Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Investor Presentation (October 2004)
67 slides from Anz's investor presentation, Oct 7, 2004
Slide 1: Personal Division Market Update: Overview
_ Personal Division Market Uj dai RS Overview Brian Hartzer 6 ret 0211 1.58463
Slide 2: ANZ has transformed Personal into a successful growth business
ANZ has transformed Personal into a successful growth business Strong momentum evident in underlying performance LL Asset growth (sb) | Deposit growth ($b) NPAT growth (¢m)* 36.7 | 33.2 || | HOS 2HO3 Hos 1HO3 2HO3 1HO4 1HO3 2HO3 1HO4 68.7 ie | | 418 21% ai | 11% 406 | * adjusted for 1H03 under-aceru
Slide 3: A proven management team
A proven management team
Slide 4: Personal business update: addressing some of your issues
Personal business update: addressing some of your issues Presentation focus Brian Hartzer - Overview * ANZ Personal Banking journey and current business momentum © Future priorities Greg Camm - Personal & Wealth Distribution ‘Retail franchise journey and current business momentum * Restoring Custome
Slide 5: We have built a strong retail business, block by block
We have built a strong retail business.... block by block...... Our goal is to become Australia’s “fastest growing most respected major retail bank” ANZ NOW IMPROVED CUSTOMER SATISFACTION Pre-1997. 1997 — 2004
Slide 6: Specialisation and deep research helped us design the best products
Specialisation and deep research helped us design the best products Transaction Account of the Year 2003, 2002, 2001 (Personal Investor) Best Transaction Accounts 2004 (Money Magazine) Savings Institution of the Year 2003, 2002, 2001, 2000, 1998, 1997 NZ's dominance of the awards shows an incredible
Slide 7: 'Breakout' has built an engaged, productive workforce
‘Breakout’ has built an engaged, productive workforce Staff Satisfaction - “am 1 100% Satisfied working at the ANZ?” Staff are critical to ret —rostive Responses 80% seeing * Sense of “ownership and 60% accountability” 57% ao. + 5000 staff trained in sales and 20% compliance since 2002 20% ~ Seaiece
Slide 8: Restoring Customer Faith was the critical next step
estoring Customer Faith was the critical next step RCF turns the Bank “inside out” What does it achieve? + Acknowledgement that we "got + Sense of ownership and it wrong” in the 90’s commitment + Local CEO model + Engaged staff + Freedom with accountability + Higher customer satisfaction + Community
Slide 9: RCF has dramatically improved customer satisfaction
RCF has dramatically improved customer satisfaction Customer Satisfaction* with Main Financial Institution 85 Closest ‘major peer Restoring 55 Customer Faith: program commenced 50 BRSSSRRSRZRRS88SasaEgsgssssss CP eee eee Te Te EEE EER LESS E SSP sS PB sSPsSF SS PAS FSS PAGES ANZ —— Peer Banks. —— Re
Slide 10: Bottom line: real momentum, growing market share, more upside
Bottom line: real momentum, growing market share, more upside Market share of “traditional banking” financial services increasing” % 18 16 {15.2 = a ee Gap in ui * a market share | ie between ANZ a2) 58% i & peers has reduced by 1/3 ¥ 10.8 10 $$ 9.4 8) RCF & new Growth from best transaction accounts
Slide 11: Upside case study: deepening the relationships
Upside case study: deepening the relationships Untapped high growth Private & Premier Customers (all products*) Est. share of market EVA™ ANZ Customers ANZ Customers’ EVA at other Non ANZ institutions Customers ‘Source: FMCG Analytics ae Clear opportunity to increase share of wallet « Challenge is t
Slide 12: What we are doing now
What we are doing now: rity Accelerate the momentum in specialist businesses Grow deposit share Deepen relationships Move costs from “back” to “front” Strengthen the lead on people and culture Add Enabler (examples) * Share best practices « Segment marketing capability Strong brand « Targeted custom
Slide 13: Summary
Summary * The strategy is paying off: = Profit is growing «= Market share is growing = Customer satisfaction is growing = Staff engagement is growing * Retail takes time but we now have the momentum ay ANZ
Slide 14: Distribution
_ Personal Division Market Uj dai RS Distribution 6 ret 0211 1.58463
Slide 15: Underweight share
Underweight share 4) 10.6% tilly 245 (15%) ‘Apr 2004 “12.8% 72 (16%) RGF July 2004 82 (23%) RGF July 2004 8.7% ply 248 (14%) IGF Oct 2002 le tas | asa% ah 7) i ly 24 2256 nee RGF Oct 003 Legend | Share of “ronal banking” Mees (tras He) eSeeriet ees RCF Date Restoring Customer Faith fully rolled out
Slide 16: ANZ Now
ANZ Now = Building a distinctive culture => Strengthening our Retail network =, Building our customer experience leadership => Improving our sales capability scr sou 4 : fiestor «= BANKING —_lfivestor ad meat FINANCE = faticititntisise" Excellence ae Se Moms Beton 208 ofthe Year 2004, ag ANZ
Slide 17: We are building a distinctive culture
We are building a distinctive culture What our people are saying Staff Advocacy EES wi, 85% What we've been doing Advocacy 82% ieee Faded penloiaica + More than 4/5 would management recommend ANZ as a | + 20 new Branch Managers place to work ' + + + from retailing/outside Juko1 Juk02JuKo3—Jubo4 ANZ
Slide 18: Strengthening our Retail network
Strengthening our Retail network Our Goals Our Objectives Lift the quality of + A better and safer branches environment for Customers and Open new branches 4.47 A better customer experience Our Achievements so Far v 103 branches refurbished since 2002 (additional 89 in Rural) v 292 branches re-brand
Slide 19: Building on our customer experience leadership
Building on our customer experience leadership Our Goals Restore Customer Faith Provide a distinctive customer experience Improve operational efficiency and sales capability Our Objectives Rebuild relationship # Improve Loyalty #Advocacy Share of wallet Increase staff engagement # Move decision maki
Slide 20: Customer Charter the foundation for Restoring Customer Faith
Customer Charter the foundation for Restoring Customer Faith Our promises 1. Simple accounts, fees and charges 2. Simple, fast account opening 3. Quick, convenient branch banking 4, 24 hour, 7 day accessibility 5. Fast, efficient phone service 6. Respect for personal information and privacy 7. Helpi
Slide 21: We had to rebuild the relationship
We had to rebuild the relationship Taking Specialisation to the Frontline Local Market -based small businesses led by Local CEO Responsible for all customers Wnty tne |e Find great people to lead them Lifelong Businesses Manage to a 4 pillar contract — Loyalty of our Financial Results, Customer, Gee
Slide 22: Rural Banking has been transformed with its own local market model
Rural Banking has been transformed with its own local market model ANE Reipe Tan “aoa Our people ‘ “Someone local to turn to” Our customers ‘ “Meet their needs every time” Our Service ‘ “Easy to do business with” ‘ Increasing rural share ANZ
Slide 23: We are improving our sales effectiveness
We are improving our sales effectiveness we’ CRM is lifting sales effectiveness Y Our products are more customer friendly Y Referrals and more planners are improving Wealth product sales Customer satisfaction is up a ae ANZ
Slide 24: Network sales efficiency growing, helped by CRM
Network sales efficiency growing, helped by CRM... $8 3 8 8 Sales events per effective sales FTE increasing (number per month) 0.8 0.4 i| Sep-02 Mar-03 Sep-03 Mar-04 Jubo4 Cross Sales - Average number of general insurance sales per loan sold 1.2 ° , ; , , , Apr-03 JubO3 Oct-03 Jan-04 Apr-04 JulLo4 M
Slide 25: ...and market leading products
..and market leading products New accounts have improved acquisition, reduced attri Net New Access Accounts H104 % Leading to good growth in the number of accounts Total access accounts (0008 1950 1900 1850 1800 1750 1700 1650 1600 1550 1500 1450 + Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 ANZ
Slide 26: Referrals and expanded Planner force driving growth
Referrals and expanded Planner force driving growth Wealth Network Referrals 17% 10,442 10,198 — 7,202 12,000 Sep-03 Dec-03 Mar-04 Jun-04 Sep- 04(F) $m per month Managed Investments - Gross Flows Oct-03 Jan-04 Apr-04 Julo4 EF lanner Numbers 15% 270 275 | | | | Sep-03 Dec-03 Mar-04 Jun-04 Sep- 04(F)
Slide 27: Our face to face performance has improved significantly
Our face to face performance ha: proved sig! icantly Contact Centre calls answered within 1 minute 93% 77% ||| 1H03 2HO3 1H04 2Ho4 Branch wait times have shortened (% customers served within 5 minutes) Call handling in our Contact Centre has also improved (Cé first point contact resolution) | iil 1H
Slide 28: Customers are responding very positively
Customers are responding very positively Group complaints are down ... ... and are being resolved faster (avg days to resolve) 3473 2955 2953 | || | Oct-03 © Dec-03—Mar~ Jun-04 2004 YTD Customer Satisfaction is up* ... ... and risk of defection is falling* (score out of 10) ai (cilstomers moved or s
Slide 29: We are building on this momentum
We are building on this momentum Strategic Goal Initiatives Targeted Outcomes Build a compelling > Continue to enhance our —_— Be recognised as providing the retail banking brand ‘customer proposition best service proposition of the around our Customer “majors” Charter Further improve » Strengthen O
Slide 30: Summary
Summary * We have strong momentum and great upsi = Leading customer experience « Higher sales effectiveness = Growing market share = Record Staff satisfaction We are unlocking the value in our retail network ANZ
Slide 31: Mortgages
_ Personal Division Market Uj dai RS Mortgages Chris Cooper 6 ret 0211 1.58463
Slide 32: Leveraging product expertise with improved distribution
Leveraging product expertise with improved distribution = Astrong track record in an attractive market => High quality portfolio = Brokers remain fundamentally attractive = Diversifying distribution and process automation Home Lender of the Year ANZ ANZ
Slide 33: Mortgage market is attractive and expected to deliver reasonable growth
Mortgage market is attractive and expected to deliver reasonable growth Australian Mortgage Lending Growth (%) FUM ($b) 25 800 Growth ee 700 20 600 15 Hao 400 10 300 200 5 100 oO oO Sep- Sep- Sep- Sep- Sep- 02(a) 03(a) O4(F) O5(F) 06(F) Svcs ANZ Economie: FA, Ama repos, (tes Eoin) Mortgages Market S
Slide 34: A strong track record, but recent performance impacted by margins
A strong track record, but recent performance impacted by margins NPAT ($m) 119 108 110 | aut 2H02 1HO3.«2HO3.—«1HO4 FUM ($b) 74.2 67.4 60.6 53.3 2Ho2 1HO32HO3—«1HO4 50% 40% 30% 20% 10% 0% 1,40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 + CTI (%) Margins (%) a ee 1H02 2HO2 1HO3 2HO3 1HO4 ANZ
Slide 35: Cyclical funding costs the key driver of margin contraction
Cyclical funding costs the key driver of margin contraction Mortgages Average Margin Cash / 30 Day Bill Spread % % 10 6.00 0.35 a8. 0.30 > a 29s 2 igus Zz i 9 = 3 2 8 Hy be 3 73 ig 2HO3, 1HO4 ‘2HO4F ih ipl — oe + ANZ
Slide 36: Margins also impacted by product mix and loan size
Margins also impacted by product mix and loan size Product Mix Loan Size i “4 : a 80% 9 | I . ' 12%) 1. Ba 60% 40% ay 20% | 1HO2 2HO2 1HO3 2HO3 1HO4 2HO4* 2 ee me et OE PPP ELLE Easy Start "Fixed Rate 1250 plus # 150-250 # 125-150 =150-125 10-50 \bieedse Re haa OL Vereen Kia:
Slide 37: Portfolio continues to be very high quality
continues to be very ih quality Delinquency Trends (>60 days arrears) ANZ Network and Brokers 0.30% ania Network 0.20% 0.15% 0.10% roker 0.05% 0.00% + ; : Sep-03 Dec-03 Mar-04 —Jun-04 ANZ Portfolio by LVR - Australia ‘As at June 2004 75% ao LVR at Origination Dynamic LVR 25% Delinquency Trends (>60
Slide 38: Sales still strong; Mortgage Solutions to drive further growth
Sales still strong; Mortgage Solutions to drive further growth Monthly Sales remain strong (ANZ Retail) ($m) 2,000 1,371m 1,500 ‘ 4,000 1.229 —Network * 500 —Broker 0 : * * a. + Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Mortgages Direct Referrals Growing Numbers and Volumes (weekly) (sm) OY 300 Valu
Slide 39: ANZ Mortgage Solutions will drive growth and diversify distribution
ANZ Mortgage Solutions will drive growth and diversify distribution ‘+ Will fill a gap in our distribution model with an innovative solution * Offers customer choice and convenience + With 12% of the Australian mortgage market, tremendous opportunity from remaining 88% ‘+ Specialist sales forces ach
Slide 40: Broker channel remains financially and strategically attractive
Broker channel remains financially and strategically attractive Broker channel EVA positive * Detailed review of Broker channel performed this half in conjunction with Trowbridge Deloitte * Broker Channel ROE comfortably above Group ROE * Distribution costs fully variable * Delivers larger new loan
Slide 41: Clearly defined strategy focuses on distribution and business improvement
Clearly defined strategy focuses on distribution and busin 2005 Objectives improvement | \ | | Establish own | Transform existing Grow Distribution | Get Nest \ chats eation | proprietary | Channa’: | channels | i | | H i | f Improve'back | Deliver the first Aucomation into 4 \ stage of Leroy office
Slide 42: Personal Division Market Update: Consumer Finance
_ Personal Division Market Update September 2004 Consumer Finance Brian Hartzer (568.0211 H58463 Se Ee
Slide 43: Successfully dealing with the challenges
Successfully dealing with the challenges => Consumer Finance has a strong track record = Portfolio remains healthy Focus on the customer and understanding of the business has delivered a good post-interchange outcome for our Issuing business => Acquiring business transformed, growing share a ANZ
Slide 44: Delivering strong performance
Delivering strong performance Strong NPAT growth (¢m)* Steady FUM growth ($b) mCards Personal Loans 4.80 4:95 5.05 Gu Wa #02 -1HO3.--2HO3-—«1HO4 HHO2 -1HO3.--2HO3.— 104 Cost Income Ratio %* 83.1 86.7 Source of Revenue 54.0 ‘As at March 2004 52.0 50.0 Issuing 48.0 46.0 m Acquiring & ATM's 44.0 42.0 4
Slide 45: Credit quality in good shape
Credit quality in good shape Credit Card 30 Day + delinquencies a Personal Loan write-offs 3.0% 10 2.5% + Scorecard rebuilt to 8 target 3.5% loss rate 2.0% abies 6 1.5% 4 » ~ 1.0% 2 0.5% 0 = if 2 fs. bd : 5 4 2000 2001 2002 2003 2004* Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Credit Card write-offs Fraud L
Slide 46: Successfully repositioning our cards portfolio post interchange reforms
Successfully repositioning our cards portfolio post interchange reforms Understanding our Customers: ‘+ Customer Research: 1,200 existing AFFV customers surveyed to understand the perceived impact of different product changes Key Finding ‘+ Increased Annual Fees found to be the greatest attrition ca
Slide 47: Customer attrition minimised via segment specific tactics
Customer attrit jon minimised via segment specific tactics Proactive Retention Reactive Retention ‘+ Proactive strategy implemented via letters ‘= Reactive strategy implemented by an ‘* Offers that improve the value of the product | inbound Retention team © Primary purpose: prevent closure + Purpose
Slide 48: We have made a conscious market share trade-off
We have made a conscious market share trade-off... ‘A lower share of spend -»but significantl attractive profi more Market Share of Spend % Change in Spend Per Account (3 Month Moving Avg Adj for OC Spend) un 03 = Jun 04 Base +6.0% 22% Low Spending Revolvers 20% 18% 16% 14% 12% = 34.8% 10% High Spen
Slide 49: ...to achieve a more attractive portfolio
...to achieve a more attractive portfolio \gs Earning Interest% (3 Month Moving Avg.) 2% ANZ Interchange response takes effect ——ANZ —Market Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 ”
Slide 50: Issuing strategy: sustain growth through adjacent segments
Issuing strategy — sustain growth through adjacent segments Repeatable Formula ‘Ret tain Profitable Cu rofitable Custom Extend into New Segments Drive Scale Efficiencies Adjacent Customer/Product Segments New Customer l _ New Produts Segments + Low Rate ‘Interest rate MasterCard sensitive [mone , Bu
Slide 51: We have transformed our Merchant Acquiring business
We have transformed our Merchant Acquiring business... 1999 2004 16 different terminal types from multiple vendors; Software changes require physical visit + Terminal fleet streamlined to MultiPOS; Remote software download capability Minimal fraud detection systems = * Neural network fraud system Po
Slide 52: ...delivering strong growth with clear plans going forward
...delivering strong growth with clear plans going forward Strong growth in Merchant Outlets... Number of Merchant Outlets ois a "0 « 20 Renewed focus 40 on Acquiring Business » —— PEPESTEC Tae ERA stHer seo! ith opportunities ahead “Do more Acquiring” - focus on targeted profit pools/segments i) Ex
Slide 53: Summary
Summary » Market remains attractive * A strong track record of growth * Strong focus on the customer delivers successful interchange outcome « Acquiring business has been transformed and is delivering strong growth + Well positioned to compete successfully against traditional and new competitors ANZ
Slide 54: Summary
_ Personal Division Market Uj dai RS Summary Brian Hartzer 6 ret 0211 1.58463
Slide 55: A solid foundation for growth
Asolid foundation for growth « Experienced and Proven Management Team * Leading Products * Engaged Workforce « Increasingly Satisfied Customers is Our goal is to become “Australia’s fastest growing most respected major retail bank” ANZ
Slide 56: Personal Division Market Update
_ Personal Division Market Uj dai RS 6 ret 0211 1.58463
Slide 57: Brian Hartzer
Brian Hartzer Brian Hartzer is Group Managing Director of Personal Banking. This division primarily serves ANZ's retail customers in Australia. It includes the following businesses: Personal and Wealth Distribution, Mortgages, Credit Cards, Merchant Services, Banking Products and Rural Banking. Bria
Slide 58: Greg Camm
Greg Camm Greg Camm is Managing Director, Personal and Wealth Distribution. This includes the teams in ANZ's metropolitan branch network, the contact centre, and our network of financial planners. Greg was previously Managing Director, New Zealand, and before that was Managing Director, Mortgages. F
Slide 59: Chris Cooper
Chris Cooper Chris Cooper is Managing Director, Mortgages. He is responsible for all residential mortgage security lending activities. He oversees the management of all aspects of mortgages including marketing, product development, operations and securities. Chris was previously ANZ’s Global Head of
Slide 60: Jenny Fagg
Jenny Fagg Jenny Fagg is Managing Director, Credit Cards Australia. She is responsible for the business that provides consumer and commercial credit cards to ANZ’s customers. Jenny joined ANZ in 2000 as General Manager, Consumer Finance Risk Management and Personal Loans. She was appointed Managing
Slide 61: David Hisco
David Hisco David Hisco is Managing Director, Merchant Services. This business includes the merchant acquiring businesses in Australia and New Zealand, as well as the smart card development unit. Prior to this, David was General Manager Merchant Acquiring in Australia. Before joining the merchant bu
Slide 62: Mike Guerin
Mike Guerin Mike Guerin is Head of Rural Banking Australia. He is responsible for ANZ’s Australian Rural Banking network, which includes more than 280 branches and more than 60 agencies. Mike's role is to provide the vision and framework to build stronger and more sustainable business in regional an
Slide 63: John Harries
John Har! John is the acting Managing Director, Bankings Products. He is responsible for ANZ’s consumer deposit products as well as ANZ’s wealth products V2+, Trustees, margin lending and ANZ's E*TRADE relationship. John was previously General Manager, Retail Mortgages Australia, where he developed
Slide 64: Shane Buggle
Shane Buggle Shane is Chief Financial Officer Personal Division. Shane has over 20 years experience in banking and finance. Shane rejoined ANZ in 2003 as CFO for the Consumer Finance business, before moving to his current role, having previously worked for ANZ between 1993 ~1999 in the Group Finance
Slide 65: Michael Liley
Michael Liley Michael is Head of Strategy and Marketing... Before joining ANZ in July 2004, Michael was a partner in @ boutique venturé capital firm during which time amongst other things he managed one of the major Investments, an international technology ‘company in the UK, for most of 2003, Previ
Slide 66: Sonya Clancy
Sonya Clancy Sonya Clancy is Head of People Capital, Personal Banking Division. Sonya works closely with the leadership team and focuses on strategic People Capital issues, opportunities and priorities facing the Division and ANZ. Joining ANZ in 1998, Sonya has held various senior people capital rol
Slide 67: Searchable text section of graphics
Searchable text section of graphics shown above [GRAPHIC] Per sonal Division Market Update September 2004 Overview Brian Hartzer [LOGO] ANZ has transformed Personal into a successful growth business Strong momentum evident in underlying performance [GRAPHIC] Asset growth ($b) [CHART] Deposit growth
Australia and New Zealand Banking Group — Investor Presentation (October 2004) on 6ix