Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Credit Suisse Conference Hong Kong (March 2012)
131 slides from Anz's conference presentation, March 2012
Slide 1: Investor Discussion Pack
I Investor t Discussion Di i Pack P k Mike Smith Chief Executive Officer AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012
Slide 2: Overview and strategy
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Overview and strategy
Slide 3: 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. 4-14 • A strong capital and funding position p. 15-24 • Risk management p. 25-39 • The ANZ mortgage portfolio p. 40 4
Slide 4: ANZ is structured by Geography & Segment
ANZ is structured by Geography & Segment Australia Global Wealth Global Retail Commercial & Private Institutional Banking Asia Pacific, Europe & America (APEA) Retail Global Wealth Global (including Commercial & Private Institutional partnerships) p p ) Banking New Zealand Global Wealth Global Retai
Slide 5: Coherent strategy – driving competitive advantage
Coherent strategy – driving competitive advantage Geographic opportunity • Footprint p - exposure p to Asia’s more rapid p g growth • Growing financial services requirements • Regional connectivity • Strong domestic markets and businesses Building Super Regional capabilities Leading • Bench strength
Slide 6: Delivering Super Regional performance momentum
Delivering Super Regional performance momentum OUTPERFORM AND TRANSFORM OUTPERFORM Realise full 9 Move from a presence to a potential of Super real business in Asia – 14% of Group Earnings Regional aspiration – Beachhead in Greater China, RESTORE SE Asia, India, Mekong 9 Maintain M i i strong d dome
Slide 7: Super Regional - driving long term growth and differentiated returns
Super Regional - driving long term growth and diff differentiated ti t d returns t Denotes two way merchandise trade flow3 Forecast GDP growth1 (% p.a, 2011-14) FDI inward flow2 (USDb, 2009) (2009) KR EU 2 4.0% 4 0% US 1.6% JP UK 12 2.7% 1.6% 2.3% TW Asia-US CN 3 78 5.1% Trade: US$0.8trn 8.7% HK 48
Slide 8: Super Regional strategy is based on three core strengths
Super Regional strategy is based on three core strengths 1. Strategy aligned to Asian growth GDP growth 12 • Strong domestic franchises and established 10 market position 8 % annual growth h • Focus of expansion in higher growth Asian 6 markets 4 2 0 2. Leveraging regional customer flows -2 • Aust/N
Slide 9: Super Regional connectivity provides a competitive advantage
Super Regional connectivity provides a competitive advantage Growth in trade flows and direct investment between Asia and Australia is tracking at 11% and 26% pa respectively Surplus savings There is approximately $75b in direct foreign Linked through flows of investment into Australia trade, capita
Slide 10: Realising the full potential of Super Regional
Realising the full potential of Super Regional 2017 APEA sourced revenue to drive Aspiration 25% - 30% of Group profit Expanded view of • The more mature our business, the greater our opportunities opportunity in • Increasing our footprint, customers and access to trade, liquidity APEA and investmen
Slide 11: Realising the full potential of Super Regional
Realising the full potential of Super Regional 2017 APEA sourced revenue to drive Aspiration 25% - 30% of Group profit • Continue to build depth in international management and banking experience People p • Well defined succession planning • Remuneration and incentives aligned to delivery of strateg
Slide 12: Growth levers - organic, partnerships and M&A
Growth levers - organic, partnerships and M&A Continued Focus on Organic Growth Leveraging Super Regional connectivity Increasing productivity Focus on core customers Managing the value of ANZ’s Selective M&A opportunities Partnerships • Delivering g access to attractive markets// segments • Disloca
Slide 13: The Super Regional Strategy improves ANZ's overall Balance Sheet profile
The Super Regional Strategy improves ANZ’s overall Balance Sheet profile APEA Loan to deposit ratio is 60% The key aspects of the SRS from a balance sheet management perspective are : • Self Funded • 75% NLA’s are <1 year duration • Balance sheet in Asia is self funded with deposits substantially hi
Slide 14: Emerging differentiation
Emerging differentiation • Super Regional strategy giving us greater exposure to Asia Asia’s s growth • Building blocks in place via both acquisition and investment in capability • Developing p g stronger g customer p propositions p • Driving productivity gains from our hubs • Integrating the Super
Slide 15: Capital Funding and Liquidity
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Capital Funding and Liquidity
Slide 16: ANZ well capitalised and positioned to transition to Basel III
ANZ well capitalised and positioned to transition to Basel III Basel II Basel III – Common Equity Tier 1 Basel II Basel II Dec-11 ~14.9% Proposed Basel III 7% minimum ~14.0% APRA fully including buffer Basel harmonised applicable from 12.0% 12.1% III# 12.1% Jan-16 11.9% ~9.5% ~9.5% 11.0% 10.5% 10.9%
Slide 17: Solid organic capital generation underpins Common Equity Tier 1 position
Solid organic capital generation continues to underpin the strong Common Equity Tier 1 position Capital Position (Common Equity Tier 1 Ratio) Basel II Dec-11 ~11 4% ~11.4% 2.13% ~9.5% 8.52% 8.67% (0.83%) 8 05% 8.05% (0 43%) (0.43%) (0.33%) (0.07%) Portfolio growth & mix 51bp decrease +15.8b Risk Mig
Slide 18: Tier 1 position strengthened with CPS3 issuance
Tier 1 position strengthened significantly with recent CPS3 issuance and solid organic capital generation Capital Position (Tier 1 Ratio) Basel II Dec-11 ~14.0% 14 0% 2.13% ~11.7% 11.03% 0.51% 10.94% 10.10% (0.83%) (0 57%) (0.57%) (0.33%) (0.07%) Portfolio growth & mix 65bp decrease +15.8b Risk Migr
Slide 19: Reconciliation of ANZ's capital position under Basel III
Reconciliation of ANZ’s capital position under Basel III ANZ capital ratios under a Basel III fully harmonised approach : Common Tier 1 Total Capital Equity Tier 1 APRA Sep-11 Basel II 8.5% 10.9% 12.1% Plus: dividend not provided for (net of DRP) 0.5% 0.5% 0.5% q Less Investments in ADI and overseas
Slide 20: Well diversified funding profile with increasing customer funding
ANZ has a well diversified funding profile with an increasing weighting to customer funding Strong Funding Composition Maintained low levels of short- term wholesale funding Short Term Wholesale Customer Funding Funding Term Debt < 1 year Residual Shareholders equity & Hybrid Maturity debt Term Debt
Slide 21: Stable term debt issuance, portfolio costs increasing
Stable term debt issuance, portfolio costs increasing Stable term funding profile Portfolio term funding costs expected to AUDb increase further due to current market 30 Domestic Offshore volatility 220bp 25 200bp Covered 180bp bond issuance 20 160bp 140bp Forecast Portfolio funding costs based on c
Slide 22: Mortgage pricing
Mortgage pricing Criteria used to assess Interest Change in cost of funds over the RBA Rates Cash Rate since the Global Financial Crisis Mvmt in funding costs vs. Cash Cost of Rate relative to pre-crisis levels* wholesale 1.60% Change in Funding Costs relative to Pre Crisis funding (ex Capital, Mix
Slide 23: Total liquid assets exceed total offshore wholesale debt portfolio
Total liquid assets exceed TOTAL offshore wholesale debt portfolio Strong liquidity position ($b) ANZ Total Offshore Wholesale Debt securities Prime Liquidity Portfolio Other Eligible & Highly Liquid Securities Long-term Short-term Composition of prime liquid asset portfolio ($71.4b) ($71 4b) Class
Slide 24: Hedging has lessened the impact on earnings of the stronger $A
Hedging has lessened the impact on earnings of the stronger $A Earnings Composition by Region EPS Impact & Average Translation Rates • Hedge profits more than halved the negative impact of AUD strength on FY11 earnings. • FY12 hedges are in place to cover ~80% of USD (inclusive of other significant
Slide 25: Risk Management
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Risk Management
Slide 26: Provision Charge and Impaired Assets
Provision Charge and Impaired Assets Total Provision Charge New Impaired Assets (IP charge by Division, total CP charge) by Division 1,621 3,600 1,435 3,126 3,035 1,098 2,436 2,319 1,824 722 660 551 26
Slide 27: Individual Provision Charge
Individual Provision Charge Individual Provision Charge Individual Provision Charge by Segment composition 1,531 1,283 1,062 762 594 609 1,531 1,283 1,062 Individual Provision Charge 762 by Region 594 609 1,531 1,283 1,062 762 594 609 27
Slide 28: Collective Provision Charge
Collective Provision Charge Collective Provision Charge by Source CP Charge by Division 2H11 (96) 331 36 (40) 65 (58) (74) (42) 29 29 28
Slide 29: Collective Provision Charge
Collective Provision Charge Collective Provision Charge by Source Lending Portfolio Cycle & FY11 Risk Impact Growth Mix Concentration Total Australia Division 20 42 (6) (14) 42 Institutional (29) 65 (14) 12 34 New Zealand (35) (6) (1) (47) (89) APEA & Group Centre (47) 29 1 37 20 Total (91) 130 (20)
Slide 30: Credit Risk Weighted Assets
Credit Risk Weighted Assets Credit Risk Weighted Assets Total Credit Risk Weighted Assets Movement FY11 v FY10 30
Slide 31: Credit Risk Weighted Assets
Credit Risk Weighted Assets Credit Risk Weighted Assets by Basel Asset Class $b 300 251 249 251 Bank, Sovereign & Other 250 230 234 9% 8% 8% 6% 7% 12% 11% 12% Specialised Lending 11% 11% 200 (slotted exposures eg. project 9% 12% 12% finance, certain commercial 11% 12% property exposures) 14% QRR and
Slide 32: Risk Weighted Assets
Risk Weighted Assets Risk Weighted Assets by Geographic Region $b 300 275 280 264 252 250 14% 20% 17% 13% APEA 21% 200 18% 18% 22% 150 NZ 100 65% 62% Australia 65% 65% 50 0 Sep 08 Sep 09 Sep 10 Sep 11 32
Slide 33: Impaired Assets
Impaired Assets Gross Impaired Assets Gross Impaired Assets by Type by Size of Exposure $m $ $m 8 000 8,000 Impaired Loans NPCCD Restructured 6,561 6,561 6,221 6,000 5,595 5,581 8,000 4,158 4,000 7,000 6,561 6,561 2,000 6,221 0 6,000 5,595 5,581 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 5,000 > $100
Slide 34: Watch & Control Lists and Risk Grade Profiles
Watch & Control Lists and Risk Grade Profiles Group Risk Grade profile by Watch & Control List Exposure at Default Index Watch List by Limits Mar 2009 Watch List by No. Groups = 100 Control List by Limits Control List by No. Groups 180 160 59% 59% 58% 60% 61% 140 120 100 13% 13% 14% 14% 80 13% 60 13
Slide 35: Commercial Industry Exposures
Commercial Industry Exposures Finance & Insurance Property Services Manufacturing 80 16% 80 14% 80 14% 14% 12% 12% 60 12% 60 10% 60 10% 10% 8% 8% 40 8% 40 40 6% 6% 6% 20 4% 20 4% 20 4% 2% 2% 2% 0 0% 0 0% 0 0% Sep 10 Mar 11 Sep 11 Sep 10 Mar 11 Sep 11 Sep 10 Mar 11 Sep 11 Agri, i Forestry & Fishing i
Slide 36: Australia 90+ Day Delinquencies
Australia 90+ Day Delinquencies Australia Retail 90+ day delinquencies 1.25% 1.00% 0.75% 0.50% 0.25% 0 00% 0.00% Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Total Mortgage Portfolio NSW & ACT Mortgages QLD Mortgages VIC Mortgages WA Mortgages Total Credit Cards Australia Division Mortgages have low loss rate
Slide 37: Australia Mortgages
Australia Mortgages Dynamic Loan to Valuation Ratio Portfolio Statistics % Portfolio 60% Total Number of Mortgage Accounts 832k 50% Total Mortgage FUM $170b 40% 13% of Portfolio >80% LVR 30% % of Total Australia Region Lending 60% 20% % of Total Group Lending 43% 10% 0% Owner Occupied Loans - % of P
Slide 38: Australia Commercial
Australia Commercial Australia Commercial 90+ day delinquencies 3.00% Business Banking Regional Commercial Banking 2 50% 2.50% Esanda Small Business Banking 2.00% 1.50% 1.00% 0.50% 0.00% Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Regional Commercial Banking Australia Commercial Lending Mix 90+ day delinquen
Slide 39: New Zealand businesses
New Zealand businesses Total Impaired Assets Total Provision Charge NZDm NZDm 531 600 2.47% 400 351 2.25% 247 165 98 119 2,215 2.06% 200 1.92% 2,020 0 1,809 -200 1,718 1H09 2H09 1H10 2H10 1H11 2H11 IP Charge CP Charge 1.25% 90+ Days Arrears 1.20% Mortgages 0.70% 1,132 Commercial Rural 0.80% 631 0.40
Slide 40: ANZ Mortgage Portfolio
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 ANZ Mortgage Portfolio
Slide 41: The Australian mortgage market
The Australian mortgage market Full • All mortgage lending is full recourse Recourse • Investment loans are also secured by mortgage over primary residence Variable • Most mortgage lending in variable rate rate format (ANZ ~85%) • Direct transmission for monetary policy Low LVRs • Average dynamic LV
Slide 42: Australian house price growth since the mid 1980s
Australian house price growth since the mid 1980s - income growth + structural decline in interest rates Australian house price vs. purchasing power $700,000 Interest rate contribution to simulated house price** Income ggrowth contribution to simulated house price*** p Actual house prices $600,000 $
Slide 43: Global House Price Trends
Global House Price Trends Index Mar Median House Prices 2002=100 350 300 Hong Kong 250 Singapore New Zealand 200 Australia Canada United Kingdom 150 United States 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Sources: Datastream, ANZ Research 43
Slide 44: Australian House Price Trends
Australian House Price Trends Median House Prices Index Dec Index Dec 2004=100 2004=100 Darwin 230 230 (-6.0%)# 210 210 # - Movement from peak to Dec 2011 Perth 190 190 (-7.5%)# Melbourne 170 (-6.9%)# 170 150 Brisbane 150 (-9.0%)# Adelaide 130 30 130 30 (-6.6%)# 110 Sydney 110 (-1.9%)# 90 90 2005 20
Slide 45: Australian House Price Trends
Australian House Price Trends Median House Prices Index Jan 2009=100 130 125 Top 20% Suburbs 120 Middle 60% Suburbs 115 Bottom 20% Suburbs 110 105 100 2009 2010 2011 Source: RP Data-Rismark 45
Slide 46: Australian Housing Loan Approvals
Australian Housing Loan Approvals Monthly Approvals $b Monthly Approval s $b 25 25 Total Approvals 20 20 15 15 Non First Home Buyer 10 Owner Occupiers 10 5 5 Investors First Home Buyers 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: RBA, ABS 46
Slide 47: Debt is concentrated in higher income households
Debt is concentrated in higher income households Indebted Households • Household debt up but also total Share of household debt by income assets held by y households quintiles, 2006 • Debt largely used to acquire assets 25% • Financial assets (e.g. ex housing) now equivalent to 22.75 75 years of inc
Slide 48: Balance Sheet Management
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Balance Sheet Management
Slide 49: Group loans and deposits
Group loans and deposits Group customer deposits Loan to (Customer) Deposit Ratio (%) $b Growth Rates 450 FY08 FY09 FY10 FY11 (%) 12% 16% 14% 15% 200 300 180 150 160 156 151 0 140 134 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 120 Group net loans and advances (including acceptances) 100 $b Growth Rates 450
Slide 50: Customer deposits by geography
Customer deposits by geography Australia (AUDb) New Zealand (NZDb) APEA (USDb) Growth Rates Growth Rates Growth Rates FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 10% 16% 9% 11% 5% 1% 0% 4% 49% 49% 68% 40% 200 180 160 140 120 100 80 60 40 20 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep S
Slide 51: Customer deposit composition by segment
Customer deposit composition by segment Group deposits by segment Deposits composition (AUDb) Sep 2011 297 257 Group 39% 18% 41% 2% 233 124 110 Australia 31% 21% 47% 1% 102 54 46 APEA 77% 23% 47 117 98 80 New Zealand 19% 29% 45% 7% Sep 09 Sep 10 Sep 11 Wealth Retail Commercial Institutional 51
Slide 52: Net loans and advances by geography
Net loans and advances by geography Australia (AUDb) New Zealand (NZDb) APEA (USDb) Growth Rates Growth Rates Growth Rates FY07 FY08 FY09 FY10 FY11 FY07 FY08 FY09 FY10 FY11 FY07 FY08 FY09 FY10 FY11 14% 0% 9% 6% 12% (1%) (1%) (3%) large (2%) 57% 44% 300 250 200 150 100 50 0 Sep Sep Sep Sep Sep Sep Se
Slide 53: Lending composition by segment
Lending composition by segment Group lending composition Lending composition by segment (AUDb) Sep 2011 397 369 346 Group 23% 22% 54% 1% 215 202 Australia 19% 17% 63% 1% 185 APEA 82% 18% 87 86 85 New Zealand 7% 54% 37% 1% 79 91 71 Sep 09 Sep 10 Sep 11 Wealth Retail Commercial Institutional 53
Slide 54: Australia Division
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Australia Division
Slide 55: Australia Division – Consistent customer focus driving solid results
Australia Division – Consistent customer focus and well- established market positioning driving solid results 1. Delivered customer propositions targeted at key segments aligned to our Super Regional Pro forma Profit before credit & Strategy income tax • New banking services for affluent customers •
Slide 56: Australia Division – Financial performance
Australia Division – Financial performance Pro forma Pro forma NPAT movement – FY11 v FY10 Growth Rates Up 2% P o forma Pro fo ma NPAT mo movement ement – 2H11 v 1H11 Up 8% 56
Slide 57: Australia Geography – Balance sheet and funding
Australia Geography – Balance sheet and funding Balance sheet management strategy Significant improvement in loan to • A well managed balance sheet supports sustainable deposit ratio lending and revenue growth • We aim to: % ¾ Continually improve the composition of deposits in line with Basel 3 expe
Slide 58: Australia Geography – loans and deposits
Australia Geography – loans and deposits Net loans and advances • Lending up 6% YOY and 2% HOH (including acceptances) • Mortgages up 7% YOY and 3% HOH growing at 1.2x system1 YOY • Commercial up 5% YOY and 4% HOH ¾ Business Banking up 10% YOY and 4% HOH ¾ Small Business Banking up 12% YOY and 9% HO
Slide 59: Australia Division – Net Interest Margin
Australia Division – Net Interest Margin Margin strategy Net Interest Margin • ANZ is focused on profitable growth in key segments using a service led approach Outcome • YOY NIM d down 2 b bps ¾ Improved asset margins and reduced reliance on wholesale funding largely offset by increased deposit comp
Slide 60: Retail – ANZ value proposition: easy and empowering
Retail – ANZ value proposition: “easy and empowering” Superior customer service Priorities Capabilities • Position ANZ as the most “easy and empowering bank” for Strong brand customers • Strategic marketing campaigns – “We live in your world.” • Be the bank of choice for target customer segments: De
Slide 61: Retail – Strategy delivering results
Retail – Strategy delivering results FY11 v 2H11 v Customer deposit composition Movement FY10 1H11 Income 6% 2% Expenses 4% 2% Profit Before Provisions 7% 3% Net loans & advances incl. acceptances 7% 3% Customer deposits p 13% 6% Using a combination of short & long-term strategies to drive growth •
Slide 62: Retail - Focused on profitable growth and market share
Retail - Focused on profitable growth and market share With MFI Customer Satisfaction again … and Peer leading Customer Advocacy approaching 80%... (%) MFI Customers1 Net Promoter Score1,3 … purchase intention for ANZ home loans is up … and share of wallet growth outperforms YOY and HOH domestic pee
Slide 63: Retail – Mortgages
Retail – Mortgages Dynamic Loan to Valuation Ratio Portfolio Statistics % Portfolio 60% Total Number of Mortgage Accounts 832k 50% Total Mortgage FUM $170b 40% 13% of Portfolio >80% LVR 30% % of Total Australia Region Lending 60% 20% % of Total Group Lending 43% 10% 0% Owner Occupied Loans - % of Po
Slide 64: Retail – Becoming the bank of choice for Asia Region customers
Retail – Becoming the bank of choice for Asia Region customers Customer Focus Capabilities Outcome1 • Chinese customers able to open Australia & China accounts with one application 600% increase i • Improved process for NZ customers (15 min process) new accounts opened by NZ Simple customers since p
Slide 65: Retail – Delivering customer propositions for key segments
Retail – Delivering customer propositions targeted at key segments aligned to our Super Regional Strategy International Banking Moving to Australia website Services branches Concierge model (Online) (Branch) (Phone) • Launched au c ed April p 2011 0 • Increased c eased from o 19 9 to o 47 • Launched
Slide 66: Retail – Strong momentum in Affluent program
Retail – Strong momentum in Affluent program driven by new capabilities and services Principles driving performance - easy and empowering Customer Focus Capabilities Outcome (5 months)1 • Whole customer relationship taken into account in financial ~4,700 product assessment Customers on- Customer kno
Slide 67: Commercial overview
Commercial overview FY11 v 2H11 v Net loans & advances (incl. Movement FY10 1H11 acceptances) by business Income 6% 4% Expenses 6% (2%) Profit Before Provisions 6% 7% Net loans & advances incl. acceptances 5% 4% Customer deposits p 18% 7% Strategic focus • Drive customer growth through leveraging: N
Slide 68: Commercial – super regional advantage
Commercial – super regional advantage Our super regional platform and ANZ Cross-border referrals core capabilities are driving cross-sell 29% and new-to-bank acquisition increase Super regional platform • ANZ is the only bank able to connect Commercial customers across Asia, New Zealand and Australi
Slide 69: Commercial - Business banking
Commercial - Business banking Building momentum, creating capacity FY11 lending book composition by to grow key segments • Growingg the balance sheet through g a focus on acquiring larger customers and improved share of wallet • Leveraging super regional connectivity and offering new services to cus
Slide 70: Commercial - Regional Commercial banking
Commercial - Regional Commercial banking Capitalising on opportunities for growth FY11 lending book by key and supporting customers in need segments Regional Commercial1 • Leveraging bank-wide sector expertise in Resources and Infrastructure to identify and capture Commercial opportunities within ma
Slide 71: Commercial - Small Business banking (SBB)
Commercial - Small Business banking (SBB) Leveraging ANZ distribution networks FY11 lending book composition by and enhancing customer experience sector • Acquiring q g new-to-Commercial customers by y tapping pp g into the distribution networks of OnePath, Esanda and Retail’s affluent segment • Enh
Slide 72: Commercial - Esanda
Commercial - Esanda Esanda is the market leader in Esanda lending composition by vehicle finance and a prime source assets (Sep 11) of new-to-bank customers • Largest player in the dealer vehicle finance market • Market leading credit processing speeds (under 15 minutes to process new applications)
Slide 73: Wealth (OnePath superannuation, Investments & Insurance and ANZ Private)
Wealth (OnePath superannuation, Investments & Insurance and ANZ Private) Strategic focus In-force annual premium growth • Improving management bench strength appointed new management; ¾ Distribution & Advice - Paul Barrett ¾ Superannuation & Investments - Craig Brackenrig ¾ CRO - Edith Pfister ¾ CFO
Slide 74: Wealth – Progress against strategic priorities
Wealth – Progress against strategic priorities Priorities Progress Step change in • Life insurance launched on anz.com ($3.4m premiums) and 50+ product ANZ customer base through branches ($0.7m premiums) penetration • Launched Affluent “Wealth Health Check.” • Further increase MyAdvice (phone advice
Slide 75: Asia Pacific, Europe & America (APEA) Division
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Asia Pacific, Europe & America (APEA) ( ) Division
Slide 76: APEA Division - building a leading super regional bank
Asia Pacific, Europe & America Division (APEA) - building a leading super regional bank APEA achieved another year of significant growth in APEA Division Revenue FY 2011… (USD m) • Revenue increase of 22% 2,556 • NPAT growth th off 20% 37% CAGR • Customer deposit growth up by 40% ($18b) and lending
Slide 77: APEA Division financial performance strengthened
APEA Division financial performance strengthened, despite markets trading headwinds in the second half Pro forma NPAT movement – FY11 v FY10 Up 20% Ex-Global Markets Global Markets Pro forma NPAT movement – 2H11 v 1H11 Down 9% Ex-Global Markets Global Markets 77
Slide 78: Revenue is growing in key strategic geographies, segments and products
Revenue is growing in key strategic geographies customer segments and products Geographies Customer Segments Products Franchise Markets Institutional Institutional Strategic Priorities • Greater China, Indonesia, • Natural Resources • Financial • Cash • FX & Singapore, Greater Mekong and the • Agric
Slide 79: Connectivity is a key differentiator for ANZ
Connectivity is a key differentiator for ANZ, driving revenue growth across the network Intra Asia connectivity becoming APEA Cross-Border Income1 increasingly important (AUD m) 864 801 • ANZ’s ANZ s Asian business intra region cross cross-border border revenues expanded –up 40% YOY Intra-APEA 40% •
Slide 80: Growth has driven diversification across APEA
Growth has driven diversification across APEA as Asia Retail and Northeast Asia have expanded APEA segments percentage of Group revenue FY07 vs FY11 15% 8% Partnerships & Other Asia Retail Pacific Retail Institutional & Commercial APEA geographies percentage of Group revenue FY07 vs FY11 15% 8% Euro
Slide 81: Tight cost disciplines and improving efficiency
Tight cost disciplines and improving efficiency are helping to fund front-line investment Improving efficiency APEA FTE • Focused on reducing enablement/back-office costs (including contract employees) while continuing to invest in revenue-generating capabilities ¾Enablement Centralisation Program ~
Slide 82: Increased net funding while improving credit quality
Increased net funding while improving the credit quality of loan portfolio and growing the balance sheet • Significant Volume growth • Credit Quality Improving • Self Funding • 75% Net Loans & Advances <1 year duration Customer Deposits Net Loans & Advances APEA Institutional Risk Grade profile (inc
Slide 83: Brand awareness has significantly improved
Brand awareness has significantly improved across all of our customer segments Brand awareness1 across Hong Kong, Singapore and Taiwan Average Percentage, 2010-2011 2 3 1. Includes both Prompted and Spontaneous awareness, arithmetic average across all three markets 2. Based on ANZ Brand Health Track
Slide 84: Integration of acquired RBS businesses completed
Integration of acquired RBS businesses into ANZ was completed in October 2011 Completed complex integration Building a larger and more capable in 6 Asian markets bank on the integrated business Effective Effecti e management of a comple complex Enhanced ffrontline ontline integration • New frontline
Slide 85: APEA Institutional: Executing to a clearly articulated strategy
APEA Institutional: Executing to a clearly articulated strategy Revenues up 29% YoY as customer franchise Customer numbers continue to grow strengthens Targeting sectors aligned to global strengths and with significant regional growth prospects +41% CAGR • Natural Resources • Agribusiness • Infrastr
Slide 86: APEA Retail: Growth in wealth driving business expansion
APEA Retail: Growth in wealth driving business expansion in Asia Customer growth despite portfolio Substantial repositioning of Mass to repositioning Affluent / Emerging Affluent Customer Numbers (‘000s) +51% • Revenue up 18% amidst repositioning and volatile market 2 500 2,500 2,450 conditions 1,10
Slide 87: Institutional Division
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 Institutional Division
Slide 88: Institutional – executing to a clearly articulated strategy
Institutional – executing to a clearly articulated strategy • Targeting sectors with existing strength and Institutional Division significant regional growth prospects Underlying Net profit after Tax ($m) • Natural Resources • Agriculture A i lt • Infrastructure 35% CAGR • Increasing geographic dive
Slide 89: Institutional – Financial Performance
Institutional – Financial Performance Pro forma NPAT movement – FY11 v FY10 Up 9% Ex-Global Markets Global Markets Pro forma NPAT movement – 2H11 v 1H11 Down 15% Ex-Global Markets Global Markets 89
Slide 90: Identified priority sectors where we have existing strengths
Identified priority sectors where we have existing strengths to build upon Priority Sectors Priority Products Natural Resources Cash Management • In target sub-segments – minerals & mining, oil & • A leading provider of cash management and gas, primary processing, primary services and working capita
Slide 91: Benefits emerging through growth in priority sectors and products
Benefits emerging through growth in priority sectors and products Institutional Division Growth has been achieved through: Client revenue growth FY11 vs FY10 • A global specialised relationship model offering industry expertise and a broader product proposition has seen priority sectors achieve supe
Slide 92: More diverse, self funded loan growth
More diverse, self funded loan growth Institutional Lending and Deposits Institutional Trade Lines Funded & Unfunded 39 Net Loans & Advances Customer Deposits (incl. acceptances) 30 $13b Growth YOY $20b Growth YOY 22 117.4 97.7 91.2 78.7 79.8 75.6 Asia Funded Trade Lines 11 7 3 92
Slide 93: Investment in the strategy
Investment in the strategy Majority of FY11 cost growth relates to investment in de risking and supporting immediate and longer term growth initiatives $m • Back / middle office FTE • Risk management systems • Payments infrastructure • Productivity initiatives • Process automation • Cash management
Slide 94: Initiatives in train to maintain cost trajectory
P r o d u c t i v i t y f o c u s e v i d e n t i n n e a r t e r m c o s t g r o w t h Institutional Operating Expenses Initiatives in train to maintain Growth Pro Forma HOH cost trajectory Process automation and enhancement • Enhanced markets operations platforms and processes • Automation of data
Slide 95: Improved credit quality
Improved credit quality Institutional net impaired assets Institutional risk grade profile by size and as % NLA by exposure at default AAA-BBB BBB- BB+~BB- BB- >BB- 95
Slide 96: Diversification of client base and revenues
Diversification of client base and revenues Institutional client base Revenue mix1 7,464 6,924 6,382 1. Underlying basis 96
Slide 97: Cash management business delivering connectivity
Cash management business delivering connectivity Significant progress made in 2011 ANZ Transactive trans-tasman sites and usage • Connecting our customers’ customers transaction banking needs across Australia and New Zealand is a key differentiator. • Customers can perform a range of cash management
Slide 98: Global Markets Performance
Global Markets Performance Strategy to increase Global Markets revenue client flow revenues is delivering pro forma FX adjusted • Revenue down 11% YOY and 31% HOH due to difficult macro conditions in traded risk and balance sheet management • Trading and balance sheet related revenues were down 36%
Slide 99: Global Markets product offering
Global Markets product offering Global Markets delivers innovative product solutions through specialist Global Markets revenue mix teams operating p g across the Asian region g • Interest rate risk hedging for clients • Pricing and risk management of credit Fixed d Income iinstruments • Management o
Slide 100: Sales, trading and balance sheet revenue
Sales, trading and balance sheet revenue Global markets business focussed on client driven risk management and trading activity Global Markets revenue Also management of ANZ’s own liquidity and composition (pro forma) b l balance sheet h risk i k management • Direct client flow business on core prod
Slide 101: Global Capital Markets - becoming a leading Asia Pacific specialist
Global Capital Markets - becoming a leading Asia Pacific capital markets specialist Achieved a number of milestones in 2011 Corporate and frequent issuer bonds • A number of first in offshore RMB/CNH market league table rankings ¾ Joint Lead Manager for First offshore bond for an Category g y Rank #
Slide 102: New Zealand Businesses
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 New Zealand Businesses
Slide 103: New Zealand Businesses - simplification & efficiency
New Zealand Businesses - simplification & efficiency Simplifying the business • Have simplified the management structure Profit before provisions1 • Progressing g g with p process and p product simplification p NZDm • Moving to one IT system Improved customer and employee engagement • Increasing g c
Slide 104: New Zealand Businesses – financial performance
New Zealand Businesses – financial performance Pro forma Pro forma NPAT movement – FY11 v FY10 Growth Rates (NZD) Up 55% Pro forma NPAT movement – 2H11 v 1H11 Flat 104
Slide 105: New Zealand Businesses - balance sheet management
New Zealand Businesses - balance sheet management Net Interest Margin Retail • Mortgages – have held share in the <80% LVR market and taken a more conservative approach to growth in >80% LVR segment • Deposit strategy focussed on growing better quality at call and savings accounts (up 15% YoY) • A d
Slide 106: Simplification program progressing well
Simplification program progressing well with good progress made in 2011 • New regional management approach that simplifies decision making across all businesses N New • Merged Commercial and Agri businesses to ensure an integrated focus Operating right across the agribusiness sector Model • Made Bus
Slide 107: Super Regional capabilities provide real differentiation
Super Regional capabilities provide real differentiation Leveraging our Super Regional capabilities • Migrant Banking – on track to exceed 10,000 new customers through migrant banking channel this year • Wealth – migrant investor program targeting high net worth investors • First major New Zealand b
Slide 108: Retail & Wealth - simplifying our business
Retail & Wealth - simplifying our business to make banking easier for customers and staff Simplification initiatives undertaken across Customer satisfaction at business historic highs1 • Re-engineering processes to allow frontline staff to spend more time with customers • Progressing optimisation of
Slide 109: Commercial & Agri – unlocking value
Commercial & Agri – unlocking value by bringing segments closer together Managing for a lower growth environment Lending Composition • Disciplined management of risk, balance sheet and expenses By Segment Enhanced customer focus • Unrivalled coverage, with customers having access to more relationshi
Slide 110: Business Banking – growth proposition in Small Business
Business Banking – ANZ has a compelling growth proposition in Small Business Strong performance in FY11 Small Business a significant part • Maintained #1 market share position of the NZ economy • Customer satisfaction improved from 87% to 88%1 90% of NZ businesses employ • Lending growth 1.4x system
Slide 111: New Zealand Businesses - credit quality
New Zealand Businesses - credit quality Total impaired assets Total provision charge 531 351 247 165 98 119 90+ Days arrears 111
Slide 112: 2012 Q1 Trading Update (17 February 2012)
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 2012 Q1 Trading Update (17 February 2012)
Slide 113: ANZ released FY12 Q1 trading update on 17 February
ANZ released FY12 Q1 trading update on 17 February Key Highlights (QOQ) A$m • Q1 (3 months to 31/12/11) Underlying profit* up 4.6% QOQ (up 4.1% pcp) • Statutory profit (unaudited) for Q1 was $1.7b • Group G PBP up b by 6% ((or 8% FX adjusted) d d) to $2.3b • Total Provision charge $239m • Total T lP
Slide 114: Provisions remain at or below long term averages
Provisions remain at or below long term averages Total Provision Charge Provision charge remains at low (IP charge by Division and total CP charge) levels A$m 098 1,098 722 660 551 Expected Range 239 * * 1Q12 provision charge annualised 114
Slide 115: Key points from the ANZ Q1 Trading Update
Key points from the ANZ Q1 Trading Update: ANZ is growing and diversifying its customer and revenue base in line with its Super Regional Strategy. In Australia, Australia deposit growth remained strong, strong asset growth was driven largely by mortgages and delinquency trends in the mortgage portfo
Slide 116: Global Markets income recovered somewhat in 1Q12
Global Markets income recovered somewhat in 1Q12 Global Markets Income (FX Adjusted) $m 600 Total Income Sales Income Trading & Balance Sheet Income 500 400 300 200 100 0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 116
Slide 117: Global Markets customer sales income at record highs
Global Markets customer sales income at record highs Trading & Balance Sheet Income Sales Income (FX Adjusted) (FX Adjusted) $m $ Quarterly Sales Income $m $ Quarterly Trading & Balance Sheet Income 400 Quarterly Average 2008 400 Quarterly Average 2008 Quarterly Average 2009 Quarterly Average 2009 Q
Slide 118: 2011 Financial Result
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED March 2012 2011 Financial Result
Slide 119: Overview of financial performance
Overview of financial performance 2011 $m % Underlying Profit 5,652 +12% Operating Income 16,812 +7% E Expenses 7 718 7,718 +11% 11% Provisions 1,211 -33% Statutory y Net Profit After Tax 5,355 , +19% EPS (cents) 218.4 +10% Dividend per Share (cents) 140 +11% Net Interest Margin 2.46% -1bps Customer
Slide 120: 2011 Full Year
2011 Full Year Performance FY11 v FY10 3% 33% Up 12% 2% Up 19% Performance 2H11 v 1H11 1H11 1H11 Profit 2H11 2H11 Non-Core Non-Core Statutory Underlying Before Provisions Tax & OEI Underlying Statutory Items Items Profit Profit Provisions Profit Profit 2,664 154 2,818 (124) 109 31 2,834 143 2,691 Do
Slide 121: Impact of trading income and provision trends 2H11
Impact of trading income and provision trends 2H11 Performance 2H11 v 1H11 Down 70% Up 3% Up 2% Down 17% Down 3% Up 1% Performance FY10 v FY11 FY10 FY11 Trading Income Underlying Expenses Provisions Tax & OEI Underlying Income ex-Trading Profit Profit 5,025 (337) 1,367 (747) 609 (265) 5,652 Down 36%
Slide 122: Trends September Quarter 2011
Trends September Quarter 2011 Trading Income weaker than expected Lower provision charge Higher g recoveries & write-backs driven by y Release of collective flood p provision taken Institutional division in 1H11 122
Slide 123: Adjust for acquisitions & FX – The Pro Forma Numbers
Adjust for acquisitions & FX – The Pro Forma Numbers Growth FY11 v FY10 – Underlying & Pro forma Profit before Revenue e e ue Expenses pe ses Net et Profit o t after a te Tax a P Provisions i i Ex-Trading Ex-Trading g 7.6% 7.0% Growth 2H11 v 1H11 – Underlying & Pro forma Profit before Revenue Expens
Slide 124: Divisional overview
Divisional overview Net Profit after Tax (Pro Forma) 2H11 v 1H11 2H11 HOH FY11 YOY 1,445 8% 2,777 2% 353 (9%) 739 20% 867 (15%) 1 895 1,895 9% 451 0% 904 55% Profit Before Provisions (Pro forma) 2H11 v 1H11 2H11 HOH FY11 YOY 2,361 2% 4,673 5% 491 (9%) 1,030 17% 1,314 (17%) 2,905 (8%) 755 2% 1 493 1,
Slide 125: Net Interest Margin
Net Interest Margin Movement 2H11 v 1H11 (bps) 280.9 Down 0.6 bps ex-markets 280.3 Down 3.0 bps Movement FY11 v FY10 (bps) Funding F di & FY10 Funding Costs Deposits Assets Other Markets FY11 Asset Mix 247.4 2.8 (3.4) (7.8) 16.3 (1.1) (8.5) 245.7 Down 1.8 bps 273.9 Up 6.7 bps ex-markets 280.6 125
Slide 126: Net Interest Margin
Net Interest Margin Net Interest Margin 2H11 v 1H11 Net Interest Margin Institutional Australia Division ex-Markets Down 2bps Down 17bps New Zealand APEA Division Businesses (NZD) ex-Markets (USD) Up 6bps Down 36 bps 126
Slide 127: Operating Expenses
Operating Expenses Operating Expense Growth Pro Forma HOH Group Operating Expense growth Australia New Zealand Group 5.5% Division Businesses 4.1% 2.4% APEA APEA Institutional Institutional ex-Institutional 127
Slide 128: Continue to invest for future growth and productivity
Continue to invest for future growth and productivity Operating Expense Growth Pro Forma FY11 v FY10 • Risk management systems • Payments & IT infrastructure • Back & middle office FTE • Frontline FTE in Institutional & APEA • Institutional cash management platform rollout, Global Markets systems •
Slide 129: Credit quality is improving
Credit quality is improving Total Provision Charge New Impaired Assets 1,621 3,600 1,435 3,126 3,035 1,098 2,437 2,319 1,842 722 660 551 129
Slide 130: Collective Provision Charge & Management Overlay
Collective Provision Charge & Management Overlay Economic Cycle & Concentration Collective Provision Charge (Management) Overlay Balance Additional natural disaster overlay Total charge $8m 130
Slide 131: 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 — Credit Suisse Conference Hong Kong (March 2012) on 6ix