Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — UBS Conference 2006
21 slides from Anz's conference presentation, Jul 10, 2006
Slide 1: UBS Conference June 2006
UBS Conference 22 June 2006 “Chief Financial Officer www.anz.com
Slide 2: A quick recap on the first half result
A quick recap on the first half result First Half NPAT - $1,811m Cash EPS growth - 10% (fully comparable IFRS basis) Dividend growth - 10% Benefits of our investment program starting to flow through EE Cash EPS — in line But we continue to invest And we are already with peer average heavily for futu
Slide 3: Issues that came out of the result
Issues that came out of the result « What should actually constitute “Cash” EPS? * How does the Collective Provision work, including timing of oil shock collective provision run off? © What will happen with NZ revenue hedge, and likely impact of a softer Kiwi dollar? « How successful was the NZ inte
Slide 4: ANZs definition of “Cash” EPS
ANZs definition of “Cash” EPS ae eaee aaa Reported NPAT based payments & pension Instruments post IFRS ‘expense as required by IFRS Hybrid Distributions +h Averages ott to Fil — Hedge Ineffectiv. sin/cases ae scoed RED ledge Ineffectiveness.——gains/lonses are 3 suena perouenes through the Pa anyway
Slide 5: Collective Provision charge driven by Cards and Esanda
Collective Provision charge driven by Cards and Esanda 1HO6 Collective Provision charge” Group 55.5 12.0 Institutional 20.7 @5) Crosson) = 888 New Zealand 125 12.8) Cards (Aust:) 147 179 Esende 29 177 Other ay G6) “oasad on new orgreation | (32.2) a73) es 3) eo @2 15 (1) 42 66) 296 17.4 (42) “dudes
Slide 6: Oil provision run off to be completed by Sept-09
Oil provision run off to be completed by Sept-09 lustrative — Assumes “status quo” conditions Oil Provision ~ Modelled Run-Off Profile’ (Asm) 2 Mar-06 Sep-06 Mar-O7 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Divisional Run-Off Profile (% of charge released) See page 21 for ‘an explanation of how the Oll Sho
Slide 7: NZD revenue hedge - a good economic outcome
NZD revenue hedge - a good economic outcome why we hedge? The right decision! Hedge has created significant value During 04/05, N2$ perceived to be NZ$ Revenue Hedge - very good significantly overvalued ‘economic outcome for ANZ Notional Principal (NZSb pre- tax) oF Total Market Value (Asm post-tax)
Slide 8: However under IFRS, a good economic outcome becomes a “not so good” accounting outcome
However under IFRS, a good economic outcome becomes a “not so good” accounting outcome ‘+ From 1 October 2006, “revenue hedges” are no longer recognised under AIFRS + Therefore on adoption of this new AIFRS requirement on 1 October 2006, deferred gains and Mark to Market value of FX revenue hedges g
Slide 9: Integration complete - costs impacted by RBNZ requirements, revenue attrition contained
jtegration complete - costs impacted by RBNZ requirements, revenue attrition contained ‘+ Reduced scope lowered initial estimates Integration Costs, 265 265 239 RBNZ requirements increased final costs: Revenue benefits '* Driven by Institutional 2007 pa at 45 = businesses ‘* Reduced scope & RENZ Cos
Slide 10: Success of integration and two brand strategy
Success of integration and two brand strategy increasingly reflected in share of NZ profits ANZN generates 40% of the Top 4 banks NPAT 4094 Strategy day for ANZ National will be held in Auckland on 7 September ASB BN, = Westpac = ANZN of Mar-03 Mar-04 Mar-05 Mae-06 NZ 10 ite mach Toe ae (ondonted Pa
Slide 11: Putting “trading income” in perspective - accounting disclosures can be misleading
Putting “trading income” in perspective - accounting disclosures can be misleading Reported ‘Trading’ Income being confused with ‘Markets’ income Trading income il 3 To understand what is really happening in Markets income, need to look at aggregate picture 280 a. 1H05 1H06 Growth misleading given +
Slide 12: So how are we generating our “Markets” income?
So how are we generating our “Markets” income? Majority of Markets income Reflected in VaR being generated by Sales desk significantly below peers (a0 $m VaR # 99% confidence lev) asm ag 2000 aby 21% 1924 23 ii anos Hos 2HO4 1HOS HOS, HOS Peer aver wTrading mSales Other ANE “Wak Cave, H06 We oe BNE
Slide 13: Dividend policy & capital management - consistent themes
Dividend policy & capital management - consistent themes Dividends + Dividends will grow broadly in tine ith Cash EPS, but seek to look through to ‘normal’ provisioning ‘+ Capping DRP/BOP @ 50,000 shares limits dilution or need to buyback ‘+ Payout ratio provides scope for modest acquisitions, and s
Slide 14: A CFO’s view on Asian partnerships - providing ANZ with a valuable growth option
A CFO’s view on Asian partnerships - providing ANZ with a valuable growth option Starting proposition > « Asia will have higher economic growth than Western economies + Financial services will grow more quickly than overall economy Key issues I look for: > v Is the market attractive, and is there so
Slide 15: Some closing observations
Some closing observations * Apleasing first half, as we started to reap the benefits of our investment program * Credit conditions remain sound, but are at cyclical lows and losses more likely to increase * Overall 2006 expected to be a good year for ANZ * Looking forward, we have a clear growth str
Slide 16: The material in this presentation is general background information about the Bank's activities
‘The material in this presentation is general background information about the Bank's activities current at the date of the presentation, Tt 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 potential investors
Slide 17: Hedge Ineffectiveness illustration
Hedge Ineffectiveness illustration Somple transaction (illustrative) 4. ANZ seeks to hedge variable rate exposuce in ite mortgage pertito 2. ANZ uses a Pay Floatng/Recewve Fed intarest rate swap to hedge interest ra 2. Intorast eats fin Voor 2 mortgage accruat | Vaabl rate income fom o © = 7 — 9 Und
Slide 18: Diluting for hybrids - not reflective of economic reality
ls - not reflective of economic reality Diluting for hybi US Hybrid as an example Why are they in the dilution calculation? + On 15 December 2053, there is mandatory conversion to ordinary shares if ANZ hasn't already redeemed them. It is this potential conversion to ordinary shares that results in
Slide 19: Hybrid Deals
Hybrid Deals € Trust Securities Currency & Amount 81 bition 561.1 bition ++ 5§350m ~ an 2010 + USE7S0m ~ Dee 2013 EURS0O milion Issue Date 24 September 2003 126 November 2003, 19 december 2004 Final Maturity Date 1 September 2053 Reset ate Sep 2008 12 December 2053 Interest Rate Floating - 88SW + 10
Slide 20: NBNZ Integration is complete and all objectives met
NBNZ Integration is complete and all objectives met 2004 2005-2006 (f)_ 2007 (f) Nzgm Total Integration costs 49 139 51 ° Incremental Integration Opex 29. 85 42 ° Cost synergies 6 33 44 70 Revenue synergies 1 26 44 50 Attrition 20 _33_____34_34 Net synergies “13, 26 54 86 ‘+ The Integration programm
Slide 21: Searchable text section of graphics shown above
Searchable text section of graphics shown above [GRPAHIC] UBS Conference 22 June 2006 Financial management issues to consider when looking at ANZ Peter Marriott Chief Financial Officer www.anz.com [LOGO] A quick recap on the first half result First Half NPAT - $1,811m Cash EPS growth - 10% (fully co
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