Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — FY2018 Earnings Presentation
143 slides from Anz's earnings presentation, Oct 31, 2018
Slide 1: 2018 Full Year Results
2018 FULL YEAR RESULTS RESULTS PRESENTATION & INVESTOR DISCUSSION PACK 31 OCTOBER 2018 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 2: Contents
CONTENTS FULL YEAR 2018 RESULT CEO and CFO Results Presentations 3 CEO Presentation 3 CFO Presentation 14 Large/notable items 34 Financial Performance 46 Group Treasury 56 Risk Management 64 Housing Portfolio 82 Divisional Performance 95 Australia Division 97 Institutional Division 105 New Zealand D
Slide 3: CEO Presentation: Shayne Elliott
2018 FULL YEAR RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER 31 OCTOBER 2018 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 4: Financial Snapshot
FINANCIAL SNAPSHOT FY18 Change (vs FY17) Statutory Profit ($m) 6,400 0% Cash Profit After Tax (continuing operations) ($m) 6,487 -5% Earnings Per Share (cents) 223.4 -4% Return on Equity 11.0% -67bp Dividend Per Share (cents) 160 Flat CET1 Ratio (APRA) 11.4% 87bp Net Tangible Assets Per Share ($) 18
Slide 5: Four Priorities
FOUR PRIORITIES CONSISTENT FOCUS SINCE 2016 1. Creating a simpler, 2. Focusing on areas better balanced bank where we can win 3. Building a superior 4. Driving a purpose everyday experience and values led to compete in the transformation digital age 5
Slide 6: Strategic Focus: A Simpler Better Balanced Bank
STRATEGIC FOCUS A SIMPLER BETTER BALANCED BANK CAPITAL REALLOCATION1 CAPITAL FLEXIBIILTY % CET1 CAPITAL FREED UP FROM TRANSFORMATION ($b) SEPTEMBER 2015 Pro forma SEPTEMBER 20182 INCLUDING ANNOUNCED ASSET DISPOSALS 11.7 11.7 Other (0.2) Institutional 4.5 reshaping Retained for higher 5.5 capital and
Slide 7: Strategic Focus: More Agile Bank
STRATEGIC FOCUS MORE AGILE BANK RESHAPING THE WORKFORCE REDUCING FUTURE LIABILITY FULL TIME EQUIVALENT STAFF (FTE)1 CAPITALISED SOFTWARE BALANCE $b 3.0 50,152 Peer 2 46,554 2.5 43,011 37,860 Peer 3 2.0 Peer 1 1.5 ANZ1 1.0 0.5 0.0 Sep 15 Sep 16 Sep 17 Sep 18 Sep Sep Sep Sep Sep Dec 17/ Sep Mar 182 08
Slide 8: Strategic Focus: Outcomes
STRATEGIC FOCUS OUTCOMES CAPITAL RETURNS ASSETS CREDIT QUALITY CET1 ROE1 NTA PER SHARE INTERNAL EXPECTED LOSS 11.4% 12.2% $18.47 0.35% 11.8% $17.13 9.6% 0.27% Sep 16 Sep 18 FY16 FY18 Sep 16 Sep 18 FY16 FY18 ~12.2% calculated on an APRA CET1 ratio of 10.5% 1. ANZ 2018 on a Cash Continuing basis (excl
Slide 9: New Zealand 8 Years In
NEW ZEALAND 8 YEARS IN EXECUTION CONSISTENCY New Zealand Division1 Sep 2010 Sep 2018 Core systems 2 1 Brands 2 1 ANZ brand consideration2 27% 51% FTE3 9,412 7,511 Staff engagement 64% 77% Revenue (NZDm) 2,675 3,555 Expenses (NZDm) 1,349 1,282 CTI 50.4% 36.1% Cash Profit (NZDm) 585 1,633 1. 2010 fina
Slide 10: Institutional 3 Years In
INSTITUTIONAL 3 YEARS IN EXECUTION CONSISTENCY CUSTOMERS FTE CREDIT RISK WEIGHTED ASSETS % change in # of customers1,2 % change in # of FTE2 % change in CRWA2 -21% -39% -24% -49% -27% -32% Institutional International Institutional International Institutional International RISK ADJUSTED NIM REVENUE &
Slide 11: Australia
AUSTRALIA Australia Division1 Sep 2016 Sep 2018 Retail customers 5.4m 5.7m Small Business customers 472k 500k Branches 724 629 includes digital branches 40 114 Products 373 236 FTE2 13,687 12,885 Revenue ($m) 9,197 9,667 Expenses ($m) 3,242 3,406 Cash Profit ($m) 3,551 3,889 CTI 35.3% 35.2% Risk Pro
Slide 12: Executive Committee Priorities
EXECUTIVE COMMITTEE PRIORITIES 1. Improve the process and speed of remediation 2. Continue simplification and cost out 3. Complete announced asset sales, move to new partnership model 4. Bias resources to the redesign of our Australia business 12
Slide 13: Sustainability Performance Trends
SUSTAINABILITY PERFORMANCE TRENDS WOMEN IN LEADERSHIP2 COMMUNITY INVESTMENT1 ENVIRONMENTAL FINANCING $15B TARGET Total community investment ($m) Funded and facilitated ($b) Representation (%) 137 11.5 32.0 29.9 90 2.5 FY16 FY18 FY16 FY18 FY16 FY18 MONEYMINDED & SAVER PLUS EMPLOYEE ENGAGEMENT Estimat
Slide 14: CFO Presentation: Michelle Jablko
2018 FULL YEAR RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER 31 OCTOBER 2018 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 15: Overview
OVERVIEW CASH PROFIT1 CASH EPS1 Strong balance sheet $m cents 6,809 6,487 232.7 223.4 5,889 202.6 ‘BAU’ costs well managed FY16 FY17 FY18 FY16 FY17 FY18 Strong credit quality ROE1 CET1 RATIO 11.7 Difficult year in Australia division % 11.0 % 11.4 10.3 10.6 9.6 Good result in Institutional
Slide 16: Capital and Liquidity
CAPITAL AND LIQUIDITY COMMON EQUITY TIER 1 CAPITAL (CET1) – LEVEL 2 16.8% % internationally comparable basis 0.28 1.07 11.83 -0.57 11.44 11.04 -0.19 -0.19 20bp higher than $1.9b of $3b historical second completed to date half average1 Mar 18 Organic Capital Divestments Dividends paid Share buy-back
Slide 17: Risk Weighted Asset Movement
RISK WEIGHTED ASSET MOVEMENT TOTAL RISK WEIGHTED ASSETS (RWA) CREDIT RWA DRIVERS $b $b Divisional lending 402 409 4.0 0.0 391 391 19 23 4.1 0.4 -0.5 15 11 336.8 -2.7 337.6 55 60 57 56 -3.9 -0.6 120 Sep 17 FX Aus Instit. NZ Other Asia Risk Other Sep 18 147 161 159 Impact Div Retail CRWA divest. CREDI
Slide 18: Cash Profit Composition – Full Year
CASH PROFIT COMPOSITION – FULL YEAR IMPACT OF DIVESTMENTS AND OTHER LARGE / NOTABLE ITEMS FULL YEAR 2018 $m 698 6,960 682 6,487 5,805 -225 FY18 Cash Profit Discontinued FY18 Cash Profit Divestments Other large / notable items FY18 ex large / Reported Wealth operations1 Continuing notable items FULL
Slide 19: Cash Profit Composition: Divestments
CASH PROFIT COMPOSITION – FULL YEAR DIVESTMENTS (CONTINUING OPERATIONS) FULL YEAR 2018 $m 698 6,960 6,487 6,262 -225 FY18 Cash Profit Divestments FY18 ex Divestments Other large / FY18 ex large / notable items Continuing notable items $m Continuing operations Announced divestment status Earnings1 Ga
Slide 20: Cash Profit Composition: Other Large / Notable Items
CASH PROFIT COMPOSITION – FULL YEAR OTHER LARGE / NOTABLE ITEMS FULL YEAR 2018 $m 698 6,960 6,487 6,262 -225 FY18 Cash Profit Divestments FY18 ex Divestments Other large / FY18 ex large / notable items Continuing notable items $m Other large / notable items within Continuing Operations Accelerated E
Slide 21: 2018 Financial Performance
2018 FINANCIAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) GROUP PERFORMANCE $m 413 6,960 6,763 -66 126 -276 -1.4% -1.5% -38.4% +2.3% +2.9% FY17 Revenue1 Expenses Provisions Tax & NCI FY18 DIVISIONAL PERFORMANCE $m 119 204 74 6,960 118 6,763 FY18 v FY17 Australia
Slide 22: Net Interest Margin
NET INTEREST MARGIN CASH PROFIT CONTINUING OPERATIONS GROUP NET INTEREST MARGIN (NIM) bp High return 193 1 low margin 0 189 -2 -1 -2 -2 182 -4 -1 BBSW / OIS impact ~-2bp -4bp -7bp 1H18 Asset & Funding cost Deposits Assets Treasury 2H18 ex Customer Markets Asia Retail 2H18 funding mix Remediation, re
Slide 23: Risk Adjusted Performance
RISK ADJUSTED PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) NET INTEREST INCOME / AVERAGE CREDIT RWA % GROUP TOTAL1 AUSTRALIA NEW ZEALAND INSTITUTIONAL1 6.15 6.05 6.05 5.87 5.12 5.22 4.54 4.52 4.78 4.91 4.40 4.23 2.34 2.21 2.13 2.07 1H17 2H17 1H18 2H18 1H17 2H17 1H1
Slide 24: Expenses
EXPENSES CASH PROFIT CONTINUING OPERATIONS EXPENSE DRIVERS (EXCLUDING LARGE / NOTABLE ITEMS) $m 8,605 50 8,479 -117 -51 -8 -1.5% FY17 Personnel Property Tech Other FY18 FTE MOVEMENT BY DIVISION CAPITALISED SOFTWARE BALANCE SOFTWARE CAPITALISED $b $m FY18 vs FY17 # % 2.9 Avg. Australia (1,000) -7% am
Slide 25: Credit Impairment Charges
CREDIT IMPAIRMENT CHARGES TOTAL PROVISION CHARGE INDIVIDUAL PROVISION CHARGE $m $m Total loss 1,956 1,047 rate 9bp 892 787 803 1,199 554 196 430 343 404 400 688 0.36% 0.31% 0.27% 249 0.19% 0.15% 0.11% 732 745 548 17 -142 -85 -24 FY16 FY17 FY18 1H16 2H16 1H17 2H17 1H18 2H18 Collective Provision Consu
Slide 26: Portfolio Quality
PORTFOLIO QUALITY NEW IMPAIRED ASSETS BY DIVISION AUSTRALIA HOME LOANS 90+ DAY DELINQUENCIES1,2,3 $b % 4 3.63 1.0 3.21 3 0.8 2.11 0.6 2 0.4 1 0.2 0 0.0 FY16 FY17 FY18 Sep 15 Sep 16 Sep 17 Sep 18 Australia New Zealand Institutional Other 90+ Owner Occupied 90+ Investor GROSS IMPAIRED ASSETS BY DIVISI
Slide 27: AASB 9 Financial Instruments – Transition Impact
AASB 9 FINANCIAL INSTRUMENTS – TRANSITION IMPACT REPLACES “INCURRED LOSS” IMPAIRMENT MODEL WITH EXPECTED LOSS MODEL ILLUSTRATIVE DAY 1 IMPACT: COLLECTIVE PROVISION BALANCE & COVERAGE IAS 39 AASB 9 Equivalent Increase Collective Provision balance $2,523m $3,336m $813m Existing deduction from CET1 APR
Slide 28: Australia Division
AUSTRALIA DIVISION CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) FINANCIAL PERFORMANCE VOLUMES & RISK ADJUSTED MARGIN % change $b 326 334 339 340 FY18 vs FY17 2H18 vs 1H18 Income 2% -3% 198 201 204 203 6.15% 6.05% 6.05% 5.87% Net interest income 3% -3% Other operating income -6
Slide 29: Australia Division Retail
AUSTRALIA DIVISION RETAIL CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) NET LOANS & ADVANCES1 HOUSING COMPOSITION1 $b NET LOANS & ADVANCES $b 10.4 256 264 271 272 21.1 4% 3% 3% 14% 3% 21% 18% 16% -11.2 282.1 8% 275.2 13% 10% -11.9 -1.5 15% 16% 18% 13% 15% 51% 54% 57% 3% 47% Sep
Slide 30: Australia Division Business & Private Bank
AUSTRALIA DIVISION BUSINESS & PRIVATE BANK CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) NET LOANS & ADVANCES LENDING COMPOSITION $b NET LOANS & ADVANCES $b 58.3 0.7 58.1 58.4 58.3 57.6 58.1 1.5 1.5 1.6 1.9 -0.9 15.7 15.6 15.3 15.0 41.1 41.2 40.7 41.2 0% Sep 17 Unsecured lendin
Slide 31: Institutional
INSTITUTIONAL CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) FINANCIAL PERFORMANCE VOLUMES & RISK ADJUSTED MARGIN % change $b 206 181 189 191 FY18 vs FY17 2H18 vs 1H18 138 150 132 132 Income -9% 2% 2.34% 2.07% 2.13% 2.21% Net interest income -6% 2% Other operating income -13% 2%
Slide 32: Institutional Income Performance
INSTITUTIONAL INCOME PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) INSTITUTIONAL INCOME COMPOSITION1 MARKETS INCOME COMPOSITION $m $m 3,070 1,379 57 162 2,576 2,539 2,597 54 53 40 1,379 356 993 67 915 901 901 993 915 11 52 278 295 276 378 825 764 826 197 729 170 117
Slide 33: New Zealand Division
NEW ZEALAND DIVISION CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) FINANCIAL PERFORMANCE VOLUMES & RISK ADJUSTED MARGIN % change NZD NZDb 115 117 119 121 FY18 vs FY17 2H18 vs 1H18 81 82 84 87 Income 5% 1% 5.23% 4.78% 4.91% 5.11% Net interest income 5% 3% Other operating income
Slide 34: Large/Notable Items
2018 FULL YEAR RESULTS LARGE/NOTABLE ITEMS INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 35: Cash Profit Composition – Full Year
CASH PROFIT COMPOSITION – FULL YEAR IMPACT OF DIVESTMENTS AND OTHER LARGE / NOTABLE ITEMS FULL YEAR 2018 $m 698 6,960 682 6,487 5,805 -225 FY18 Cash Profit Discontinued FY18 Cash Profit Divestments Other large / notable items FY18 ex large / Reported Wealth operations1 Continuing notable items FULL
Slide 36: Cash Profit Composition: Divestments
CASH PROFIT COMPOSITION – FULL YEAR DIVESTMENTS (CONTINUING OPERATIONS) FULL YEAR 2018 $m 698 6,960 6,487 6,262 -225 FY18 Cash Profit Divestments FY18 ex Divestments Other large / FY18 ex large / notable items Continuing notable items $m Continuing operations Announced divestment status Earnings1 Ga
Slide 37: Cash Profit Composition: Other Large / Notable Items
CASH PROFIT COMPOSITION – FULL YEAR OTHER LARGE / NOTABLE ITEMS FULL YEAR 2018 $m 698 6,960 6,487 6,262 -225 FY18 Cash Profit Divestments FY18 ex Divestments Other large / FY18 ex large / notable items Continuing notable items $m Other large / notable items within Continuing Operations Accelerated E
Slide 38: Other Large / Notable Items
OTHER LARGE / NOTABLE ITEMS FULL YEAR 2018 CASH PROFIT IMPACT (REDUCTION) $m CONTINUING OPERATIONS 698 Royal Commission 38 External legal costs associated with responding to the Royal Commission. Total $55 million (pre-tax) for FY18. Restructuring 159 Restructuring charges of $104 million in 2H18, w
Slide 39: Customer Remediation
CUSTOMER REMEDIATION CASH PROFIT IMPACT CONTINUING OPERATIONS DISCONTINUED OPERATIONS PROFIT & LOSS IMPACT PROVISION ON BALANCE SHEET PROFIT & LOSS IMPACT PROVISION ON BALANCE SHEET $m (AFTER TAX) $m $m (AFTER TAX) $m 418 -295 184 -161 130 -127 -112 -54 -74 -134 -58 0 -53 10 FY17 FY18 FY17 FY18 FY17
Slide 40: Large / Notable Items: Group Total
LARGE / NOTABLE ITEMS GROUP TOTAL FY17 ex FY18 ex FY17 cash Divest- FY18 cash Divest- FY18 v FY17 ($m) large / Large / notable items large / continuing ments1 continuing ments1 notable notable Customer Restructur- 100 QSM Customer Accelerated Royal Restructuring remediation ing sale remediation amor
Slide 41: Group Divestments – Full Year 2018 & 2017
LARGE / NOTABLE ITEMS GROUP DIVESTMENTS – FULL YEAR 2018 & 2017 FY18 ($m) Gain / (Loss) on sale Divested business results Total Total Divestments PNG Retail, Total Gain Asia Retail SRCB UDC MCC Cambodia JV OPL NZ Comm, SME / (Loss) Asia Retail MCC Divested bus. results Net interest income - - - - -
Slide 42: Group Divestments – Half Year 2018
LARGE / NOTABLE ITEMS GROUP DIVESTMENTS – HALF YEAR 2018 2H18 ($m) Gain / (Loss) on sale Divested business results Total Total Divestments PNG Retail, Total Gain Asia Retail SRCB UDC MCC Cambodia JV OPL NZ Comm, SME / (Loss) Asia Retail MCC Divested bus. results Net interest income - - - - - - - - -
Slide 43: Large / Notable Items: Australia Division
LARGE / NOTABLE ITEMS AUSTRALIA DIVISION FY17 ex FY18 ex FY17 cash FY18 cash Growth FY18 v FY17 FY18 v FY17 ($m) Large / notable items large / Large / notable items large / continuing continuing (%) notable notable Customer Customer Accelerated Cash ex large Restructuring Restructuring remediation r
Slide 44: Large / Notable Items: Institutional
LARGE / NOTABLE ITEMS INSTITUTIONAL FY17 ex FY18 ex FY17 cash FY18 cash Growth FY18 v FY17 FY18 v FY17 ($m) Large / notable items large / Large / notable items large / continuing continuing (%) notable notable Customer Customer Accelerated Cash ex large Restructuring Restructuring remediation remedi
Slide 45: Large / Notable Items: New Zealand
LARGE / NOTABLE ITEMS NEW ZEALAND FY17 ex FY18 ex FY17 cash FY18 cash Growth FY18 v FY17 FY18 v FY17 (NZD $m) Large / notable items large / Large / notable items large / continuing continuing (%) notable notable Customer Customer Accelerated Cash ex large Restructuring Restructuring remediation reme
Slide 46: Financial Performance
2018 FULL YEAR RESULTS FINANCIAL PERFORMANCE INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 47: Financial Performance – Statutory to Cash Profit
FINANCIAL PERFORMANCE – STATUTORY TO CASH PROFIT STATUTORY & CASH PROFIT STATUTORY TO CASH ADJUSTMENTS $m Cash profit represents ANZ’s preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and Divisional performance against prior periods an
Slide 48: Financial Performance
FINANCIAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) FULL YEAR 2018 $m 413 6,960 6,763 126 -66 -276 -1.4% -1.5% -38.4% +2.3% +2.9% FY17 Revenue Expenses Provisions Tax & NCI FY18 SECOND HALF 2018 $m 102 3,518 21 15 3,442 -62 +0.2% -0.4% -26.7% +4.3% +2.2% 1H18 Re
Slide 49: Divisional Performance
DIVISIONAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) FULL YEAR 2018 (EXCLUDING LARGE/NOTABLE ITEMS) $m 119 NZ Div. 204 74 6,960 FY18 v FY17 (%) Aus. Div Instit 118 (NZD) 6,763 Income 2 (9) 5 -318 Expenses 2 (4) 2 PBP2 2 (14) 7 Provisions (21) (148) (93) Cash Pro
Slide 50: FY18 Balance Sheet
FY18 BALANCE SHEET NET LOANS & ADVANCES – BY SEGMENT CUSTOMER DEPOSITS – BY SEGEMENT $b $b 605 487 576 580 6 468 450 23 15 9 27 18 150 132 140 206 174 189 94 95 92 14 13 16 62 70 75 331 341 312 195 182 184 Sep 16 Sep 17 Sep 18 Sep 16 Sep 17 Sep 18 Housing (Aus & NZ) Commercial (Aus & NZ) Other1 Reta
Slide 51: Risk Adjusted Performance
RISK ADJUSTED PERFORMANCE CASH PROFIT CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS NET INTEREST INCOME / AVERAGE Credit RWA1 (%) PROFIT BEFORE PROVISIONS / AVERAGE TOTAL RWA (%) Group Total Australia Institutional NZ Division Group Total Australia Institutional NZ Division Division Division
Slide 52: Total Operating Income
TOTAL OPERATING INCOME CONTINUING OPERATIONS BY DIVISION BY CATEGORY OTHER OPERATING INCOME $m $m $m 5,499 Continuing Operations basis Continuing Operations basis Continuing Operations basis 544 4,941 20,594 20,594 19,816 19,816 234 300 4,700 19,214 19,214 183 2,844 1,579 175 1,339 5,499 668 659 4,9
Slide 53: Expenses
EXPENSES CONTINUING OPERATIONS BY CATEGORY BY DIVISION FULL TIME EQUIVALENT STAFF $m $m # Continuing Operations basis Continuing Operations basis Continuing Operations basis 10,439 10,439 46,554 2,562 43,011 1,525 9,248 9,248 997 8,967 8,967 4,794 2,759 3,664 37,860 278 1,553 1,431 845 1,517 1,578 1
Slide 54: AASB 9 Financial Instruments – Transition Impact
AASB 9 FINANCIAL INSTRUMENTS – TRANSITION IMPACT ILLUSTRATIVE DAY 1 IMPACT: COLLECTIVE PROVISION BALANCE & COVERAGE AASB 139 AASB 9 Increase Collective Provision balance $2,523m $3,336m $813m Existing deduction from CET1 APRA Basel 3 expected loss in excess of eligible $567m 0 $246m impact to CET11
Slide 55: Shareholder Returns
SHAREHOLDER RETURNS 10 YEAR PERFORMANCE EARNINGS PER SHARE DIVIDEND PER SHARE cents cents 260 260 178 181 238 237 164 160 160 160 218 219 145 199 203 200 140 168 126 102 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 SHARE PRICE DIVIDEND PAYOUT RA
Slide 56: Treasury
2018 FULL YEAR RESULTS TREASURY INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 57: Regulatory Capital
REGULATORY CAPITAL CAPITAL UPDATE APRA LEVEL 2 COMMON EQUITY TIER 1 (CET1) Capital Position % Net Organic Capital APRA Level 2 CET1 ratio of 11.4% (or 16.8% on an Internationally Comparable Generation +107bp basis1), which is in excess of APRA’s ‘unquestionably strong’ benchmark2, well ahead 0.90
Slide 58: Regulatory Capital Generation
REGULATORY CAPITAL GENERATION Second half Full Year COMMON EQUITY TIER 1 average 2H18 average FY12- FY18 GENERATION (bp) 2H12 – 2H17 FY17 Cash NPAT1 95 90 191 180 RWA movement (1) 15 (16) 3 Organic Capital Generation 2 Capital Deductions (7) 2 (21) (1) Net organic capital generation of +182bp for
Slide 59: Internationally Comparable Regulatory Capital Position
INTERNATIONALLY COMPARABLE1 REGULATORY CAPITAL POSITION APRA Level 2 CET1 – 30 September 2018 11.4% Corporate undrawn EAD and Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many jurisdictions 1.6% unsecured LGD adjustments APRA requires 100% deduction from C
Slide 60: CET1 and Leverage in a Global Context
CET1 AND LEVERAGE IN A GLOBAL CONTEXT CET1 RATIOS1 LEVERAGE RATIOS1,2 5% 10% 15% 20% 25% 30% 2% 4% 6% 8% Swedbank UOB Svenska Handelsbanken OCBC Nordea DBS SEB ABN Amro Intesa Sanpaolo ANZ Erste Bank Danske Bank BBVA Morgan Stanley Raiffeisen Bank International (RBI) RBS Rabobank Standard Chartered
Slide 61: Balance Sheet Structure
BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET COMPOSITION1 SOURCES AND USES OF FUNDS Sep 2017 to Sep 2018 $b STRUCTURAL FUNDING POSITION SHORT TERM $4.8b increase to Structural funding $4.8b reduction in Short position Term funding position Short Term Wholesale Debt & Liquid and Other Assets Other Fu
Slide 62: Funding & Liquidity Metrics
FUNDING & LIQUIDITY METRICS1 NSFR COMPOSITION NSFR MOVEMENT Sep 2018 Sep 2017 v Sep 2018 $500b $436b 2.3% Wholesale Funding & Other2 Liquids 0.5% 114.6% Non Financial and Other Assets3 113.9% 0.8% 0.9% 0.1% Corporates Other Loans4 -3.9% Retail/SME Residential Mortgages5,6 Capital <35% Available Requ
Slide 63: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 ISSUANCE MATURITIES $b 32 26 24 24 23 22 22 23 19 14 12 11 6 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25+ Senior Unsecured Covered Bonds Tier 2 RMBS PORTFOLIO PORTFOLIO BY CURRENCY 7% 6% 1% 14% 21% 33% Domestic (AUD, NZD) Senior Unsecured Tier 2
Slide 64: Risk Management
2018 FULL YEAR RESULTS RISK MANAGEMENT INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 65: Key Risk Metrics
KEY RISK METRICS CREDIT IMPAIRMENT CHARGE INDIVIDUAL PROVISION CHARGE CP BALANCE & COVERAGE $m $m $m 1,956 1,939 3,336 1,341 2,956 2,876 1,110 2,662 2,523 1,205 1,199 773 0.99% 0.85% 0.82% 0.79% 0.75% 688 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Sep 15 Sep 16 Sep-17 Sep 18 Sep 181 IP Charge CP Charge
Slide 66: Risk Management: Total & Collective Provision Charge
RISK MANAGEMENT TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE CP BALANCE BY DIVISION $m $m 1,956 2,000 1,258 0.4 4,000 3,336 1,500 1,199 2,876 2,662 1,197 989 1,205 0.3 3,000 2,523 1,000 688 2,000 0.2 500 1,000 0 0.1 -85 0 -500 -142 0.0 Sep 16 Sep 17 Sep 18 Sep 18 (AASB9) FY12 FY13
Slide 67: Individual Provision (IP) Charge
RISK MANAGEMENT INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL LOSS RATES INTERNAL EXPECTED LOSS bp % 250 Mar 16 Sep 16 Mar Sep Mar Sep 17 17 18 18 200 Australia Div. 0.35 0.33 0.33 0.33 0.31 0.29 150 100 New Zealand Div. 0.25 0.26 0.26 0.22 0.21 0.19 50 Institutional Div. 0.37 0.36 0.35 0.30 0.32
Slide 68: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 4,000 3,173 2,940 2,708 2,719 2,883 100 3,000 0.55% 2,384 0.48% 0.47% 0.51% 0.51% 2,034 2,013 50 2,000 0.41% 0.34% 0.33% 1,000 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 0 09 10 11 12 13 14 15 16
Slide 69: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b 402 409 391.1 0.8 0.3 1.4 390.8 397 391 396 391 388 38 39 39 37 37 38 -2.8 38 14 18 17 17 16 16 16 Sep 17 Credit RWA Op RWA IRRBB RWA Mkt. RWA Sep 18 CRWA MOVEMENT 350 352 342 337 343 338 $b 334 4.1 1.2 336.8 33
Slide 70: Risk Weighted Assets: Group EAD & CRWA
RISK MANAGEMENT RISK WEIGHTED ASSETS GROUP EAD1 & CRWA’s GROUP EAD1 MOVEMENT $b ($b) 930 944 31.4 944.1 903 889 894 899 903 13.6 903.1 -4.0 Sep 17 FX Impact Lending Data/Meth. Sep 18 Mvmt. Review GROUP EAD & CRWA GROWTH MOVEMENT1,2 38.7% 37.6% 39.4% 38.0% 37.3% 36.9% 35.8% SEP 18 v SEP 17 ($b) 25.4
Slide 71: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE ACTIONS TAKEN TO IMPROVE RISK PROFILE INTERNAL EXPECTED LOSS (IEL) Sold Asia Retail & Wealth businesses (IEL 151bp) 1 (AS A % OF GROSS LENDING ASSETS) (IEL 100bp)2 GROUP TOTAL (%) INSTITUTIONAL (%) Sold Esanda Dealer Finance business 0.35 0.31 0.27 0.27 (IEL 41bp)1 L
Slide 72: Portfolio Composition
RISK MANAGEMENT PORTFOLIO COMPOSITION Portfolio % of Portfolio in Category % of Group EAD Balance in Non Non Performing Performing EXPOSURE AT DEFAULT (EAD) AS A % OF Sep 17 Sep 18 Sep 17 Sep 18 Sep 18 GROUP TOTAL Consumer Lending 41.5% 39.7% 0.1% 0.1% $448 Finance, Investment & Insurance 17.2% 19.6
Slide 73: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSUMER LENDING RETAIL TRADE WHOLESALE TRADE $b % $b % $b % 400 3.5 80 3.5 80 3.5 3.0 3.0 3.0 300 2.5 60 2.5 60 2.5 2.0 2.0 2.0 200 40 40 1.5 1.5 1.5 100 1.0 20 1.0 20 1.0 0.5 0.5 0.5 0 0.0 0 0.0 0 0.0 Mar-14 Mar-17 Mar-18 Sep 12 Sep 13 Sep
Slide 74: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSTRUCTION MANUFACTURING AGRI, FORESTRY, FISHING $b % $b % $b % 80 3.5 80 3.5 80 5 3.0 3.0 60 60 4 60 2.5 2.5 2.0 2.0 3 40 40 40 1.5 1.5 2 20 1.0 20 1.0 20 1 0.5 0.5 0 0.0 0 0.0 0 0 Mar-13 Mar-15 Mar-16 Mar-17 Mar-18 Mar-15 Mar-16 Mar-17 Ma
Slide 75: Group Resources Portfolio
RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR (%) Total EAD (Sep 18): $15.3b As a % of Group EAD (Sep 18): 1.6% 8.6 7.8 7.4 7.0 4.9 4.4 4.0 3.5 2.9 2.3 1.5 1.1 1.4 1.3 1.7 1.4 1.2 1.1 1.0 0.9 Coal Mining1 Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining
Slide 76: Commercial Property Portfolio
RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY REGION1 COMMERCIAL PROPERTY OUSTANDINGS BY SECTOR1 $b % 40.2 100 38.4 8.0 80 37.4 37.5 37.9 37.7 37.5 37.6 2.9 3.9 3.6 2.7 2.4 3.0 60 4.5 4.7 7.5 40 9.8 20 8.8 9.5 9.5 9.7 9.7 8.3 8.4 Mar 17 Sep 17 Mar 18 Sep 18 7.0 Of
Slide 77: Residential Development
RESIDENTIAL DEVELOPMENT COMMERCIAL PROPERTY EXPOSURE OVERVIEW PROFILE (SEP 18) Total Residential Limits: $10.28b • Overall Apartment Development limits have increased by $0.56bn (17%) to ~$4bn in FY18 and now accounts for ~39% of Total 29% Residential Limits. 21% Apartment Development Other Developm
Slide 78: Group Agriculture Portfolio
RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) GROUP AGRICULTURE EAD SPLITS1 Total EAD (Mar 18) As a % of Group EAD A$34.8b 3.7% 6.6% 3.3% 43.5% 15.9% 10.2% 98.9% 74.2% 56.2% 12.6% 36.2% 0.3% 1.1% <60% Secured Australia Productive 60 - <80% Secured New Zealand Imp
Slide 79: New Zealand
RISK MANAGEMENT NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED ASSETS NEW ZEALAND GEOGRAPHY TOTAL PROVISION CHARGE1 NZ$m % NZ$m 1,451 300 202 2.5 200 147 955 2.0 66 60 254 77 53 708 1.5 100 86 130 83 46 106 101 419 491 1.0 31 61 368 337 0 -52 -46 -48 -64 -92 0.5 -100 0.0 -9 Sep 12 Sep 13 Sep 14 Se
Slide 80: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Sep 18): A$408b2 400 Finance (Banks and Central Banks) Government Admin. 27% 31% Property Services3 350 Services to Fin. & Ins. Basic Mat
Slide 81: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Sep 18): A$101b2 EAD (Sep 18): A$101b2 Finance (Banks & Central Banks) 6% 20% Basic Material Wholesaling 3% Machinery & Equip Mnfg 3% 25% 3% Petroleum,Coal,Chem
Slide 82: Housing Portfolio
2018 FULL YEAR RESULTS HOUSING PORTFOLIO INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 83: Australia Home Loans: Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio1 Flow2 Portfolio1 FY16 FY17 FY18 FY18 FY16 FY17 FY18 Number of Home Loan 976k 1,009k 1,011k 170k3 Average LVR at Origination9, 10, 11 71% 69% 67% accounts1 Total FUM1 $246b $264b $272b $57b Average Dynamic LVR10,11,12, 13 55% 54% 54% Average Loan Siz
Slide 84: Australia Home Loans: Portfolio Growth
AUSTRALIA HOME LOANS PORTFOLIO GROWTH LOAN BALANCE & LENDING FLOWS1 HOME LOAN COMPOSITION2 $b $b +3% Payment Type Owner Investor Equity Loan Total Occupied 16 45 1 264 272 P&I Loan 155.6 49.1 - 204.7 -54 Interest Only 21.9 36.8 - 58.7 Equity Loan - - 8.2 8.2 FY17 New Sales Net OFI Refi Redraw & Repa
Slide 85: Australia Division: Portfolio Dynamics
AUSTRALIA DIVISION PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE1,2 72% of accounts ahead of repayments % composition of accounts (September18) Investment:5 Interest payments may receive 26% negative gearing/tax benefits 25% New Accounts: Less than 1
Slide 86: Australia Division: Portfolio Performance
AUSTRALIA DIVISION PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES1,2 HOME LOAN DELINQUENCIES1,2,4 % % 5.0 2.0 4.0 1.5 3.0 1.0 2.0 1.0 0.5 0.0 0.0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 12 13 14 15 16 17 18 12 13 14 15 16 17 18 Home Loans Personal Loans 30+ DPD % 90+ Investor Co
Slide 87: Australia Home Loans: Areas of Interest
AUSTRALIA HOME LOANS AREAS OF INTEREST WA OUTSTANDING BALANCE • Greater focus on Acquisition & Collection management strategies have been applied $b 40 • Exposure to WA has decreased since Mar-16 driven by the economic environment and credit policy tightening (mining town lending, etc) 35 • Currentl
Slide 88: Australia Home Loans: Interest Only
AUSTRALIA HOME LOANS INTEREST ONLY INTEREST ONLY FLOW COMPOSITION1 • Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan % • 83% of Interest Only customers have net income >$100k pa. (portfolio APRA’s 30% limit introduced M
Slide 89: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Pre – application2 Income & Expenses • Effective hardship & collections processes • Full recourse lending Quality assurance, info ver
Slide 90: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 ANZ Policy changes Jun'15 LVR cap reduced to 70% in high risk mining towns Jul'15 LVR cap reduced to 90% for investment loans Aug’15 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Apr’16 Introductio
Slide 91: Stress Testing the Australian Mortgage Portfolio
AUSTRALIAN HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO Assumptions Current Year 1 Year 2 Year 3 • ANZ conducts regular stress tests of its loan portfolios to meet risk management Unemployment 5.0% 6.4% 10.3% 10.6% objectives and satisfy regulatory requirements. rate • Stress tests ar
Slide 92: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE ANZLMI HAS MAINTAINED STABLE LOSS RATIOS SEPTEMBER FULL YEAR 2018 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 18 (% New Business FUM Oct-17 to Sep-18) Gross Written Premium ($m) $141.1m LVR<80% Not LMI Insured
Slide 93: New Zealand Home Loans: Portfolio Overview
NEW ZEALAND HOME LOANS PORTFOLIO OVERVIEW1 Portfolio Growth Portfolio Growth FY18 v FY18 v FY17 FY18 FY17 FY18 FY17 FY17 Number of Home Loan Accounts 520k 526k 1.1% % Broker Originated 35% 36% 186bps Total FUM NZ$77b NZ$81b 4.9% Average LVR at Origination2 59% 58% -128bps Average Loan Size at Origin
Slide 94: New Zealand Home Lending
NEW ZEALAND HOME LENDING1 FLOW2 PORTFOLIO 5% 5% 21% 18% 21% 20% 34% 39% 11% 11% 7% 7% 10% 11% 79% 82% 66% 61% 46% 46% FY17 FY18 FY17 FY18 FY17 FY18 Auckland Christchurch Other Nth Is. Proprietary Broker Fixed Variable Wellington Other Sth Is. Other³ MARKET SHARE4 ANZ HOME LOAN LVR PROFILE5 31.1% 31.
Slide 95: Divisional Performance
2018 FULL YEAR RESULTS DIVISIONAL PERFORMANCE INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 96: Divisional Performance
DIVISIONAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) CASH PROFIT AUSTRALIA AUDm 118 FY18 vs 2H18 vs AUDm FY17 FY18 204 74 6,960 FY17 1H18 6,763 Revenue 9,478 9,667 2% -3% -199 Expenses (3,325) (3,406) 2% -4% Profit Before Provisions 6,153 6,261 2% -2% Provisions
Slide 97: Australia Division Priorities
AUSTRALIA DIVISION PRIORITIES MOVEMENTS PRIORITIES ACTIONS METRICS FY15 FY16 FY17 FY18 Simplified products # Products decommissioned <10 <10 47 90 Optimised branch footprint # Branches 751 724 684 629 Create a simpler, better capitalised, More digital branches # Digital branches 5 40 81 114 better b
Slide 98: Australia Division
AUSTRALIA DIVISION CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) REVENUE EXPENSES TOTAL PROVISIONS $m $m $m 4,660 4,818 4,896 4,771 1,646 1,679 1,737 1,669 468 417 386 312 415 449 358 35.3% 35.5% 35.0% 338 375 338 345 350 34.8% 53 11 -32 -25 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H18 1H17 2H1
Slide 99: Australia Division
AUSTRALIA DIVISION CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) LENDING & DEPOSITS RETURNS $b $m 326 334 339 340 1,904 1,991 1,898 1,781 198 201 204 203 2.74% 2.74% 2.79% 2.66% Mar 17 Sep 17 Mar 18 Sep 18 1H17 2H17 1H18 2H18 NLA Deposits Cash Profit NIM RISK FINANCIAL OUTCOMES % 0.36% 0.3
Slide 100: Australia Division: Retail
AUSTRALIA DIVISION RETAIL (EXCLUDING LARGE / NOTABLE ITEMS) LENDING & DEPOSITS LENDING AND DEPOSIT COMPOSITION $b Retail FUM ($b), PCP growth (%) 275 282 282 $282b NLA $120b Deposits 267 Transact $14b +4% P&I +18% I/O -28% $28b Offsets +3% 117 119 121 120 $272b $31b Term Deposit OO +6% +2% Inv -2% $
Slide 101: Australia Division: Business and Private Bank
AUSTRALIA DIVISION BUSINESS AND PRIVATE BANK (EXCLUDING LARGE / NOTABLE ITEMS) LENDING & DEPOSITS CRWA PROFILE $b $b 5.39% 5.53% 5.78% 83 83 5.32% 80 82 58 58 58 58 58 58 58 58 50 49 49 48 Mar 17 Sep 17 Mar 18 Sep 18 1H17 2H17 1H18 2H18 NLA Deposits NLA CRWA (AVG) NII/Avg cRWA DEPOSITS MIX RISK1 $b
Slide 102: Australia Division: Revenue Drivers
AUSTRALIA DIVISION REVENUE DRIVERS (EXCLUDING LARGE / NOTABLE ITEMS) SLOWING DEMAND FOR HOUSING CREDIT SLOWING HOUSING MARKET Housing Credit1 Home Loan ANZ & System year on year growth (%) 15 Annual YoY % Change 10 40 30 5 20 0 10 -5 Aug Feb Aug Feb Aug 0 16 17 17 18 18 Sep 01 Aug 18 Owner Occupier
Slide 103: Australia Division: Expense Composition & Drivers
AUSTRALIA DIVISION EXPENSE COMPOSITION & DRIVERS (EXCLUDING LARGE / NOTABLE ITEMS) EXPENSE COMPOSITION $m 35 2 3,406 60 23 3,348 3,325 -38 FY17 Asia Retail indirect FY17 Adjusted Personnel Group Technology Technology Other FY18 cost reallocation Support Investment OPTIMISING OUR WORKFORCE SIMPLER OF
Slide 104: Australia Division: Digital
AUSTRALIA DIVISION DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES CUSTOMERS 3.6m Introduced ANZ App in Feb 18, combining goMoney and Grow 3.3m 3.5m into a new unified mobile banking application. 3.0m ANZ app offers a single location for Australian retail customers
Slide 105: Institutional: Reshaping the Business
INSTITUTIONAL RESHAPING THE BUSINESS, TRANSITIONING TO DISCIPLINED GROWTH • RWA $44b (21%) lower and ~6,000 reduction in clients1 since RESHAPE THE BUSINESS September 2015 AND IMPROVE RISK PROFILE • Improved portfolio quality since September 2015 with 85% (+510bps) of exposures now investment grade
Slide 106: Institutional: Digital
INSTITUTIONAL DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR PEOPLE TRANSLATING INTO BUSINESS OUTCOMES AND CUSTOMERS LOGINS PAYMENT VALUE3 FY182 Building a Single Digital Channel with Multi-product Access Access to multiple products via a single, secure and converged digital channel. Mobile app offe
Slide 107: Institutional: Leading Market Positions
INSTITUTIONAL MAINTAINED OUR LEADING MARKET POSITIONS ACROSS OUR KEY GEOGRAPHIES AUSTRALIA NEW ZEALAND ASIA #1 Lead Bank Penetration1 #1 Lead Bank Penetration1 Top 4 Corporate Bank2 37% 50% 58% #1 Overall Quality 47% 45% 26% = #4 28% 33% 20% 20% 26% 9% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank
Slide 108: Institutional: Continued Momentum in 2H18
INSTITUTIONAL CONTINUED MOMENTUM IN 2H18 WITH PROFITABLE CUSTOMER REVENUE GROWTH, A FIFTH CONSECUTIVE HALF YEAR OF ABSOLUTE COST REDUCTION, AND IMPROVED RETURNS REVENUE1 EXPENSES1 TOTAL PROVISIONS $m $m $m 3,070 1,416 1,392 1,363 1,333 129 2,576 2,539 2,597 49 2,146 2,009 2,038 2,142 54% 54% 51% 46%
Slide 109: Institutional: Customer Businesses Performing Well
INSTITUTIONAL ALL CUSTOMER BUSINESSES PERFORMING WELL DRIVEN BY TARGETED GROWTH IN OUR PRIORITY SECTORS REVENUE CONTRIBUTION1, 2 AVERAGE CREDIT RWA2 $m $b 0% +2% 3,070 150 +1% +2% 139 139 136 2,576 2,539 2,597 33 33 32 33 1,379 901 19 993 915 19 19 18 233 231 220 231 576 576 599 580 94 85 83 86 825
Slide 110: Institutional: Markets Income
INSTITUTIONAL MARKETS INCOME DOWN 2% HOH, WITH IMPROVED FRANCHISE SALES OFFSET BY A WEAKER TRADING RESULT MARKETS INCOME CONTRIBUTION1 MARKETS AVERAGE VALUE AT RISK (99% VAR) $m $m 1,379 60 162 40 -9% -2% 20 356 993 67 915 0 901 1H17 2H17 1H18 2H18 11 52 278 Traded Non Traded 295 276 378 VOLATILITY
Slide 111: Institutional: Volume Growth and Higher Margins
INSTITUTIONAL VOLUME GROWTH AND HIGHER MARGINS DRIVING IMPROVED RETURNS VOLUMES1 NIM BY REGION (EXCLUDING MAJOR BANK LEVY)3 $b bps 108 107 113 92 94 95 98 254 257 162 177 172 173 176 223 222 225 103 251 250 221 146 145 148 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H
Slide 112: Institutional: Absolute Cost Reduction
INSTITUTIONAL FIFTH CONSECUTIVE HALF OF ABSOLUTE COST REDUCTION, DESPITE ASIA RETAIL HEADWINDS EXPENSE CONTRIBUTION1 FTE $m # -4% -2% -9% -5% 1,416 1,392 6,950 6,783 6,505 1,363 1,333 6,188 2,462 2,424 2,353 2,210 365 353 366 358 659 687 3,025 2,932 649 648 2,775 2,605 1,098 1,074 1,011 1,015 Mar 17
Slide 113: Institutional: Improved Portfolio Quality
INSTITUTIONAL IMPROVED PORTFOLIO QUALITY AND BENIGN CREDIT ENVIRONMENT EXPOSURE-AT-DEFAULT1 GROSS IMPAIRED ASSETS NEW IMPAIRED ASSETS $b +10% $m $m +3% 1,143 -42% 599 404 418 -29% 383 380 -87% -64% 16% 15% 757 19% 17% 347 626 442 81% 83% 84% 85% 124 45 Mar 17 Sep 17 Mar 18 Sep 18 Mar 17 Sep 17 Mar 1
Slide 114: New Zealand Division: Priorities
NEW ZEALAND DIVISION PRIORITIES PRIORITIES ACTIONS METRICS SEP 16 SEP 17 SEP 18 Brand consideration1 49.6% 50.9% 51.4% Grow customer Migrant Banking brand consideration1 74.9% 74.1% 70.2% #1 in service satisfaction and brand consideration Retail Net Promoter Score2 8.6 12.3 16.0 KiwiSaver provider (
Slide 115: New Zealand Division: Financial Performance
NEW ZEALAND DIVISION1 FINANCIAL PERFORMANCE REVENUE EXPENSES TOTAL PROVISIONS NZDm NZDm NZDm 1,670 1,723 1,767 1,788 632 631 637 645 44 39 37.8% 22 36.6% 36.0% 36.1% 517 533 555 565 -16 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H18 1H17 2H17 1H18 2H18 Revenue Revenue/Avg FTE ($k) annualised Expenses CTI C
Slide 116: New Zealand: Simpler, Better Balanced Bank
NEW ZEALAND1 STRATEGIC FOCUS – SIMPLER, BETTER BALANCED BANK BALANCE SHEET2 PROFITABILITY & MARGIN3 NZDb NZDm 2.37% 2.37% 2.32% 29.3 28.1 24.6 1,474 1,633 120.7 124.9 128.7 1,361 91.4 96.8 104.1 Sep 16 Sep 17 Sep 18 FY16 FY17 FY18 NLA Deposits Funding gap Cash Profit NIM MORTGAGES LOAN TO VALUE RATI
Slide 117: New Zealand: #1 in Service
NEW ZEALAND STRATEGIC FOCUS - #1 IN SERVICE NET CUSTOMER GROWTH BRAND CONSIDERATION1 #k % #2 #1 #1 65 54 49.6% 50.9% 51.4% 42 FY16 FY17 FY18 Sep 16 Sep 17 Sep 18 Net Retail acquisition (new less defection) RETAIL NET PROMOTER SCORE2 BRAND CONSIDERATION – MIGRANTS1 #k 70 71 63 16.0 12.3 74.9% 74.1% 7
Slide 118: New Zealand: Environment
NEW ZEALAND ENVIRONMENT GDP1 NET MIGRATION2 Annual average % change #k 4.0% 3.6% 140 2.8% 120 2.7% 2.6% 2.4% 100 80 60 40 20 0 -20 07 08 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 2015 2016 2017 2018F 2019F 2020F Net annual permanent long-term Arrivals Departures HOUSE PRICES3 CONSU
Slide 119: New Zealand: Retail
NEW ZEALAND RETAIL MARKET SHARE BRANCH COVERAGE4 Closer to more people in more places Maintained our leading position in core banking products to support our vision of helping more Kiwis succeed Focus on well managed sustainable growth means our deposit growth has exceeded that of lending 178 162 15
Slide 120: New Zealand: Commercial
NEW ZEALAND COMMERCIAL COMMERCIAL AND AGRI PORTFOLIO (GLA)1 AGRI PORTFOLIO (GLA)2 NZDb Dairy as a % of total NZ Geography 27% 11.7% 10.9% 10.0% 9.3% Agri 20 Property 50% Wholesale & Retail Trade 10 6% Manufacturing 3% 3% Entertainment, Leisure & Tourism 0 Sep 15 Sep 16 Sep 17 Sep 18 11% Other Dairy
Slide 121: New Zealand: Digital
NEW ZEALAND DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR PEOPLE TRANSLATING INTO BUSINESS OUTCOMES AND CUSTOMERS 1.5m +181k 1.4m IntroducedJamie, Introduced Jamie,aadigital digitalassistant assistanton onhelp.anz.co.nz help.anz.co.nz 1.4m 1.3m to assist customers with over 40 common to assist cust
Slide 122: New Zealand Geography
NEW ZEALAND GEOGRAPHY1 CASH PROFIT PROFIT BEFORE PROVISIONS NZDm 1H18 2H18 FY18 2,631 2,689 2,244 NZDm NZDm NZDm Income 2,107 2,076 4,183 3,824 4,077 4,183 Net interest 1,572 1,605 3,177 Other income 535 471 1,006 -1,580 -1,446 -1,494 Expenses 737 757 1,494 FY16 FY17 FY18 PBP 1,370 1,319 2,689 Reven
Slide 123: Wealth Australia: Continuing and Divested Businesses
WEALTH AUSTRALIA OVERVIEW OF CONTINUING AND DIVESTED BUSINESSES Continuing Operations Divested Businesses One Path Pensions & Investments (OnePath Wealth Australia OnePath Life (OPL) P&I) Advised Life (incl. OneCare) Lender’s Mortgage Insurance Direct Life Insurance Distribution of general insurance
Slide 124: Wealth Australia: Continuing Operations
WEALTH AUSTRALIA CONTINUING OPERATIONS (EXCLUDING LARGE / NOTABLE ITEMS) SUMMARY OF BUSINESSES RETAINED FINANCIAL PERFORMANCE ANZ will retain the following businesses within Australia Division post Decline due to: completion: • Non-recurring LMI reinsurance profit commission benefit included in FY17
Slide 125: Wealth Australia: Divested Businesses P&I and ADG
WEALTH AUSTRALIA DIVESTED BUSINESSES - PENSIONS AND INVESTMENTS (P&I) AND ALIGNED DEALER GROUPS (ADG) FINANCIAL PERFORMANCE GROSS MARGIN2 • Prepared on a standalone pro forma basis1 and excludes $m ANZ Group consolidation adjustments • Is not comparable with financial performance as reported 74.9% 7
Slide 126: Wealth Australia: P&I FUM and Flows
WEALTH AUSTRALIA DIVESTED BUSINESSES – P&I FUM AND FLOWS INFLOWS AND OUTFLOWS BY SOLUTION FY18 NETFLOWS BY SOLUTION $b $m Open solutions Closed solutions FY17 FY18 169 Inflows Outflows Inflows Outflows Open solutions 4.8 (3.9) 4.2 (4.5) (235) (190) ANZ Smart Choice 2.3 (1.4) 2.2 (2.1) (259) Wrap 0.9
Slide 127: Corporate Overview & Sustainability
2018 FULL YEAR RESULTS CORPORATE OVERVIEW & SUSTAINABILITY INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 128: ANZ Corporate Profile
ANZ CORPORATE PROFILE CORPORATE PROFILE OUR LARGEST BUSINESSES FULL YEAR 2018 CASH PROFIT ($m)2 • Top 5 listed corporate in Australia and the largest bank in New Zealand by bank market share • Market capitalisation of AU$81b1 INSTITUTIONAL Provides products, services and solutions to global Institut
Slide 129: Strategic Focus
STRATEGIC FOCUS 1. Reduce operating costs and risks by removing product and management complexity 1. Creating a simpler, better 2. Exit low return and non-core businesses. balanced bank 3. Reduce reliance on low-return aspects of Institutional banking in particular. 4. Further strengthen the balance
Slide 130: Creating Value for Our Stakeholders
CREATING VALUE FOR OUR STAKEHOLDERS CUSTOMERS EMPLOYEES COMMUNITY SHAREHOLDERS5 Full mobile wallet (only 39,934 people employed $137 M contributed in $6.5 billion major bank in Australia to (FTE) community investment3 cash profit offer this) 260 people recruited from 124,113 volunteering hours #1 Le
Slide 131: Sustainability: Our Approach
SUSTAINABILITY OUR APPROACH Our Sustainability Framework supports our business strategy, reflects our most material issues and is aligned with our purpose. This year we refreshed our Framework: At the core of our Framework is Fair and responsible banking - keeping pace with the expectations of our c
Slide 132: Sustainability Scorecard Snapshot
SUSTAINABILITY SCORECARD SNAPSHOT On track to In Not achieve progress achieved Progress Outcome FAIR & RESPONSIBLE BANKING • Create best experience for our customers, measured by improving Net Promoter Score relative to peers 3rd1 (Aus. Retail) • Communicate with > 700,000 of our retail and commerci
Slide 133: Sustainability Performance Trends
SUSTAINABILITY PERFORMANCE TRENDS COMMUNITY INVESTMENT1 ENVIRONMENTAL FINANCING MONEYMINDED & SAVER PLUS $15B TARGET Total community investment ($m) Funded and facilitated ($b) Estimated # of people reached 137 88,308 131 80,074 11.5 69,826 65,549 59,461 90 76 75 6.9 2.5 2014 2015 2016 2017 2018 201
Slide 134: Sustainable Development Policies
SUSTAINABLE DEVELOPMENT POLICIES OUR POLICIES SHAPE DECISIONS ON WHO WE BANK SUSTAINABLE DEVELOPMENT POLICIES CORE POLICY • Our policies align to our purpose and our sustainability priorities • We assess business customers against our policies to ensure they manage their social and environmental imp
Slide 135: Climate-Related Financial Disclosures (TCFD)
CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)1 Governance Strategy Risk Management Metrics & targets • Board Risk Committee oversees • Identifying material sustainability • Climate-related financial risks • Support at least 100 of our largest management of climate-related risks, including climate-rel
Slide 136: TCFD-Related Metrics and Industry Exposures
TCFD-RELATED METRICS AND INDUSTRY EXPOSURES IMPROVED CREDIT QUALITY IN KEY INDUSTRIES IDENTIFIED BY THE TCFD INDUSTRY GROUPS AND CREDIT QUALITY SUMMARY EXPOSURES TO KEY TCFD SUB-INDUSTRIES Exposure ad Default Non performing Loans Investment Grade EAD ($b) (EAD) ($b) (% of sector EAD) (% of sector EA
Slide 137: Key ANZ Reforms
KEY ANZ REFORMS IMPLEMENTED OVER THE LAST TWO YEARS IMPROVED MONITORING, CONDUCT AND SAFEGUARDS • Appointed Colin Neave AM as Customer Fairness Advisor, a new role to help improve fairness of the bank’s products and services • Implemented a new Retail ‘Customer Experience Framework’ in branches and
Slide 138: Key ANZ Reforms
KEY ANZ REFORMS IMPLEMENTED OVER THE LAST TWO YEARS REDUCED REMUNERATION FOCUS ON SALES • Updated and published ANZ Remuneration Principles to further reinforce our focus on customer outcomes • Changed Retail (branch and call centre) and Business and Private Bank incentive plans removing campaign in
Slide 139: We Measure What Matters
WE MEASURE WHAT MATTERS RECOGNITION Highest ranked Australian Included on the 2018 Member of the Achieved highest 2018 leader in workplace We achieved a CDP bank on the Dow Jones Bloomberg Gender FTSE4Good Index “leading” rating for gender equality climate disclosure score Sustainability Index, scor
Slide 140: Economic Forecasts
2018 FULL YEAR RESULTS ECONOMIC FORECASTS INVESTOR DISCUSSION PACK AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 141: Economics: Australia Forecast Table
ECONOMICS AUSTRALIA FORECAST TABLE1 2015 2016 2017 2018 2019 2020F Australia – annual % growth GDP 2.5 2.6 2.2 3.2 3.0 2.8 Domestic final demand 1.2 1.9 3.0 3.3 2.4 2.2 Headline CPI 1.5 1.3 1.9 1.9 2.0 2.3 Core CPI 2.2 1.5 1.9 1.9 2.0 2.2 Employment 2.8 0.9 3.3 1.9 1.8 1.6 Wages 2.2 2.0 2.0 2.2 2.5
Slide 142: Economics: Global & Asia Forecast Tables
ECONOMICS GLOBAL & ASIA FORECAST TABLES GROSS DOMESTIC PRODUCT (YEAR-AVERAGE % CHANGE) 1998-2007 average 2008-2017 average 2017 2018F 2019F 2020F United States 3.1 1.5 2.3 2.9 2.2 1.8 Euro area 2.4 0.6 2.4 2.2 2.0 1.8 United Kingdom 2.9 1.1 1.7 1.4 1.6 1.7 Japan 1.0 0.5 1.7 1.2 1.0 1.4 China 10.0 8.
Slide 143: Further Information
FURTHER INFORMATION Our Shareholder information shareholder.anz.com Equity Investors Jill Campbell Cameron Davis Katherine Hird Group General Manager Executive Manager Senior Manager Investor Relations Investor Relations Investor Relations +61 3 8654 7749 +61 3 8654 7716 +61 3 8655 3261 +61 412 047
Australia and New Zealand Banking Group — FY2018 Earnings Presentation on 6ix