Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Non-Deal Roadshow (December 2010)
106 slides from Anz's roadshow presentation, Dec 1, 2010
Slide 1: Investor Discussion Pack
For personal use only Investor Discussion Pack Mike Smith Chief Executive Officer AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED December 2010
Slide 2: ANZ has established a strong business foundation
ANZ has established a strong business foundation For personal use only A clear company wide focus on our super regional strategy: • Organised our business around three key geographies and our customers p. 3-16 • Maintaining strong businesses in our home markets: • Australia p. 17-23 • New Zealand p.
Slide 3: Overview and strategy
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Overview and strategy
Slide 4: ANZ is structured by Geography & Segment
ANZ is structured by Geography & Segment For personal use only Asia Pacific, Europe & America (APEA) Retail Commercial (including Wealth Institutional (emerging) partnerships) Australia Retail Wealth Commercial Institutional New Zealand Retail Wealth Commercial Institutional Institutional is a globa
Slide 5: Super Regional strategy progressing well
Super Regional strategy progressing well For personal use only TRANSFORM OUT PERFORM RESTORE • Institutional back • Quality on par with Create global leaders in our to system markets a leading Super • Restore “jaws” – • Best of breed Regional bank increase revenue faster than costs customer experien
Slide 6: Super Regional Strategy
Super Regional Strategy For personal use only Asian, Australian & New Zealand Australian 2 way trade weights interconnectedness increasing: US & Europe1 • Following and supporting our customers to the region, developing relationships to work both ends of the trade flows. • Trade flows between Asia a
Slide 7: Regional and intra-regional trade and investment flows are substantive
Regional and intra-regional trade and investment flows are substantive For personal use only Denotes two way trade flow (2008) FDI inward flow (USDb, 2008) Asia1-Europe Asia1-USA Trade: US$1.1trn Trade: US$1.0trn CN TW 108 5 IND HK 42 63 Pacific-Asia1 VN 8 Trade: US$7b INDON Intra-Asia1 8 Trade: US$
Slide 8: Building a genuinely pan regional business - connectivity provides a competitive advantage
Building a genuinely pan regional business - connectivity provides a competitive advantage For personal use only Growth in trade and capital flows between Asia Linked through flows of trade, and Australia are tracking 17% to 25% pa capital and population Surplus savings Key focus is to bridge gaps a
Slide 9: Disciplined approach to M&A – RBS Asia acquisition
Strategy is supported by a disciplined approach to M&A – RBS Asia acquisition For personal use only • Acquired RBS¹ businesses in six countries, Country Business Branches Customers Deposits aligned with current strategy: Taiwan Retail 21 ~1.3m ~US $2.5b Retail, wealth & commercial Commercial & 16
Slide 10: Disciplined approach to M&A - ING Australia and New Zealand Joint Ventures
Strategy is supported by a disciplined approach to M&A - ING Australia and New Zealand Joint Ventures For personal use only • Acquired ING Groep‟s (ING) 51% interest in ING Australia and ING NZ (the JVs) for $1,760m1 Australia ~11x multiple of normalised 2008 earnings2 Acquired ING's 51% in ING Au
Slide 11: Disciplined approach to M&A - Landmark Loan and Deposit book
Strategy is supported by a disciplined approach to M&A - Landmark Loan and Deposit book For personal use only Overview of transaction Overview of Landmark • Acquisition of Landmark Financial Services • Leading Australian agribusiness company, (LFS) loan and deposit book from AWB‟s rural offering mer
Slide 12: ANZ has continued to invest for growth notwithstanding tougher economic conditions
ANZ has continued to invest for growth notwithstanding recent tougher economic conditions For personal use only Revenue and Expenses Net Profit by region 17% Pro Forma Basis1 12% 12% 9% 10% 8% 6% 8% 7% 8% FY06 FY07 FY08 FY09 FY10 Revenue Expenses Provision charges Net Profit after tax2 1. Pro forma
Slide 13: Group loans and deposits
Group loans and deposits For personal use only Group Customer Deposits (AUDb) Group Net Loans and Advances (including acceptances) (AUDb) Loan to Deposit Ratio Sep 2010 – 140% Loan to Deposit Ratio Sep 2006 – 171% 1 1 1. Includes Wealth and Other Regional performance: Overview 13
Slide 14: Net loans and advances by geography
Net loans and advances1 by geography For personal use only Australia New Zealand (NZD) APEA (USD) FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 Growth 13% 15% (1%) 6% 13% 11% (1%) (1%) 31% 99% (14%) 45% A$b 2 1. NLAs include acceptances 2. Retail includes Wealth and Group Centre Region
Slide 15: Customer deposits by geography
Customer deposits by geography For personal use only Australia New Zealand (NZD) APEA (USD) FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 Growth 20% 12% 14% 7% 7% 5% 2% 0% 26% 69% 31% 72% A$b 1 1. Retail includes Wealth and Other Regional performance: Overview 15
Slide 16: Diversified lending portfolio, weighted to secured mortgage portfolio
Diversified lending portfolio, weighted to secured mortgage portfolio For personal use only Net Loans and Advances (including acceptances) by product line (A$b) 361 1 (A$b) 172 1 47 (A$b) 90 52 1. Includes Wealth. 16
Slide 17: Australia Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Australia Division
Slide 18: Australia Division – high value strategy has delivered
Australia Division – high value strategy has delivered For personal use only Pro Forma Basis2 Australia Division Revenue & Expense growth1 Profit Before Provisions growth Pro Forma Basis2 Provisions Net Profit after tax 1. 2005 to 2008 based on “Personal Division” structure, 2009 and 2010 based on “
Slide 19: Super Regional strategy provides opportunities across Australian business
ANZ‟s Super Regional strategy provides opportunities across our Australian business For personal use only Retail • By 2015 15% of the Australian population will be of In-country Business Migrant banking Asian origin platforms Development Managers • Student volume is driving much of the in-flow from
Slide 20: Retail building on a strong customer franchise
Retail building on a strong customer franchise, revenues impacted by fee changes and higher cost of funds For personal use only Pro Forma Basis3 • iKnow platform providing frontline staff with Market share2 Revenue growth improved customer insights and support • Renewed focus on customer service and
Slide 21: Australia: Commercial
Australia: Commercial For personal use only Pro Forma Basis3 • Acquired Landmark Financial Services Revenue growth Growing market share1 ($2.2bn lending, $400m deposits) • Invested in more small business (% of market share) specialists. Esanda Market share • Esanda transitioned to a purely auto of r
Slide 22: Australia: Wealth
Australia: Wealth For personal use only Pro Forma Basis1 Revenue growth • ANZ assumed full ownership of ING's Insurance in-force premiums superannuation, investment and insurance businesses $m Up 14% • Combined with ANZ Private and 1,312 1,155 1,230 Investment & Insurance businesses to form a single
Slide 23: The Asia Pacific Europe & America Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 The Asia Pacific Europe & America Division
Slide 24: Deep onshore presence and strong network model
Deep onshore presence and strong network model delivers connectivity to clients For personal use only Franchise Franchise Markets Network Core markets for Institutional, Commercial, Retail & Wealth Hubs • Greater China • Greater Mekong1 • India • Indonesia • Malaysia • Pacific Regional Business Hubs
Slide 25: Since 2008, we have prioritised our build out
Since 2008, we have prioritised our build out, enabling us to become a credible competitor For personal use only 1H 2008 Today • Institutional network • Pan-regional Institutional/commercial business • Formed partnership with • Top 4 foreign bank in Indonesia South and AmBank • Largest foreign bank
Slide 26: APEA: Balance sheet momentum
APEA: Balance sheet momentum1 For personal use only APEA loans & deposits (USDb) 2010 loan and deposit growth by RBS2 Dep. Loans region 2H10 5.0 2.8 1H10 1.5 0.4 APEA Asia Pacific Europe & America APEA Current & Saving accounts 2010 loan & deposit growth by segment (CASA) (USDb) Includes accounts fr
Slide 27: Business strategy allows efficient use of APEA's liquidity surplus
Business strategy allows for efficient use of APEA's liquidity surplus For personal use only • Focus on affluent and emerging affluent client segments Business Strategy • Building a substantive DCM and Cash Management capability and investor client base This focus allows us to: • Fund our own region
Slide 28: Becoming a top four Institutional bank in Asia Pacific
Becoming a top four Institutional bank in Asia Pacific For personal use only Customer Segments Value Proposition • Be a core wholesale bank to our clients Institutional • Leveraging our strengths: MNC / Regional Corporate – Regional network and connectivity – AA rating Commercial – Deep insights – g
Slide 29: Delivering for Institutional and clients across Asia and the Pacific
We are delivering for Institutional and our clients across Asia and the Pacific For personal use only Regional Connectivity Examples • Mandated Lead Arrangers with BNP and European and US Multinational HSBC companies accessing Asia • USD411m (2.7x launch size)-maiden Asian syndication bond • Raised
Slide 30: Retail & Wealth and Private Bank deliver local and regional banking
Our Retail & Wealth and Private Bank will deliver local and regional banking to the affluent in each market For personal use only • HNW, Affluent & Emerging Affluent Customer segments • Owners, management and staff of our institutional and commercial clients Position and Value Proposition • Three cr
Slide 31: Five key partnerships expand our organic agenda
Five key partnerships expand our organic agenda For personal use only Double play in high growth, high return market Partnership Model Focus on our key segments (Commercial, Affluent & Emerging Affluent) • Significant influence Scale (Number 5 by assets & deposits) in a closed market • Exposur
Slide 32: Organic growth a key driver of strategy
Organic growth a key driver of strategy For personal use only 2008 2009 2010 2011 2012+ Develop strategy and Continue organic Extend and deepen build business model growth with bolt-ons franchise • Build substantive Institutional • Organic growth anchored by • Deepen organic growth in business Insti
Slide 33: The New Zealand Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 The New Zealand Division
Slide 34: Strategy to leverage ANZ's leading market position
Our strategy is to fully leverage ANZ‟s leading market position to deliver superior growth and returns For personal use only Leveraging leading market share Two strong banking brands with a positions1 powerful market presence Market share1 39% 39% 33% Well diversified portfolio, weighted to Resident
Slide 35: New Zealand - Retail & Wealth
New Zealand - Retail & Wealth For personal use only Pro Forma Basis2 Retail Wealth Revenue growth • Asset growth flat, system growth • Wealth profitability favourably rates subdued impacted by ING NZ full ownership • Income impacted by removal of • $1.5 billion KiwiSaver FUM with exception fees, mar
Slide 36: New Zealand - Commercial
New Zealand - Commercial For personal use only Pro Forma Basis1 Commercial Rural • Leveraged Shanghai Expo as an • Higher Rural incomes with Fonterra Revenue growth opportunity to connect customers to forecasting the third highest dairy payout Asia and demonstrate regional on record capabilities • A
Slide 37: New Zealand - Institutional
New Zealand - Institutional For personal use only Pro Forma Basis2 • ANZ continues to dominate the Institutional NZ NZ institutional segment 2010 Financial Performance Revenue growth • Second half expense growth Trading revenue driven by investment in down 161m payments systems • Connecting customer
Slide 38: The Institutional Business
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 The Institutional Business
Slide 39: Global Institutional business focus redefined
Global Institutional business focus redefined For personal use only Foundations laid Revenue Contribution by Product • Strengthened the Institutional Leadership Team, additional team members with international experience • Starting to execute the technology and operations roadmap • Improving capital
Slide 40: Increased focus on core customers and geographies
Increased focus on core customers and geographies For personal use only Over 3,500 active Institutional and Corporate A single global team services customer customers supported by over 5,000 staff needs across the network • Corporate banking customers: t/over $40-400m • Global representation support
Slide 41: Regional networks, superior insights & service underpin competitive advantage
Regional networks, superior insights & service underpin the competitive advantage For personal use only Competing globally requires Regionally Networked Model superior insights and service • A lead regional bank servicing clients with pan regional needs • A strong regional branch • Building platform
Slide 42: Global Institutional – growing core customer relationships
Global Institutional – a focus on growing core customer relationships supporting income performance For personal use only Customer Growth Customer Income1 Cross Border Income >1,100 new relationship managed Super Regional strategy increasingly customers ex-acquisitions capturing cross border revenue
Slide 43: Global Markets
Global Markets For personal use only Global Markets Income Product Contribution Sales & Trading Mix (AUDm)1 % Total Income 2,062 1,816 49% 1,225 43% 857 36% 29% 51% 57% 71% 64% Whilst lower than 2009, market • Capital Markets growth underlines the benefits of volatility evident in 2010 Asian network
Slide 44: Global Institutional P&L drivers
Global Institutional P&L drivers For personal use only Underlying Performance1 Business Segment Performance1 YOY Movement (FY10 vs FY09) AUDm YOY Movement (FY10 vs FY09) AUDm large 14% (22%) large 2 2% 14% (46%) 23% Geographic Performance1 YOY Movement (FY10 vs FY09) AUDm Up 29% 2H10 vs 3% 10% (29%)
Slide 45: Investing across the business in systems and people
Investing across the business in systems and people For personal use only Expense Growth1 Asia Pacific, Europe & America • Continued investment in growing the Asia franchise YOY HOH and driving customer acquisition • Investment in support infrastructure to underpin revenue growth 31% 13% Australia •
Slide 46: Predicated on disciplined execution
Predicated on disciplined execution For personal use only Implementation priorities Significant growth opportunities Estimated addressable Cash Management Sustained customer growth Revenue pools • Deepening relationships with existing 3500 active clients ($b) • Targeting a significant number of new
Slide 47: Priority segments – Natural resources & Agriculture
Priority segments – Natural resources & Agriculture For personal use only Natural resources Agriculture • Well positioned to develop a super regional • Growing soft commodity demand from Asia natural resources business linking Australian producers with Asian processors • Well positioned for Australi
Slide 48: Priority segments – Infrastructure
Priority segments – Infrastructure For personal use only • Goal to become a leading commercial Addressable revenue in APAC Infrastructure Bank in the Asia Pacific Infrastructure market set to grow to Region $5.5bn Debt Markets • Maintain dominant position in Australia and NZ and invest selectively i
Slide 49: Priority products – Cash Management & Trade
Priority products – Cash Management & Trade For personal use only Cash Management Trade • Vision to be a lead provider of pan-regional cash • Support trade flows between our core management solutions via a single transactional operating geographies interface • Build on strong market position in Aust
Slide 50: Priority products – Regional Rates and FX; Commodities and DCM
Priority products – Regional Rates and FX; Commodities and Debt Capital Markets For personal use only Commodities Regional Rates and FX • Commodity revenue split: • Largest domestic markets business Hedging exposures of commodity producers and consumers ~ 60% of revenue • FX revenues growing at 40
Slide 51: Treasury
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Treasury
Slide 52: ANZ's strong capital ratios measured across jurisdictions
ANZ‟s strong capital ratios are fully reflected when measured consistently across various jurisdictions For personal use only Sep 09 Mar 10 Sep 10 FSA Sep 10 Core Tier 1(1) 9.0% 8.5% 8.0% 11.3% Tier 1 10.6% 10.7% 10.1% 13.5% Total Capital 13.7% 13.0% 11.9% 15.2% Capital Update: Capital Agenda: • ANZ
Slide 53: Core Tier-1 level remains strong and well positioned
Core Tier-1 level remains strong and well positioned For personal use only Capital Position (Core Tier-1 Ratio) Portfolio growth & mix 19bp decrease Risk migration 3bp increase Portfolio data review 4bp increase ING 79bp decrease Non credit RWA 27bp decrease RBS 20bp decrease Landmark 7bp decrease I
Slide 54: Tier-1 position reduced during FY10 due to acquisitions
Tier-1 position reduced during FY10 due to recent acquisitions partially offset by Hybrid issuance For personal use only Capital Position (Tier-1 Ratio) Portfolio growth & mix 23bp decrease Risk migration 4bp increase Portfolio data review 5bp increase ING 79bp decrease Non credit RWA 34bp decrease
Slide 55: Reconciliation of ANZ's capital position to FSA Basel guidelines
Reconciliation of ANZ‟s capital position to FSA Basel 2 guidelines For personal use only APRA regulations are more conservative than current FSA regulations, in that APRA requires: • A 20% Loss Given Default floor for mortgages (FSA: 10% floor) • Interest Rate Risk in the Banking Book (IRRBB) includ
Slide 56: Basel & APRA Regulatory reform - Capital
Basel 3 & APRA Regulatory reform - Capital For personal use only Basel Committee Announcements What remains outstanding under B3? To date, the Basel Committee has announced: • Methodology for determining countercyclical buffer • New capital targets and buffers • Final requirements for Tier-1 & 2 ins
Slide 57: Improved funding profile achieved, stable term debt issuance
Improved funding profile achieved, stable term debt issuance For personal use only Stable term funding profile Key Funding Metrics • 82% of all funded assets financed by equity, deposits & LT debt (was 78% as at Sep „09 & 71% Sep „08) • $26.4b of term funding (including $2.4b of pre funding Issuance
Slide 58: ANZ's term debt issuance consistent and well diversified
ANZ‟s term debt issuance consistent and well diversified For personal use only Marginal term funding costs have APEA funding benefit reduces stabilised but average costs continue term debt issuance by ~10% to increase as portfolio reprices APEA surplus deposits Domestic AUD/NZD Offshore Private Plac
Slide 59: Strong Liquidity Position leading into proposed B3 changes
Strong Liquidity Position leading into proposed B3 changes For personal use only Basel III Liquidity Developments Maintaining post GFC liquidity • Reduction in required core funding of position ($b) mortgages from 100% to 65% • Improved treatment of „Retail‟ and „SME‟ deposits • Allowance for „opera
Slide 60: AUD strength presents a headwind for future earnings
AUD strength presents a headwind for future earnings For personal use only • ~1.25% negative impact, including current hedging positions, on FY11 EPS growth expected if the AUD maintains current levels • NZD remains the most significant single currency revenue exposure • USD and Asian local currency
Slide 61: 2010 Results
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 2010 Results
Slide 62: Overview of financial performance
Overview of financial performance For personal use only 2010 2H10 Consolidated Group performance A$m Growth Growth Underlying performance Revenue 15,782 +10% + 9% Expense 6,971 +15% +15% Profit before provisions 8,811 +6% +4% Provisions 1,820 -40% -34% Net Profit After Tax 5,025 +33% +19% Underlying
Slide 63: Solid pre provision earnings, lower provisions and acquisition benefits delivering 33% NPAT growth
Solid pre provision earnings, lower provisions and acquisition benefits delivering 33% NPAT growth For personal use only 2010 Full Year Includes 480m of acquisition impacts Underlying EPS Up 18% AUD m down 40% -4% and +4% offsetting impact on up 6% 33% Profit growth Up 33% Up 53% 1H10 Statutory 1H10
Slide 64: Pro Forma data adjusts for acquisitions and FX
Pro Forma data adjusts for acquisitions and FX, showing good revenue growth and continuing momentum For personal use only Revenue Expense Profit before Net profit growth growth provisions after tax 2010 Full Year 2010 Second Half (vs 1H10) For explanation of Pro Forma refer slide 23 (Pro Forma profi
Slide 65: Growth largely in Net Interest, Partnerships & Wealth income
Growth largely in Net Interest, Partnerships & Wealth income partly offset by lower markets income and fees For personal use only Pro Forma revenue growth Markets income Lower relative to exceptional 2009, positive longer term trend Net interest1 A$m CAGR 29% Fee income1 Markets2 Product split Sales
Slide 66: NIM improved year on year with repricing for business risk
NIM improved year on year with repricing for business risk, slowing in 2H10 and continued funding pressure For personal use only 2010 Full Year NIM Basis points Group ex Markets +28.4 bps Group +16.1 bps 2009 Funding Funding Deposits Assets Other Markets 2010 & Asset costs Mix 2010 Second Half NIM G
Slide 67: Expense trend reflective of substantial investment
Expense trend reflective of substantial investment and a focus on delivering sustainable revenue outcomes For personal use only Revenue / Expense “Jaws” Expense growth Avg Revenue growth 11% 15% 15% Avg Expense growth 9% 13% Ex Markets1 11% Ex Markets 8% 5% Pro Forma 1 FX adjusted for comparability
Slide 68: Improved provision & new impaired asset trends
Improved provision & new impaired asset trends predominantly in the Institutional business For personal use only Total Provision Charge New & Increased Impaired (IP charge by Division and total CP charge) Assets by Division A$m A$m 3,126 1,098 2,319 722 68
Slide 69: Divisional performance
Divisional performance For personal use only 2010 Divisional Profit Before Provisions (Pro Forma basis) 2010 2H10 growth AUD m Australia 4,460 11% 2% Institutional 3,173 (4%)1 (1%) NZD m NZ Businesses 1,343 2% 8% USD m 915 1% (3%) APEA 2010 Divisional Net Profit After Tax (Pro Forma basis) 2010 2H10
Slide 70: Summary
Summary For personal use only Group margin ex Markets1 Investing in the franchise Cost growth % (HoH) Net Loans and Advances2 growth Total provision charge and CP coverage A$m A$b Markets revenue Currency impacts A$m AUD/USD AUD/NZD 1. Prior periods restated to includes the impact of NZ line fees re
Slide 71: Risk Management
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Risk Management
Slide 72: Individual Provision Charge
Individual Provision Charge For personal use only Individual Provision (IP) Charge by IP Charge Movement Composition Segment A$m A$m IP Charge by Region A$m Risk 72
Slide 73: Collective Provision Charge
Collective Provision Charge For personal use only Collective Provision Charge by Division FY10 Total Risk Impacts Cycle & (A$m) Charge Lending & migration Concentration Mix Group Total (4) 62 (68) 29 (26) Australia Division 10 New Zealand Businesses 48 Institutional (64) APEA (ex-Institutional) 2 &
Slide 74: Credit Risk Weighted Assets
Credit Risk Weighted Assets For personal use only Total Credit Risk Weighted Assets Credit RWA Movement FY10 vs FY09 A$b A$b Acquisitions Impact: RBS $4.6b Landmark $2.3b Risk 74
Slide 75: Impaired Asset balance has reduced ex-acquisitions
Impaired Asset balance has reduced ex-acquisitions For personal use only Gross Impaired Assets Gross Impaired Assets By type By size of exposure A$m A$m New Impaired Assets A$m By Segment NPCCD – Non Performing Credit Commitments and Contingencies Risk 75
Slide 76: Watch & Control Lists and Risk Grade Profiles
Watch & Control Lists and Risk Grade Profiles For personal use only Watch & Control List by limits Group Risk Grade profile by (Mar 2009 Watch List index =100) Exposure at Default Index Top 5 Watch List Industries By Exposure By No. Groups Agriculture, Forestry & Fishing Agriculture, Forestry & Fish
Slide 77: Commercial Industry Exposures
Commercial Industry Exposures For personal use only A$b Finance & Insurance A$b Property Services1 Agriculture, Forestry & Fishing Manufacturing Government Wholesale Trade Exposure at Default ($b) (LHS) % in Non-Performing (RHS) % of Group portfolio (RHS) 1. Property Services includes Commercial Pro
Slide 78: Commercial Industry Exposures
Commercial Industry Exposures For personal use only A$b Retail Trade A$b Transport & Storage Electricity, Gas & Water Supply Mining Construction Other Exposure at Default ($b) (LHS) % in Non-Performing (RHS) % of Group portfolio (RHS) Risk 78
Slide 79: 90+ days past due Australia
90+ days past due Australia For personal use only Australia Mortgages Australia Cards 90+ day delinquencies 90+ day delinquencies Australia Commercial 90+ day delinquencies Risk 79
Slide 80: Australia Mortgages
Australia Mortgages For personal use only Portfolio Statistics Dynamic Loan to Valuation Ratio • All lending is on a full recourse basis Sep 2010 - 84% 12% 4% • Approvals require demonstrated serviceability • ~830,000 loans on book • 65% of portfolio owner occupied lending • Average loan size at ori
Slide 81: New Zealand – Risk Performance
New Zealand – Risk Performance For personal use only Total Impaired Assets and as % Gross Total Provision Charge Lending Assets (NZ$m) (NZ$m) 90+ Days Arrears 81
Slide 82: Credit Intermediation Trades
Credit Intermediation Trades For personal use only Position as at 30 Sep Notional Life to Date Notional 2010 purchased Credit Risk Credit Risk Principal Mark to protection on on Amount on No. Market principal Derivatives Derivatives corresponding (US$m) amount (US$m) (A$m) Sold Protection Counterpar
Slide 83: Credit Intermediation Trade Portfolio
Credit Intermediation Trade Portfolio For personal use only • Cumulative Credit Risk on Derivative expense for the Credit Intermediation Trades Credit Intermediation Trade portfolio as at 30/9/2010 was $515m (down $5m from 31/3/2010) • The relative stability in credit markets and the reduced level o
Slide 84: Commercial Property Credit Exposure
Commercial Property Credit Exposure For personal use only Commercial Property Exposure Commercial Property Exposure GLA by Region (AUDb) by Sector 7.5% of Group GLA‟s 29.6 28.2 27.2 26.7 27.7 26.1 84
Slide 85: Economics
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Economics
Slide 86: Exceptionally strong investment outlook over next few years
Exceptionally strong investment outlook over next few years For personal use only $bn 80 Communication sub-total Uncertainty Water & sewerage Sub-total 70 Manufacturing Sub-total Gas Pipeline sub-total Electricity Sub-total Mining Sub-total 60 Energy Sub-total Airports Sub-total Rail sub-total Ports
Slide 87: The outlook for mining investment has rarely been stronger
The outlook for mining investment has rarely been stronger For personal use only ABARE Advanced Mining Projects, June 2010 Sources: ABARE
Slide 88: Record population growth coupled with undersupply
Record population growth coupled with undersupply For personal use only Population growth vs. dwelling completions 225000 450,000 Annual population 400,000 gain (lhs) 200000 350,000 175000 300,000 250,000 150000 200,000 125000 150,000 Annual dwelling completions (rhs) 100,000 100000 76 78 80 82 84 8
Slide 89: Housing shortage has reached unprecedented levels
Housing shortage has reached unprecedented levels For personal use only Housing market balance „000 400 360 320 280 240 Underlying demand 200 160 120 Completions 80 Cumulative Shortage 40 0 -40 -80 Surplus 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Sources: ABS, ANZ Economics and Markets Research
Slide 90: Recovery in dwelling prices has been broadly-based
Recovery in dwelling prices has been broadly-based For personal use only Australian dwelling prices Price index value 125 Top 20% 120 115 Middle 60% 110 Bottom 20% 105 100 95 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 90 Source: RP Data Rismark
Slide 91: Changing composition in those seeking finance approvals
Changing composition in those seeking finance approvals For personal use only Housing finance approvals (value) Sources: ABS, RBA, ANZ Economics and Markets Research 91
Slide 92: Distribution of debt rather than aggregate debt is a key factor
Distribution of debt rather than the aggregate debt is a key factor… For personal use only Increased household debt has been And has been taken up by higher directed towards residential property, income households with the capacity not personal consumption to service Source: RBA paper “Aspects of Au
Slide 93: Complexion of household debt
Complexion of household debt For personal use only • Household debt up but also total assets held by households • Debt largely used to acquire assets • Financial assets (i.e. ex housing) now equivalent to 2.75 years of income up from 1.75 years of income in the early 1990‟s • Increased debt mostly t
Slide 94: Australian house prices
Australian house prices For personal use only Fundamentals are sound – Nominal house prices and ratio to income elevated – House price to income ratio ignores interest rates / debt servicing – Fundamentals are currently very supportive – Housing shortage worsening – Cyclical upturn underpinned by re
Slide 95: Conservative lending, supportive policy and strong economy
Conservative lending, supportive policy and strong economy has meant a very resilient housing market For personal use only Source: RBA
Slide 96: Australian house prices have broadly tracked incomes
Australian house prices have broadly tracked incomes since 2004 (incomes rising strongly due to terms of trade) For personal use only House price to income ratio Index 18 Australia US UK New Zealand 16 14 12 10 8 6 4 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 96 Sources: RP Data-Rismark, RBA, ANZ
Slide 97: Structural lowering of mortgage rates improved debt serviceability
A structural lowering (halving) of mortgage rates has significantly improved debt serviceability For personal use only Mortgage interest rates 20 Australia US 18 UK NZ 16 14 12 10 8 6 4 On average, mortgage rates have halved justifying a 2 near doubling of house price to income ratios 0 81 82 83 84
Slide 98: Increase in house price to income ratio accounted for by mortgage rate
Increase in house price to income ratio almost fully accounted for by the halving of mortgage rate For personal use only Median house Average household Mortgage rate House price to price income income $000's $000's % ratio 600 120 16 6 14 500 100 5 12 400 80 4 10 300 60 8 3 6 200 40 2 4 100 20 1 2 0
Slide 99: Household incomes and consumption
Household incomes and consumption For personal use only Household disposable income & consumption % 10 Gross disposable income Consumption spending Savings rate 8 Forecasts 6 4 2 0 -2 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: ANZ, RBA, ABS 99
Slide 100: Labour market is strong and supporting household confidence
Labour market is strong and supporting household confidence For personal use only Monthly employment and labour force growth, „000 people (trend) 40 Labourforce growth (trend) Employment growth (trend) 30 '000 change per month 20 10 0 -10 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Source: ABS
Slide 101: 1990's commercial property downturn characterised by oversupply
1990‟s commercial property downturn characterised by significant oversupply vs other downturns1 For personal use only Supply Pipeline as a % of Total Stock Australian CBD Office Market Source: Jones Lang LaSalle. 1. with the exception of WA & QLD 101
Slide 102: Australia has run a current account deficit for most of past 150 years
Australia has run a current account deficit for most of the past 150 years For personal use only Current account deficit ● The current account deficit is the gap between national saving and national investment ● That Australia has run a deficit for such a long period suggests the country has more in
Slide 103: Economics – Forecasts
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2010 Economics – Forecasts
Slide 104: Economic updates
Economic updates For personal use only Australia New Zealand 2009 2010 2011 2012 2009 2010 2011 2012 GDP 0.8 3.7 3.8 4.1 -1.7 1.9 3.9 2.6 Inflation 1.3 2.9 2.9 3.2 2.0 4.61 3.0 2.4 Unemployment 5.8 5.0 4.7 4.5 7.1 6.4 5.4 5.6 Current A/C (% GDP) -4.4 -2.9 -3.4 -4.9 -2.9 -3.0 -3.6 -4.4 Cash rate 3.00
Slide 105: Growth Forecasts – Asia
Growth Forecasts – Asia For personal use only Emerging Asia GDP Growth Forecasts 2007 2008 2009 2010 2011 2012 China 13.1 9.0 8.8 9.9 10.0 10.3 India 9.5 7.5 6.7 8.3 6.7 7.5 NIEs Hong Kong 6.4 2.4 -2.8 5.5 5.0 5.2 Korea 5.1 2.5 0.1 6.1 4.0 4.7 Singapore 8.6 1.9 -1.3 15.0 4.9 4.5 Taiwan 5.9 1.1 -2.0
Slide 106: For personal use only
For personal use only 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 p
Australia and New Zealand Banking Group — Non-Deal Roadshow (December 2010) on 6ix