current level costs the
Slide 35: ANZ has a conservative wholesale funding and liquidity profile
ANZ has a conservative wholesale funding and liquidity profile For personal use only • Since 2000, ANZ’s funding strategy ANZ has progressively reduced reliance has been targeted to achieving a on short term wholesale funding conservative balance between short Ratio of short-dated wholesale and long
Slide 36: Summary of ANZ Economic forecasts – Australia
Summary of ANZ Economic forecasts – Australia (bank year) For personal use only 2006 2007 2008 2009 GDP 2.8 3.6 4.0 4.2 Inflation 3.4 2.5 3.1 2.9 Unemployment 4.7 4.3 4.1 4.0 Cash rate 6.00 6.50 6.75 6.75 10 year bonds 5.5 5.9 6.5 6.9 A$/US$ 0.75 0.85 0.83 0.75 Credit 14.7 14.8 12.1 11.1 - Housing 1
Slide 37: Branch banking - ANZ's Not-So-Secret Weapon
For personal use only Branch banking - ANZ’s Not-So-Secret Weapon Louis Hawke Managing Director Retail Banking Wednesday, September 19 2007 1
Slide 38: Branches – the primary customer channel
Branches – the primary customer channel For personal use only Retail Branch Network • 528 Branches • 47 Local Markets q 10 * 111 • ~5,000 Staff q 50 * 57 q 26 * 36 Regional & Rural Network q 45 • 284 Branches * 165 q 69 • 19 Regions • ~2,400 Staff * Retail *147 * 12 q Branches q 71 q 13 Rural Branch
Slide 39: Strategic Goal
Strategic Goal For personal use only To be the #2 Retail Bank in Australia by successfully delivering on the brand promise of Convenience, Simplicity, and Responsibility. Actions: • Managing and growing the network • Acquiring more customers • Growing share of wallet • Representing the face of ANZ t
Slide 40: Delivering "Convenience and Simplicity"
Delivering “Convenience and Simplicity” For personal use only • New Branch locations • Extended hours • Local market specialists • Mobile mortgage specialists • Straightforward applications • Shorter queues • More ATM locations • Best Australian call centre • CSIA “Best of the Best” 4
Slide 41: Network design driven by a scientific approach
Network design driven by a scientific approach ..… Macro catchment identification For personal use only Statistical analysis Toplocations locations Top Local knowledge Optimal site location Site availability Site assessment Pipeline Pipeline 5
Slide 42: Distinctive branch design
Distinctive branch design For personal use only 2007 Network Changes 62 39 New Branches Major Refurbishments* • Research based design characteristics • Key principles of change include: -more privacy for customers -increased satisfaction for staff • Branch design accommodates on-site specialists • R
Slide 43: Network expansion has delivered ahead of expectations
Network expansion has delivered ahead of expectations New branches aligned to growth …And breaking even For personal use only areas and representation gaps… ahead of plan 80 new branches from Oct 2004 to Oct 2007 22% 9% M4 M8 M12 M16 M20 M24 18% 35% 16% Targets Actual Branch Location Category Repres
Slide 44: Strong growth in customer numbers…
Strong growth in customer numbers… For personal use only Traditional Banking MFI Customers Customers 3500 Peer 1 2200 Peer 1 2000 3000 1800 2500 ('000) ('000) 1600 2000 1400 1500 1200 1000 1000 Jun-04 Jun-05 Jun-06 Jun-07 Jun-04 Jun-05 Jun-06 Jun-07 ANZ Peer 2 Peer 3 Peer 4 Source: Roy Morgan Resear
Slide 45: Building a high performance culture
Building a high performance culture For personal use only Alignment between: • Organization structure • People & roles • Performance processes Employee Engagement Banking and Finance Benchmark 58% 40% 60% Indifferent ANZ Retail Banking 67% Zone 25% Serious Zone Hewitt Best Employers 79% High Perform
Slide 46: Relationships are deepening …
Relationships are deepening … For personal use only Strong improvement in share of wallet 55% 50% Growth initiatives: • Customers First 45% • Premium Banking • iKnow 40% • Process simplification 35% 30% Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 ANZ Peer 1 Peer 2 Peer 3 Peer 4 Source: Roy Morgan Rese
Slide 47: …and strong customer advocacy and satisfaction
…and strong customer advocacy and satisfaction For personal use only ANZ has the highest level of Positive Customer Experiences# advocacy from our customers Net promoter score^ 15 90 88.1 10 5 0 -5 -10 -15 Advocacy Satisfaction Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 ANZ Peer 1 Peer 2 Peer 3 Peer 4 ^ Sou
Slide 48: ANZ Retail in 2010
ANZ Retail in 2010 For personal use only Leverage network expansion Simplified Processes Clear #2 Retail Bank Strong achievement culture 12
Slide 49: Regional & Rural
For personal use only Regional & Rural Rob Goudswaard Managing Director Regional, Rural and Small Business Banking Wednesday, September 19 2007
Slide 50: Regional & Rural banking is almost a $400b market!
Regional & Rural banking is almost a $400b market! For personal use only Regional & Rural Funds Under Management ($b) Agri $60 Commercial $84 Consumer $250 2
Slide 51: Regional and Rural contributes >20% of Personal Division's NPAT
Regional and Rural contributes >20% of Personal Division’s NPAT For personal use only FUM Growth ($b) Personal Division’s NPAT ($m, 1H07) 9% 5% 2.3 2.5 2.2 5% 10% 6.6 6.9 6 709 1H06 2H06 1H07 Lending Deposits 51 >20% NPAT Growth ($m) 3% 2% 49 50 51 Personal Division Regional & Rural 1H06 2H06 1H07 3
Slide 52: Our business ranges from consumer transaction accounts to farm-gate facilities
Our business ranges from consumer transaction accounts to multi-million dollar farm-gate facilities For personal use only Consumer Banking 284 Branches, 396 ATMs • Focus on main bank customer growth 19 Regions, 2400 employees • Branch & ATM expansion and refurbishments promoting “convenience, simpli
Slide 53: Unique conditions require a specialised strategy
Unique conditions require a specialised strategy For personal use only Winning the hearts and minds of Maintaining strong customer customers and staff: satisfaction* while supporting Our Priorities the rural community 85 Deepen • Blue Week • Seeds of renewal grants 80 customer & • Reconciliation Act
Slide 54: Priorities to sustain growth in Regional & Rural
Priorities to sustain growth in Regional & Rural For personal use only “More Convenient Banking” • Bringing our convenience and simplicity Representation in regional & rural Australia proposition to life: Opened first 7 day a week branch 619 • Continued investment in the branch network, e.g. new bra
Slide 55: Small Business Banking
For personal use only Small Business Banking Rob Goudswaard Managing Director Regional, Rural and Small Business Banking Wednesday, September 19 2007 7
Slide 56: Small business = big opportunity
Small business = big opportunity For personal use only • Market size today is $26b ANZ is the only major dedicated to serving the • 1.3 million small business small end of town owners Up to $100k • Market growing at 95,000 ANZ lending FUM customers net p.a. Up to $500k Peer 1 • This is largely a dep
Slide 57: Our Small Business model is working…
Our Small Business model is working… For personal use only Rapid business expansion FUM Staff Customers • Specialist Business model ($m) established in 2004 2004 6 190,000 1,980 2007 220 266,000 3,780 • More than half of our staff are located in the branch First marketing campaign launched March 200
Slide 58: …and producing strong results
…and producing strong results Volume growth is well above For personal use only “system” growth measures (FY07 Forecasts) 70% ANZ SBB 60% 50% System* 45% of Small Business 40% income sits in other business 30% units in Personal 20% 10% 0% Other Deposits Lending Businesses Small Business Invested in
Slide 59: Continuing to invest in growth
Continuing to invest in growth For personal use only Expanding • 50% increase in Small Business bankers Distribution • Close alignment with branch network • Specialty focus on retail, new migrants, franchisees, women, home based, etc. Segmentation • Exploring potential partnerships to access new cus
Slide 60: Investment & Insurance Products
For personal use only Investment & Insurance Products Geoff Cohen Managing Director Investment and Insurance Products Wednesday, September 19 2007
Slide 61: I&I: Significant and growing part of ANZ's wealth business
I&I: Significant and growing part of ANZ’s wealth business For personal use only Wealth contributes Investment and ~ 7% to group profits Insurance I&I: distributor of products to Over 1.2m customers: Institutional. Supplier of products to • Financial Planning Other 2 Private Bank • Margin Lending 1
Slide 62: We have been growing quickly across the board
We have been growing quickly across the board For personal use only Growth in Margin Lending Financial Planning driving customers… strong growth (customer numbers) (FUM $b) 38% 10,800 22% 7,800 12.8 6,400 10.2 8.8 Sep-O5 Sep-O6 Aug-O7 … accelerating Margin Lending Retail FUM growth ($m) 48% 1,831 38
Slide 63: We have been growing quickly across the board (cont'd)
We have been growing quickly across the board (cont’d) Insurance sales continue For personal use only to grow strongly E*Trade customers on track to double in two years Life Risk Insurance (Growth % Aug 06 – Aug 07) O00’s 99% 450 15% 400 350 300 Aug-O6 Aug-O7 250 200 General Insurance (Growth % Aug
Slide 64: Sustained planner productivity while growing planner #'s
Sustained planner productivity while growing planner #’s Planner productivity in first For personal use only Planner numbers 12 months 500 index 100 450 90 400 80 350 70 60 300 Up 31% 50 in 2 years 250 40 30 200 20 150 10 100 0 1 2 3 4 5 6 7 8 9 10 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 2007 Trendline 2
Slide 65: Now focusing on internal cross-sell and external opportunities
Now focusing on internal cross-sell and external opportunities Customers’ level of importance For personal use only Existing customers: when selecting financial planning advice* Lifting cross sell • Continued growth in new planners 90% Trust • Improve sales processes - eg mortgage protection “write
Slide 66: Successful product innovation around Convenience, Simplicity, and Responsibility
Successful product innovation around “Convenience, Simplicity, and Responsibility” For personal use only Diversified Margin Loan OneCare Express risk insurance provides greater stock choice delivering fast approvals # of stocks on Approved Securities List* % of INGA applications in fast approval and
Slide 67: E*Trade performing ahead of expectations
E*Trade performing ahead of expectations Strong growth … and a platform For personal use only from core activities … for further growth (contract notes per day) 15,000 91% • Great cross sell to ANZ growth in 12,000 16 mths customers 9,000 • Sale of banking products to 6,000 E*Trade customer 3,000 •
Slide 68: Summary
Summary For personal use only • Important and growing part of ANZ’s wealth business ¾ Now approaching 30% percent of ANZ wealth profit ¾ Creating additional value in INGA as largest distributor • Strong growth in all key segments Our goal: ¾ Taking advantage of favourable market conditions Double pr
Slide 69: Additional information
For personal use only Additional information 10
Slide 70: Financial Planning
Financial Planning For personal use only Gross Inflows* Total Risk sales* ($m) (000’s) 2,800 14 2,400 12 2,000 10 1,600 8 1,200 6 800 4 400 2 0 0 2005 2006 2007 2005 2006 2007 *10 months to July 05, 06, 07 11
Slide 71: Insurance
Insurance For personal use only Positive trend in insurance Cross Sell rates (Retail Branch performance for insurable loans ) Personal Loans Home & Contents Mortgage protection (% with policies written) (% with policies written) (% with policies written) 58% 56% 53% 53% 52% 49% 47% 33% 30% 2005 2006
Slide 72: Mortgages
For personal use only Mortgages Michael Rowland Managing Director Mortgages Wednesday, September 19 2007
Slide 73: Mortgages Overview
Mortgages Overview For personal use only Mortgages is an end to end business Contribution to • Sales management for nonbranch channels (60% of sales) Personal Division NPAT • Servicing and fulfilment for all consumer home loans (1H07) Most awarded Australian home lender • Home Loan Lender of the Yea
Slide 74: Retail mortgage loan book growth continues
Retail mortgage loan book growth continues Retail FUM growth remains just For personal use only Continued strong Retail FUM growth, offset by Origin decline ahead of market (06/2006 - 06/2007) ($b) -7.8% 13.8% 13.7% 5.5 -7.1% 13.1% 13.0% 6.0 5.9% 6.4 6.7% 100.5 95.1 89.1 1H06 2H06 1H07 2005-2006 200
Slide 75: Strong sales and low prepayment rates in 2007
Strong sales and low prepayment rates in 2007 For personal use only Monthly Sales remain strong Low Monthly Prepayment Rates ANZ Retail support FUM growth ($m) Payment in advance of schedule 2,000 2.5% Network Broker Specialists 2.0% 1,500 $1,412m $1,197m 1.5% 1,000 $940m 1.0% 500 0.5% 0 0.0% Jul Ja
Slide 76: Earnings constrained by margin compression
Earnings constrained by margin compression Earnings growth constrained ...impacted by margin pressure For personal use only in 1H07… (NPAT $m) Mortgages Average Margin Basis Points 1% 7% 190 191 178 +1bps (2bps) +94bps +93bps (1bps) (2bps) Funding Competition Funding +90bps Competition 1H06 2H06 1H0
Slide 77: Normalising for basis risk shows consistent growth
Normalising for basis risk shows consistent growth For personal use only Mortgage portfolio revenue 2007 Basis Risk drag 2006 Basis Risk benefit • Normalising for wholesale funding volatility shows a consistent 2005 2006 2007 growth of Mortgages’ revenues Revenue Revenue excluding Basis Risk • Margi
Slide 78: Margins have also been impacted by a shift to fixed rates
Margins have also been impacted by a shift to fixed rates For personal use only FUM Mix Sales Mix 9% 14% 14% 14% 17% 16% 14% 16% 18% 20% 20% 19% 91% 86% 86% 86% 83% 84% 86% 84% 82% 80% 80% 81% 1H05 2H05 1H06 2H06 1H07 2H07* 1H05 2H05 1H06 2H06 1H07 2H07* Std Var Fixed Rate * Based on half to date. 7
Slide 79: Multi-channel convenience will continue to drive growth
Multi-channel convenience will continue to drive growth For personal use only Convenience Multi-channel strategy - of immediate convenience of channel of choice approval Mix of distribution channels for customers at the same price capability (% flows) Customers can access ANZ Branch Network Mortgage
Slide 80: Broker channel remains attractive
Broker channel remains attractive For personal use only • Brokers are ~40%1 of the market • Broker Channel ROE comfortably • Valuable source of new customer above Group ROE acquisition for overall Group • Distribution costs fully variable • Expands distribution footprint • Larger average loan size K
Slide 81: Substantial opportunity in branch network to drive growth
Substantial opportunity in branch network to drive growth For personal use only Specialist channels are driving Opportunity to drive higher mortgage loan book growth sales productivity in the Branch Network (Gross Retail FUM*) +14.3% +2.6% +16.7% +2.6% +5.5% +33.3% +28.6% +3.9% 1H05 2H05 1H06 2H06 1
Slide 82: Targeted initiatives will drive Network home loan growth
Targeted initiatives will drive Network home loan growth For personal use only Making Mortgages Simple • Common Sales Process including new front end tool • Removal of administrative tasks from frontline • Revised credit policies • Revamp of LMI Product/Process • Revised performance metrics • Simpli
Slide 83: Process transformation will materially lower unit costs
Process transformation will materially lower unit costs For personal use only New Operations Model Automation Reengineering Relocation • Leverage specialist skills • More agile and better • Minimising rework and ANZ India to reduce able to deal with • Seamless workflow our costs increases in volume
Slide 84: Arrears in good shape, delinquencies are localised
Arrears in good shape, delinquencies are localised For personal use only Arrears still in good shape Mortgages Retail Delinquency (> 60 day delinquencies) Exposure Hot Spots (August-07) 0.40% Outer Gosford / Western Wyong 0.35% Sydney 0.55% 0.55% 0.30% Blacktown 0.21% 0.25% 0.20% Sydney CBD 0.15% 0.
Slide 85: Mortgages does not offer Sub-prime loans
Mortgages does not offer Sub-prime loans For personal use only ANZ Australia Loan portfolio Low doc components $1.2B Prime Low Doc $92b $19b $18.1B Low doc 80 Prime Low doc 60 Low doc ANZ Definition • Lo Doc – applicants who self certify their income but provide documentation to support other aspect
Slide 86: Mortgages summary
Mortgages summary For personal use only ¾ Convenient to do business with, wherever, whenever - Multi-distribution strategy ¾ Simple to do business with - Competitive product suite evidenced by Cannex and Home Lender of The Year awards Goal: Grow above ¾ Targeted in-branch customer home loan experien
Slide 87: Banking Products
For personal use only Banking Products Australia and New Zealand Banking Group Limited 19 September, 2007 John Harries Managing Director Banking Products
Slide 88: Banking Products Overview
Banking Products Overview Responsible for the development, pricing, marketing and distribution of ANZ's For personal use only consumer transaction, saving and investment deposit products Contribution to % Personal Banking Products is composed of: Personal Division active Transaction Banking Savings
Slide 89: A strong formula for success…
A strong formula for success… • Growing customer numbers and FUM to deliver above For personal use only Acquisition system FUM growth and increase market share • Strategies based on “convenience and simplicity” + • Net acquisition through minimising loss of customers and FUM Retention • Active reten
Slide 90: Acquisition and retention strategies have delivered strong account growth
Acquisition and retention strategies have delivered For personal use only strong account growth…. Banking Products transaction account numbers* 300,000 2H06 benefited 250,000 from Visa Debit Card introduction 200,000 150,000 100,000 50,000 0 1H04 2H04 1H05 2H05 1H06 2H06 1H07 New Closed Net Accounts
Slide 91: …and contributing to above system FUM growth and increasing market share
… and contributing to above system FUM growth and increasing Market share Strongest growth of majors in household deposits Strongest growth in market For personal use only (APRA household deposits ) share of the majors 30% 24% ~28% ~ 26% 18% Peer 1 12% 14% 6% 13% 0% = Sep- Mar- Sep- Mar- Sep- Mar- 1
Slide 92: Growing FUM at attractive margins
Growing FUM at attractive margins • Margin on new business is consistently superior to peers For personal use only • Premium on new business demonstrates reality of More Convenient Banking segment FUM Growth / Margin NII Contribution 6 months to Mar-07 8% FUM Growth Peer 1 ANZ 6% Peer 2 4% Peer 3 Pe
Slide 93: Innovation is essential for successful acquisition
Innovation is essential for successful acquisition Waves of change have contributed to positive results for Banking Products For personal use only 2007 Maintaining a simple suite of accounts and enhancing features Assured enhancements 2006 & fee simplification Visa debit 2005 Design My Card 2004 S&I
Slide 94: Retention strategies are focused on retaining customers and winning back FUM
Retention strategies are focused on retaining customers and winning back FUM Retention strategies in place ANZ gains more customers For personal use only to protect existing customers from switching than it looses and FUM Net gain/loss from main bank switchers* Focused retention activity • Creation
Slide 95: Product mix is well diversified and actively managed
Product mix is well diversified and actively managed to minimise pricing volatility FUM growth delivered Our well diversified portfolio For personal use only across all product assists with our margin (A$b) management Replicating Portfolios 42.0 39.8 37.1 21% 35.2 14.2 Rolling 30 Fixed Rate 13.9 day
Slide 96: Summary
Summary For personal use only • Successful acquisition and retention strategies • Growth in market share Goal To continue to grow market share: • Profitable strategy – price not 14.0% FUM market the key driver share by 2010 • Maintaining a balanced product mix 10
Slide 97: Consumer Finance
For personal use only Consumer Finance Jenny Fagg Managing Director Consumer Finance Wednesday, September 19 2007 1
Slide 98: Consumer Finance Overview
Consumer Finance Overview For personal use only Contribution to Consumer cards Personal Division NPAT (1H07) • FUM +$6b • 20% market share Personal Loans Consumer Finance • FUM +$1.5b • 8% market share 21% Merchant Services • Credit Turnover +$29b pa • 16% market share Commercial Cards • Spend +$3b
Slide 99: Consumer Finance has consistently been one of the Group's best performing businesses
Consumer Finance has consistently been one of the Group’s best performing businesses … …with strong growth in revenue… For personal use only Solid FUM growth… ~12% ~11% ~14% ~12% Cards Under Accrual CAGR adjustment 5.1 708 ($b) 4.2 ($m) 597 38 670 2001 2003 Aug-07 2001 2003 1H07 annualised …and cons
Slide 100: Our goals have been consistent since 2004
Our goals have been consistent since 2004 For personal use only 2004 commitments Achieved Objectives Grow revenue Grow profit at 20% or double system volume 99 Micro-manage the credit risk/reward trade-off growth Lead with innovative and convenient Lead in our chosen markets and servicing segments 9
Slide 101: The strategic approach is consistent: A repeatable formula & core capabilities
The strategic approach is consistent: A repeatable formula & core capabilities For personal use only 5 specialised businesses: Consumer Cards, Merchants, Commercial Cards, Personal Loans, ATMs Our approach Brand: Increase Retain Expand into Convenient, Attract New Profit from “Repeatable profitable
Slide 102: How do we win on strategy
How do we win on strategy For personal use only People and culture Brand Simply, the Best Customer Consumer Finance experience Business in Australia Strategic agility Information, risk management 6
Slide 103: Our brand position seeks to differentiate on what is important to customers
Our brand position seeks to differentiate on Brand what is important to customers: • Simple, convenient and responsible banking For personal use only • Innovative products • Exceptional service at key moments of truth ANZ Cards Whatever It Takes… Security Low Rate Premium Rewards Visa Debit Help you
Slide 104: Innovation combined with first mover advantage has driven success
Innovation combined with first mover advantage Strategic agility has driven success … For personal use only First chip card in First major bank Australasia low rate card First major bank First bank with Visa Debit 24x7 call centre + customer charter 1996… 2001 2002 2003 2004 2005 2006 First bank to
Slide 105: Low Rate products and Balance Transfers contribute to growth
Low Rate products and Balance Transfers Strategic agility contribute to growth 0% BT offers enable ANZ to capture For personal use only larger interest-earning balances (Interest Earning Balance per Account) • Low rate products are 350 Int. Earning profitable and trending up 300 Balance greater afte
Slide 106: Strategic agility supported by smart analytics
Information, risk mgt Strategic agility supported by smart analytics For personal use only • Significant investment in Case Study: A recent product launch supports customer data management & the notion that price is not the only lever market research: 1. Qualitative Research Take up rate % • Signifi
Slide 107: Controlled growth in unsecured portfolios has delivered expected risk outcomes
Controlled growth in unsecured portfolios has Information, delivered expected risk outcomes risk mgt Credit Cards growth moving in line For personal use only with system Pre-06 – lending growth well above system, with positive credit environment* Market share continues 22% to track at ~ 20%* 16% 28%
Slide 108: Cards and Personal Loans: Credit quality and losses in line with expectations
Cards and Personal Loans: Credit quality and Information, losses in line with expectations risk mgt Greater acquisition of proprietary cards With credit card loss rates increasing For personal use only % Acquisition growth by cards product as low rate balances ‘season’… Portfolio by Vintage March 20
Slide 109: Continually delivering above peers on product and service excellence
Continually delivering above peers on product Customer experience and service excellence is key For personal use only ANZ Consumer Cards remains at top of Award winning customer service other majors in customer satisfaction capabilities Score 8.5 8.0 7.5 7.0 ANZ Bank 1 Bank 2 Bank 3 6.5 May-01 May-0
Slide 110: At the forefront of Responsible Lending and committed to Financial Literacy
At the forefront of Responsible Lending and Customer experience committed to Financial Literacy For personal use only Customer Charter • Public benchmark for service to our customers • First to introduce Responsible Lending Charter Responsible • Better at credit assessment and at identifying and Len
Slide 111: A strong emphasis on people, lead by a highly engaged management team
A strong emphasis on people, lead by a highly People and culture engaged management team For personal use only ANZ Consumer Finance Most engaged workforce of major employee value proposition Australian companies 2006 ANZ Staff engagement results Financial Services Benchmark 51% 60% 40% ANZ 60% 25% I
Slide 112: Esanda
For personal use only Esanda David Hisco Managing Director Esanda Wednesday, September 19 2007 1
Slide 113: Esanda - Australia's leading provider of asset finance
Esanda - Australia's leading provider of asset finance Auto Finance For personal use only • Number 1 automotive financier in Australia • Most extensive Dealer Network – over 650 car Contribution to dealerships Personal Division • Total Loans $7.4b NPAT • Number of contracts ~ 295,000 (1H07 Esanda on
Slide 114: Strategy
Strategy For personal use only Building a reputation • where we play based on our • assets we write expertise • price we write at • ANZ business with a #1 market position • revitalising our proposition, improving returns ¾ leadership bench-strength improved Dealer Auto Finance ¾ delivery speed ¾ pro
Slide 115: Business Evolution and Overhaul
Business Evolution and Overhaul For personal use only 2005 2006 2007 • Margin management • Sale of FleetPartners • New Dealer issues • Closure of Online proposition pilot Saver • New leadership • Fleet re-pricing pressures • Withdrawal from teams Specialised Asset • Refined strategies • Poor profit
Slide 116: Leading to Stronger Performance Esanda Australia
Leading to Stronger Performance Esanda Australia Revenue ($m) For personal use only PAT ($m) Profit per FTE ($k) ~ 6% 4.2% 108 369 20% 96 354 85 80 2005 2006 2007 2005 2006 2007 2005 2006 2007 ROE (%) Cost/income ratio (%) Lending ($bn) 41.4 40.0 15.4 14.4 14.6 13.3 2005 2006 2007 2005 2006 2007 200
Slide 117: 2007 – advancing capabilities
2007 – advancing capabilities For personal use only Deeper understanding Bench-strength additions leading to increase in Value add to other auto buy rates investments. Eg: AmmBank Loan History Analysis Expertise Example: New Dealer Proposition Pilot Segment • average approval & Asset response time <
Slide 118: Advancing Capabilities: Dealer Finance case study
Advancing Capabilities: Dealer Finance case study For personal use only • Base interest rates charged to dealers did not vary with loan risk • Commission plans paid to dealers significantly more for low quality loans Situation • Low quality loans grew as a percentage of book • Losing money on loans
Slide 119: No dealer finance position provides strategic advantages
No 1 dealer finance position provides strategic advantages For personal use only • A well respected and recognisable brand • Large volumes processed offer scale advantages • Participating in dealer consolidation • Our share of large dealers means we are more often on the buy side • Reputation ¾ help
Slide 120: UDC – example of a successful transition
UDC – example of a successful transition For personal use only • Management team completely restructured in 2006 • Staff engagement up significantly • Sales focus and experienced leadership driving a 25% increase in new business writings • Balance sheet growing again after 3 years of decline • 4 bel
Slide 121: Innovative ways and award winning products enhancing our finance company offering
Innovative ways and award winning products enhancing our finance company offering For personal use only Personal Loan pilot Esanda Debentures • Over 40 inbound calls per • 50 years of investment day received from existing issuances customers • Australia’s largest supplier of • Consumer credit expert
Australia and New Zealand Banking Group — Investor Day (September 2007) on 6ix