Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Non-Deal Roadshow (January 2011)
91 slides from Anz's roadshow presentation, January 2011
Slide 1: Investor Discussion Pack
Investor Discussion Pack Mike Smith Chief Executive Officer AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011
Slide 2: ANZ has established a strong business foundation
ANZ has established a strong business foundation A clear company wide focus on our super regional strategy: • Organised our business around three key geographies and our customers p. 3-16 • Maintaining strong businesses in our home markets: • Australia p. 17-22 • New Zealand p. 33-37 • Investing for
Slide 3: Overview and strategy
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Overview and strategy
Slide 4: ANZ is structured by Geography & Segment
ANZ is structured by Geography & Segment Asia Pacific, Europe & America (APEA) Retail Commercial (including Wealth Institutional (emerging) partnerships) Australia Retail Wealth Commercial Institutional New Zealand Retail Wealth Commercial Institutional Institutional is a global business 4
Slide 5: Super Regional strategy progressing well
Super Regional strategy progressing well TRANSFORM OUT PERFORM RESTORE • Institutional back • Quality on par with Create global leaders in our to system markets a leading Super • Restore “jaws” – • Best of breed Regional bank increase revenue faster than costs customer experience • In-fill mergers a
Slide 6: Super Regional Strategy
Super Regional Strategy Asian, Australian & New Zealand Australian 2 way trade weights interconnectedness increasing: US & Europe1 • Following and supporting our customers to the region, developing relationships to work both ends of the trade flows. • Trade flows between Asia and Australia and New Z
Slide 7: Regional and intra-regional trade and investment flows are substantive
Regional and intra-regional trade and investment flows are substantive Denotes two way trade flow (2008) FDI inward flow (US$b, 2008) Asia1-Europe Asia1-USA Trade: US$1.1trn Trade: US$1.0trn CN TW 108 5 IND HK 42 63 Pacific-Asia1 VN 8 Trade: US$7b INDON Intra-Asia1 8 Trade: US$2.5trn Aus/NZ-Pacific
Slide 8: Building a genuinely pan regional business - connectivity provides a competitive advantage
Building a genuinely pan regional business - connectivity provides a competitive advantage Growth in trade and capital flows between Asia Linked through flows of trade, and Australia are tracking 17% to 25% pa capital and population Surplus savings Key focus is to bridge gaps across There is approxi
Slide 9: Strategy is supported by a disciplined approach to M&A – RBS Asia acquisition
Strategy is supported by a disciplined approach to M&A – RBS Asia acquisition • Acquired RBS¹ businesses in six countries, Country Business Branches Customers Deposits aligned with current strategy: Taiwan Retail 21 ~1.3m ~US $2.5b Retail, wealth & commercial Commercial & 16 businesses in Taiwan,
Slide 10: Strategy is supported by a disciplined approach to M&A - ING Australia and New Zealand Joint Ventures
Strategy is supported by a disciplined approach to M&A - ING Australia and New Zealand Joint Ventures • Acquired ING Groep‟s (ING) 51% interest in ING Australia and ING NZ (the JVs) for $1,760m 1 Australia ~11x multiple of normalised 2008 earnings2 Acquired ING's 51% in ING Australia 1.2x multip
Slide 11: Strategy is supported by a disciplined approach to M&A - Landmark Loan and Deposit book
Strategy is supported by a disciplined approach to M&A - Landmark Loan and Deposit book Overview of transaction Overview of Landmark • Acquisition of Landmark Financial Services • Leading Australian agribusiness company, (LFS) loan and deposit book from AWB‟s rural offering merchandise, fertiliser,
Slide 12: ANZ has continued to invest for growth notwithstanding recent tougher economic conditions
ANZ has continued to invest for growth notwithstanding recent tougher economic conditions Revenue and Expenses Net Profit by region 17% Pro Forma 1 12% 12% Basis 9% 10% 8% 6% 8% 7% 8% FY06 FY07 FY08 FY09 FY10 Revenue Expenses Provision charges Net Profit after tax2 1. Pro forma basis assumes ING Aus
Slide 13: Group loans and deposits
Group loans and deposits Group Customer Deposits (A$b) Group Net Loans and Advances (including acceptances) (A$b) Loan to Deposit Ratio Sep 2010 – 140% Loan to Deposit Ratio Sep 2006 – 171% 1 1 1. Includes Wealth and Other Regional performance: Overview 13
Slide 14: Net loans and advances by geography
Net loans and advances1 by geography Australia New Zealand (NZD) APEA (USD) FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 Growth 13% 15% (1%) 6% 13% 11% (1%) (1%) 31% 99% (14%) 45% A$b 2 1. NLAs include acceptances 2. Retail includes Wealth and Group Centre Regional performance: Overvi
Slide 15: Customer deposits by geography
Customer deposits by geography Australia New Zealand (NZD) APEA (USD) FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 Growth 20% 12% 14% 7% 7% 5% 2% 0% 26% 69% 31% 72% A$b 1 1. Retail includes Wealth and Other Regional performance: Overview 15
Slide 16: Diversified lending portfolio, weighted to secured mortgage portfolio
Diversified lending portfolio, weighted to secured mortgage portfolio Net Loans and Advances (including acceptances) by product line (A$b) 361 1 (A$b) 172 1 47 (A$b) 90 52 1. Includes Wealth. 16
Slide 17: Australia Division
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Australia Division
Slide 18: Australia Division – high value strategy has delivered
Australia Division – high value strategy has delivered Pro Forma Basis2 Australia Division Revenue & Expense growth1 Profit Before Provisions growth Pro Forma Basis2 Provisions Net Profit after tax 1. 2005 to 2008 based on “Personal Division” structure, 2009 and 2010 based on “Australia Division” st
Slide 19: ANZ’s Super Regional strategy provides opportunities across our Australian business
ANZ’s Super Regional strategy provides opportunities across our Australian business Retail • By 2015 15% of the Australian population will be of In-country Business Migrant banking Asian origin platforms Development Managers • Student volume is driving much of the in-flow from Asia (particularly Chi
Slide 20: Retail building on a strong customer franchise, revenues impacted by fee changes and higher cost of funds
Retail building on a strong customer franchise, revenues impacted by fee changes and higher cost of funds Pro Forma Basis3 • iKnow platform providing frontline staff with Market share2 Revenue growth improved customer insights and support (% of market share) • Renewed focus on customer service and e
Slide 21: Australia: Commercial
Australia: Commercial Pro Forma Basis3 • Acquired Landmark Financial Services Revenue growth Growing market share1 ($2.2bn lending, $400m deposits) • Invested in more small business (% of market share) specialists. • Esanda transitioned to a purely auto financier with business equipment asset financ
Slide 22: Australia: Wealth
Australia: Wealth Pro Forma Basis1 Revenue growth • ANZ assumed full ownership of ING's Insurance in-force premiums superannuation, investment and insurance businesses $m Up 14% • Combined with ANZ Private and 1,312 1,155 1,230 Investment & Insurance businesses to form a single Wealth unit • Strengt
Slide 23: The Asia Pacific Europe & America Division
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 The Asia Pacific Europe & America Division
Slide 24: Deep onshore presence and strong network model delivers connectivity to clients
Deep onshore presence and strong network model delivers connectivity to clients Franchise Franchise Markets Network Core markets for Institutional, Commercial, Retail & Wealth Hubs • Greater China • Greater Mekong1 • India • Indonesia • Malaysia • Pacific Regional Business Hubs Greater China (33) •
Slide 25: Since 2008, we have prioritised our build out, enabling us to become a credible competitor
Since 2008, we have prioritised our build out, enabling us to become a credible competitor 1H 2008 Today • Institutional network • Pan-regional Institutional/commercial business • Formed partnership with • Top 4 foreign bank in Indonesia South and AmBank • Largest foreign bank franchise in Greater M
Slide 26: APEA: Balance sheet momentum
APEA: Balance sheet momentum1 APEA loans & deposits (US$b) 2010 loan and deposit growth by RBS2 Dep. Loans region 2H10 5.0 2.8 1H10 1.5 0.4 APEA Asia Pacific Europe & America APEA Current & Saving accounts 2010 loan & deposit growth by segment (CASA) (US$b) Includes accounts from RBS acquisition Ret
Slide 27: Business strategy allows for efficient use of APEA's liquidity surplus
Business strategy allows for efficient use of APEA's liquidity surplus • Focus on affluent and emerging affluent client segments Business • Building a substantive DCM and Cash Management Strategy capability and investor client base This focus allows us to: • Fund our own regional growth in a less ex
Slide 28: Becoming a top four Institutional bank in Asia Pacific
Becoming a top four Institutional bank in Asia Pacific Customer Segments Value Proposition • Be a core wholesale bank to our clients Institutional • Leveraging our strengths: MNC / Regional Corporate – Regional network and connectivity – AA rating Commercial – Deep insights – geographic, industry, c
Slide 29: We are delivering for Institutional and our clients across Asia and the Pacific
We are delivering for Institutional and our clients across Asia and the Pacific Regional Connectivity Examples • Mandated Lead Arrangers with BNP and European and US Multinational HSBC companies accessing Asia • US$411m (2.7x launch size)-maiden Asian syndication bond • Raised US$1,100m (3.7x launch
Slide 30: Our Retail & Wealth and Private Bank will deliver local and regional banking to the affluent in each market
Our Retail & Wealth and Private Bank will deliver local and regional banking to the affluent in each market • HNW, Affluent & Emerging Affluent Customer segments • Owners, management and staff of our institutional and commercial clients Position and Value Proposition • Three critical value propositi
Slide 31: Five key partnerships expand our organic agenda
Five key partnerships expand our organic agenda Double play in high growth, high return market Partnership Model Focus on our key segments (Commercial, Affluent & Emerging Affluent) • Significant influence Scale (Number 5 by assets & deposits) in a closed market • Exposure to growth markets an
Slide 32: Organic growth a key driver of strategy
Organic growth a key driver of strategy 2008 2009 2010 2011 2012+ Develop strategy and Continue organic Extend and deepen build business model growth with bolt-ons franchise • Build substantive Institutional • Organic growth anchored by • Deepen organic growth in business Institutional / Commercial
Slide 33: The New Zealand Division
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 The New Zealand Division
Slide 34: Our strategy is to fully leverage ANZ’s leading market position to deliver superior growth and returns
Our strategy is to fully leverage ANZ’s leading market position to deliver superior growth and returns Leveraging leading market share Two strong banking brands with a positions1 powerful market presence Market share1 39% 39% 33% Well diversified portfolio, weighted to Residential Property Net Loans
Slide 35: New Zealand - Retail & Wealth
New Zealand - Retail & Wealth Pro Forma Basis2 Retail Wealth Revenue growth • Asset growth flat, system growth • Wealth profitability favourably rates subdued impacted by ING NZ full ownership • Income impacted by removal of • $1.5 billion KiwiSaver FUM with exception fees, margins over 360,000 cust
Slide 36: New Zealand - Commercial
New Zealand - Commercial Pro Forma Basis1 Commercial Rural • Leveraged Shanghai Expo as an • Higher Rural incomes with Fonterra Revenue growth opportunity to connect customers to forecasting the third highest dairy payout Asia and demonstrate regional on record capabilities • ANZ continues to suppor
Slide 37: New Zealand - Institutional
New Zealand - Institutional Pro Forma Basis2 • ANZ continues to dominate the Institutional NZ NZ institutional segment 2010 Financial Performance Revenue growth • Second half expense growth Trading revenue driven by investment in down 161m payments systems • Connecting customers to Asia and demonstr
Slide 38: The Institutional Business
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 The Institutional Business
Slide 39: Global Institutional business focus redefined
Global Institutional business focus redefined Foundations laid Revenue Contribution by Product • Strengthened the Institutional Leadership Team, additional team members with international experience • Starting to execute the technology and operations roadmap • Improving capital discipline • Exiting
Slide 40: Increased focus on core customers and geographies
Increased focus on core customers and geographies Over 3,500 active Institutional and Corporate A single global team services customer customers supported by over 5,000 staff needs across the network • Corporate banking customers: t/over $40-400m • Global representation supports customers based in A
Slide 41: Regional networks, superior insights & service underpin the competitive advantage
Regional networks, superior insights & service underpin the competitive advantage Competing globally requires Regionally Networked Model superior insights and service • A lead regional bank servicing clients with pan regional needs • A strong regional branch • Building platforms offers viable altern
Slide 42: Global Institutional – a focus on growing core customer relationships supporting income performance
Global Institutional – a focus on growing core customer relationships supporting income performance Customer Growth Customer Income1 Cross Border Income >1,100 new relationship managed Super Regional strategy increasingly customers ex-acquisitions capturing cross border revenue flows 14% CAGR Domest
Slide 43: Global Markets
Global Markets Global Markets Income Product Contribution Sales & Trading Mix (A$m)1 % Total Income 2,062 1,816 49% 1,225 43% 857 36% 29% 51% 57% 71% 64% Whilst lower than 2009, market • Capital Markets growth underlines the benefits of volatility evident in 2010 Asian network expansion, ensuring we
Slide 44: Global Institutional P&L drivers
Global Institutional P&L drivers Underlying Performance1 Business Segment Performance1 YOY Movement (FY10 vs. FY09) A$m YOY Movement (FY10 vs. FY09) A$m large 14% (22%) large 2 2% 14% (46%) 23% Geographic Performance1 YOY Movement (FY10 vs. FY09) A$m Up 29% 2H10 vs 3% 10% (29%) 2% 13% 1H10 1. Pro fo
Slide 45: Investing across the business in systems and people
Investing across the business in systems and people Expense Growth1 Asia Pacific, Europe & America • Continued investment in growing the Asia franchise YOY HOH and driving customer acquisition • Investment in support infrastructure to underpin revenue growth 31% 13% Australia • Investment in frontli
Slide 46: Predicated on disciplined execution
Predicated on disciplined execution Implementation priorities Significant growth opportunities Estimated addressable Cash Management Sustained customer growth Revenue pools • Deepening relationships with existing 3500 active clients ($b) • Targeting a significant number of new 17% customer relations
Slide 47: Priority segments – Natural resources & Agriculture
Priority segments – Natural resources & Agriculture Natural resources Agriculture • Well positioned to develop a super regional • Growing soft commodity demand from Asia natural resources business linking Australian producers with Asian processors • Well positioned for Australian and NZ and consumer
Slide 48: Priority segments – Infrastructure
Priority segments – Infrastructure • Goal to become a leading commercial Addressable revenue in APAC Infrastructure Bank in the Asia Pacific Infrastructure market set to grow to Region $5.5b Debt Markets • Maintain dominant position in Australia and NZ and invest selectively in Asia (A$m) Txn. Banki
Slide 49: Priority products – Cash Management & Trade
Priority products – Cash Management & Trade Cash Management Trade • Vision to be a lead provider of pan-regional cash • Support trade flows between our core management solutions via a single transactional operating geographies interface • Build on strong market position in Australia • Estimate the A
Slide 50: Priority products – Regional Rates and FX; Commodities and Debt Capital Markets
Priority products – Regional Rates and FX; Commodities and Debt Capital Markets Commodities Regional Rates and FX • Commodity revenue split: • Largest domestic markets business Hedging exposures of commodity producers and consumers ~ 60% of revenue • FX revenues growing at 40% pa since 2007, Tra
Slide 51: Our Institutional client transactions tell the story
Our Institutional client transactions tell the story Debt Capital Markets Project, Asset & Export Financing USD 600mn SGD 1bn AUD 1.75bn USD 600mn USD 263.7mn AUD 1.179bn Senior Unsecured Bonds Senior Unsecured Bonds Acquisition of CSR Limited‟s Term Facilities to refinance Hope Finance for deliveri
Slide 52: Treasury
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Treasury
Slide 53: ANZ’s strong capital ratios are fully reflected when measured consistently across various jurisdictions
ANZ’s strong capital ratios are fully reflected when measured consistently across various jurisdictions Sep 09 Mar 10 Sep 10 FSA Sep 10 Core Tier 1(1) 9.0% 8.5% 8.0% 11.3% Tier 1 10.6% 10.7% 10.1% 13.5% Total Capital 13.7% 13.0% 11.9% 15.2% Capital Update: Capital Agenda: • ANZ‟s capital strength re
Slide 54: Core Tier-1 level remains strong and well positioned
Core Tier-1 level remains strong and well positioned Capital Position (Core Tier-1 Ratio) Portfolio growth & mix 19bp decrease Risk migration 3bp increase Portfolio data review 4bp increase ING 79bp decrease Non credit RWA 27bp decrease RBS 20bp decrease Landmark 7bp decrease Integration Costs 10bp
Slide 55: Tier-1 position reduced during FY10 due to recent acquisitions partially offset by Hybrid issuance
Tier-1 position reduced during FY10 due to recent acquisitions partially offset by Hybrid issuance Capital Position (Tier-1 Ratio) Portfolio growth & mix 23bp decrease Risk migration 4bp increase Portfolio data review 5bp increase ING 79bp decrease Non credit RWA 34bp decrease RBS 24bp decrease Land
Slide 56: Reconciliation of ANZ’s capital position to FSA Basel guidelines
Reconciliation of ANZ’s capital position to FSA Basel 2 guidelines APRA regulations are more conservative than current FSA regulations, in that APRA requires: • A 20% Loss Given Default floor for mortgages (FSA: 10% floor) • Interest Rate Risk in the Banking Book (IRRBB) included in Pillar I risks (
Slide 57: Basel 3 & APRA Regulatory reform - Capital
Basel 3 & APRA Regulatory reform - Capital Basel Committee Announcements What remains outstanding under B3? To date, the Basel Committee has announced: • Methodology for determining countercyclical buffer • New capital targets and buffers • Final requirements for Tier-1 & 2 instruments • Timetable a
Slide 58: Improved funding profile achieved, stable term debt issuance
Improved funding profile achieved, stable term debt issuance Stable term funding profile Key Funding Metrics • 82% of all funded assets financed by equity, deposits & LT debt (was 78% as at Sep „09 & 71% Sep „08) • $26.4b of term funding (including $2.4b of pre funding Issuance Maturities and $2b CP
Slide 59: ANZ’s term debt issuance consistent and well diversified
ANZ’s term debt issuance consistent and well diversified APEA funding benefit reduces Marginal term funding costs have term debt issuance by ~10% stabilised but average costs continue to increase as portfolio reprices APEA surplus deposits Domestic AUD/NZD Offshore Private Placements Multi-currency
Slide 60: Strong Liquidity Position leading into proposed B3 changes
Strong Liquidity Position leading into proposed B3 changes Maintaining post GFC liquidity Basel III Liquidity Developments position ($b) • Reduction in required core funding of mortgages from 100% to 65% • Improved treatment of „Retail‟ and „SME‟ deposits • Allowance for high grade corporate and cov
Slide 61: AUD strength presents a headwind for future earnings
AUD strength presents a headwind for future earnings • ~1.2% negative impact, including current hedging positions, on FY11 EPS growth expected if the AUD maintains current levels • NZD remains the most significant single currency revenue exposure • USD and Asian local currency earnings expected to g
Slide 62: Risk Management
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Risk Management
Slide 63: Credit Risk Weighted Assets
Credit Risk Weighted Assets Total Credit Risk Weighted Assets Credit RWA Movement FY10 vs. FY09 A$b A$b Acquisitions Impact: RBS $4.6b Landmark $2.3b Risk 63
Slide 64: Impaired Asset balance has reduced ex-acquisitions
Impaired Asset balance has reduced ex-acquisitions Gross Impaired Assets Gross Impaired Assets By type By size of exposure A$m A$m New Impaired Assets A$m By Segment NPCCD – Non Performing Credit Commitments and Contingencies Risk 64
Slide 65: Watch & Control Lists and Risk Grade Profiles
Watch & Control Lists and Risk Grade Profiles Watch & Control List by limits Group Risk Grade profile by (Mar 2009 Watch List index =100) Exposure at Default Index Top 5 Watch List Industries By Exposure By No. Groups Agriculture, Forestry & Fishing Agriculture, Forestry & Fishing Mining Property Se
Slide 66: 90+ days past due Australia
90+ days past due Australia Australia Mortgages Australia Cards 90+ day delinquencies 90+ day delinquencies Australia Commercial 90+ day delinquencies Risk 66
Slide 67: Australia Mortgages
Australia Mortgages Portfolio Statistics Dynamic Loan to Valuation Ratio • All lending is on a full recourse basis Sep 2010 - 84% 12% 4% • Approvals require demonstrated serviceability • ~830,000 loans on book • 65% of portfolio owner occupied lending • Average loan size at origination ~$226k Applic
Slide 68: New Zealand – Risk Performance
New Zealand – Risk Performance Total Impaired Assets and as % Gross Total Provision Charge Lending Assets (NZ$m) (NZ$m) 90+ Days Arrears 68
Slide 69: Commercial Property Credit Exposure
Commercial Property Credit Exposure Commercial Property Exposure Commercial Property Exposure GLA by Region (A$b) by Sector 7.5% of Group GLA‟s 29.6 28.2 27.2 26.7 27.7 26.1 69
Slide 70: Economics
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Economics
Slide 71: Exceptionally strong investment outlook over next few years
Exceptionally strong investment outlook over next few years $bn 80 Communication sub-total Uncertainty Water & sewerage Sub-total 70 Manufacturing Sub-total Gas Pipeline sub-total Electricity Sub-total Mining Sub-total 60 Energy Sub-total Airports Sub-total Rail sub-total Ports sub-total 50 Roads Su
Slide 72: The outlook for mining investment has rarely been stronger
The outlook for mining investment has rarely been stronger ABARE Advanced Mining Projects, June 2010 72 Sources: ABARE
Slide 73: Record population growth coupled with undersupply
Record population growth coupled with undersupply Population growth vs. dwelling completions 225,000 450,000 Annual population 400,000 gain (lhs) 200,000 350,000 175,000 300,000 250,000 150,000 200,000 125,000 150,000 Annual dwelling completions (rhs) 100,000 100,000 76 78 80 82 84 86 88 90 92 94 96
Slide 74: Housing shortage has reached unprecedented levels
Housing shortage has reached unprecedented levels Housing market balance „000 400 360 320 280 240 Underlying demand 200 160 120 Completions 80 Cumulative Shortage 40 0 -40 -80 Surplus 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Sources: ABS, ANZ Economics and Markets Research 74
Slide 75: Recovery in dwelling prices has been broadly-based
Recovery in dwelling prices has been broadly-based Australian dwelling prices Price index value 125 Top 20% 120 115 Middle 60% 110 Bottom 20% 105 100 95 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Source: RP Data Rismark 75
Slide 76: Changing composition in those seeking finance approvals
Changing composition in those seeking finance approvals Housing finance approvals (value) Sources: ABS, RBA, ANZ Economics and Markets Research 76
Slide 77: Distribution of debt rather than the aggregate debt is a key factor…
Distribution of debt rather than the aggregate debt is a key factor… Increased household debt has been And has been taken up by higher directed towards residential income households with the capacity property, not personal consumption to service Source: RBA paper “Aspects of Australia‟s finances” 15
Slide 78: Complexion of household debt
Complexion of household debt • Household debt up but also total assets held by households • Debt largely used to acquire assets • Financial assets (i.e. ex housing) now equivalent to 2.75 years of income up from 1.75 years of income in the early 1990‟s • Increased debt mostly taken on by households
Slide 79: Australian house prices
Australian house prices Fundamentals are sound • Nominal house prices and ratio to income elevated • House price to income ratio ignores interest rates / debt servicing • Fundamentals are currently very supportive • Housing shortage worsening • Cyclical upturn underpinned by resources boom and autho
Slide 80: Conservative lending, supportive policy and strong economy has meant a very resilient housing market
Conservative lending, supportive policy and strong economy has meant a very resilient housing market Source: RBA 80
Slide 81: Australian house prices have broadly tracked incomes since 2004
Australian house prices have broadly tracked incomes since 2004 (incomes rising strongly due to terms of trade) House price to income ratio Index 18 Australia US UK New Zealand 16 14 12 10 8 6 4 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 Sources: RP Data-Rismark, RBA, ANZ Economics and Markets Res
Slide 82: A structural lowering (halving) of mortgage rates has significantly improved debt serviceability
A structural lowering (halving) of mortgage rates has significantly improved debt serviceability Mortgage interest rates 20 Australia US 18 UK NZ 16 14 12 10 8 6 4 On average, mortgage rates have halved justifying a 2 near doubling of house price to income ratios 0 81 82 83 84 85 86 87 88 89 90 91 9
Slide 83: Increase in house price to income ratio almost fully accounted for by the halving of mortgage rate
Increase in house price to income ratio almost fully accounted for by the halving of mortgage rate Median house Average household Mortgage rate House price to price income income $000's $000's % ratio 600 120 16 6 14 500 100 5 12 400 80 4 10 300 60 8 3 6 200 40 2 4 100 20 1 2 0 0 0 1985 2009 0 1985
Slide 84: Household incomes and consumption
Household incomes and consumption Household disposable income & consumption % 10 Gross disposable income Consumption spending Savings rate 8 Forecasts 6 4 2 0 -2 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: ANZ, RBA, ABS 84
Slide 85: Labour market is strong and supporting household confidence
Labour market is strong and supporting household confidence Monthly employment and labour force growth, ‘000 people (trend) 40 Labourforce growth (trend) Employment growth (trend) 30 '000 change per month 20 10 0 -10 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Source: ABS 85
Slide 86: 1990’s commercial property downturn characterised by significant oversupply vs other downturns
1990’s commercial property downturn characterised by significant oversupply vs other downturns1 Supply Pipeline as a % of Total Stock Australian CBD Office Market Source: Jones Lang LaSalle. 1. with the exception of WA & QLD 86
Slide 87: Australia has run a current account deficit for most of the past 150 years
Australia has run a current account deficit for most of the past 150 years Current account deficit ● The current account deficit is the gap between national saving and national investment ● That Australia has run a deficit for such a long period suggests the country has more investment opportunities
Slide 88: Economics – Forecasts
Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED January 2011 Economics – Forecasts
Slide 89: Economic updates
Economic updates Australia New Zealand 2009 2010 2011 2012 2009 2010 2011 2012 GDP 0.9 2.7 3.2 4.1 -2.5 1.5 2.3 4.3 Inflation 1.3 2.8 3.0 3.2 2.0 1.5 4.91 2.3 Unemployment 5.8 5.2 5.2 4.9 7.1 6.4 5.5 5.5 Current A/C (% GDP) -3.3 -3.6 -2.6 -4.0 -3.3 -3.8 -3.7 -3.9 Cash rate 3.00 4.50 5.25 5.75 2.50 3
Slide 90: Growth Forecasts – Asia
Growth Forecasts – Asia Emerging Asia GDP Growth Forecasts 2007 2008 2009 2010 2011 2012 China 13.0 9.6 9.1 10.1 9.6 9.5 India 9.5 7.3 6.8 9.2 8.4 9.3 NIEs Hong Kong 6.4 2.4 -2.7 6.5 5.0 5.2 Korea 5.1 2.3 0.2 6.2 4.3 4.6 Singapore 8.5 1.8 -1.3 14.5 4.2 5.9 Taiwan 5.9 1.1 -1.9 10.6 5.9 5.7 ASEAN Indo
Slide 91: www.anz.com
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 potential investors and
Australia and New Zealand Banking Group — Non-Deal Roadshow (January 2011) on 6ix