Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — 1H19 Earnings Presentation
110 slides from Anz's earnings presentation, May 1, 2019
Slide 1: 2019 Half Year Results
2019 HALF YEAR RESULTS — HALF YEAR ENDED 31 MARCH 2019 R E S U LT S P R E S E N TAT I O N & I N V E S TO R D I S C U SS I O N PA C K 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 2: Contents
CONTENTS 2019 FIRST HALF RESULTS CEO and CFO Results Presentations 3 CEO Presentation 3 CFO Presentation 12 Group & Divisional Financial Performance 34 Group including impact of large / notable items 35 Australia Division 41 Institutional 45 New Zealand Division 50 Wealth Australia 54 Treasury 56 Ri
Slide 3: CEO Presentation
2019 HALF YEAR RESULTS — S H AY N E E L L I OTT CHIEF EXECUTIVE OFFICER 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 4: A Simpler, Stronger, More Productive Bank
A SIMPLER, STRONGER, MORE PRODUCTIVE BANK 3 YEAR PROGRESS Absorbed inflation of ~$550m and reduced absolute costs by over $300m1 Sold 23 businesses, reduced Institutional RWAs by $50b, freed up ~$12b of capital Cut number of products in Australia by 1/3 Transferred 2 million customers to con
Slide 5: 1H19 Financial Performance
1H19 FINANCIAL PERFORMANCE Change Change 1H19 (v 2H18) (v 1H18) Statutory Profit ($m) 3,173 +3% -5% Cash Profit (continuing operations) ($m) 3,564 +19% +2% Earnings Per Share (cents) 124.8 +20% +5% Return on Equity 12.0% +193bps +13bps Dividend Per Share (cents) 80 Flat Flat CET1 Ratio (APRA) 11.5%
Slide 6: Capital Management
CAPITAL MANAGEMENT CET1 RATIO (APRA LEVEL 2) ORGANIC CAPITAL GENERATION DIVIDEND PER SHARE % bps cents 11.5 119 80 80 80 80 11.0 9.8 10.1 84 76 72 71 Mar-16 Mar-17 Mar-18 Mar-19 1H16 1H17 1H18 1H19 1H16 1H17 1H18 1H19 Organic capital generation First half historical avg (1H12 - 1H18) 6
Slide 7: Business Performance
BUSINESS PERFORMANCE CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS RORWA Profit before 3 year 1H19 ($m) Revenue Expenses NPAT RORWA provisions change (1H19 v 1H16) New Zealand Division (NZD) 1,756 638 1,118 782 2.5% 1H19 v 1H18 1% 2% 1% 0% -1bps +28bps Institutional 2,705 1,313 1,392 1,017 1
Slide 8: Priorities
PRIORITIES FIVE PRIORITIES Facing into mistakes of the past Continuing to simplify & strengthen the bank Step up in re-positioning & re-tooling the Australian business Further work on costs Transforming skills, capabilities & talent for the future 8
Slide 9: Purpose
PURPOSE AN INTEGRAL PART OF OUR STRATEGY Helped guide our decision to provide relief to farmers impacted by natural disasters Informed our approach to sustainable and affordable housing Affordable, secure & sustainable homes ‘Healthy Home’ Loan Package Environmentally sustainable solutions Reb
Slide 10: Key Messages
KEY MESSAGES 1. We have prepared well for an increasingly difficult environment 2. Future success requires a different strategy 3. This is a team with a proven track record 10
Slide 11: Royal Commission
ROYAL COMMISSION FIRST PHASE OF OUR RESPONSE TO THE ROYAL COMMISSION 16 INITIATIVES TO IMPROVE THE TREATMENT OF CUSTOMERS Commitments made within weeks of the final report Publicly reporting on the remediation of failures 16 initiatives, covering: Retail customers Farmers Remuneration
Slide 12: CFO Presentation
2019 HALF YEAR RESULTS — M I C H E L L E J A B L KO CHIEF FINANCIAL OFFICER 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 13: Overview
OVERVIEW CASH PROFIT1 CASH EPS1 ROE1 CET1 RATIO (LEVEL 2) $b cents % % 3.49 3.56 124.8 11.9 12.0 11.4 11.5 119.4 11.0 2.99 103.9 10.1 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 Mar-18 Sep-18 Mar-19 1. Cash Profit from continuing operations 13
Slide 14: Agenda
AGENDA Strong Balance Sheet Comparing the result to prior periods Group performance & drivers Divisional performance 14
Slide 15: Strong Balance Sheet: Capital
STRONG BALANCE SHEET CAPITAL APRA COMMON EQUITY TIER 1 CAPITAL (CET1) – LEVEL 2 % 0.84 ~12.1 0.17 11.44 11.49 $3b buyback completed -0.58 -0.29 -0.09 11.04 DRP neutralised, 5th consecutive half CET1 well above APRA’s 10.5% unquestionably strong ratio Dividend maintained at 80 cents per share
Slide 16: Strong Balance Sheet: Liquidity
STRONG BALANCE SHEET LIQUIDITY AVERAGE LIQUIDITY COVERAGE RATIO (LCR) NET STABLE FUNDING RATIO (NSFR) 142% 115% 115% 115% 134% 137% 1H18 2H18 1H19 Mar-18 Sep-18 Mar-19 16
Slide 17: Capital Management Approach
CAPITAL MANAGEMENT APPROACH DECISIONS ON BUYBACKS, DIVIDENDS & FRANKING WILL DEPEND ON THREE FACTORS Impact and timing of regulatory requirements Ongoing business needs Earnings and growth outlook, including composition 17
Slide 18: Financial Performance
FINANCIAL PERFORMANCE CONTINUING OPERATIONS: IMPACT OF DIVESTMENTS & OTHER LARGE / NOTABLE ITEMS Large / Notable items within Cash Profit Cash Profit Cash Profit $m Divestments Restructuring Royal Customer Accelerated Total large/ Continuing ex large / Commission Remediation Software notable notable
Slide 19: Customer Remediation
CUSTOMER REMEDIATION TOTAL PRE TAX IMPACT Financial impact $m -533 $175m ($123m post tax) charge in 1H19 $928m ($657m post tax) charges since 1H17 -175 $698m provisions on balance sheet at 31 March 2019 -102 -67 -51 1H17 2H17 1H18 2H18 1H19 Progress to date CONTINUING OPERATIONS DISCONTINUED O
Slide 20: Financial Performance
FINANCIAL PERFORMANCE CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS CASH PROFIT $m 48 3,483 68 3,478 3,407 -8 -113 0% -1% +40% 1H18 2H18 Revenue Expenses Provisions Tax & NCI 1H19 CASH PROFIT DIVISIONAL PERFORMANCE $m 3,483 63 3,478 1H19 v 2H18 Australia Institutional NZ (NZD) 63 31 -12 Reve
Slide 21: Balance Sheet Composition
BALANCE SHEET COMPOSITION NET LOANS & ADVANCES ($b) TOTAL GROUP AUSTRALIA DIVISION INSTITUTIONAL NEW ZEALAND DIVISION (NZD) 605 610 593 340 341 337 150 153 138 119 122 124 Mar-18 Sep-18 Mar-19 Mar-18 Sep-18 Mar-19 Mar-18 Sep-18 Mar-19 Mar-18 Sep-18 Mar-19 GROWTH (1H19 v 2H18) NLA Deposits1 NLA Depos
Slide 22: Net Interest Margin
NET INTEREST MARGIN CONTINUING OPERATIONS GROUP NET INTEREST MARGIN (NIM) bps 182 1 0 182 1 0 2 180 -2 -4 High return low margin flat -2bps 2H18 Asset & Funding cost Deposits Assets Treasury 1H19 Markets Customer 1H19 funding mix underlying1 Balance Sheet Remediation3 activities2 1. Excluding custom
Slide 23: Risk Adjusted Performance
RISK ADJUSTED PERFORMANCE CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS NET INTEREST INCOME / AVERAGE CREDIT RISK WEIGHTED ASSETS (%) GROUP TOTAL1 AUSTRALIA DIVISION INSTITUTIONAL1 NEW ZEALAND DIVISION 6.07 5.89 5.86 5.31 5.36 5.21 4.55 4.52 4.55 2.29 2.36 2.17 1H18 2H18 1H19 1H18 2H18 1H19
Slide 24: Expenses
EXPENSES CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS EXPENSE DRIVERS $m 78 39 -14 4,308 -69 4,260 -41 -41 -1% 2H18 FX Personnel Property Technology Marketing Other 1H19 (incl. D&A) FULL TIME EQUIVALENT STAFF (FTE) INVESTMENT SPEND1 # 000’s $m 39.7 642 37.9 37.4 576 578 65% 64% 72% Mar-18 S
Slide 25: Provisions
PROVISIONS CONTINUING OPERATIONS CREDIT IMPAIRMENT CHARGE COMPOSITION COLLECTIVE PROVISION BALANCE & MOVEMENT $m $m 1H19 charge: 13 1,400 813 29 69 72 14 3,378 1,038 1,200 918 2,523 -142 720 1,000 479 800 408 280 Sep-18 Transition FX Economic Change Volume Other Mar-19 0.36% 393 0.32% to outlook in
Slide 26: Credit Quality
CREDIT QUALITY CONTINUING OPERATIONS NEW IMPAIRED ASSETS BY DIVISION GROSS IMPAIRED ASSETS BY DIVISION $b $b 2.0 3.5 1.84 3.17 1.78 1.79 3.0 2.88 2.94 1.5 1.43 2.5 2.38 1.15 2.03 2.01 2.02 2.0 1.0 0.96 0.89 1.5 1.0 0.5 0.5 0.0 0.0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18
Slide 27: Credit Quality: Australia Housing
CREDIT QUALITY AUSTRALIA HOUSING AUSTRALIA HOME LOAN 90+ DAY DELINQUENCIES1 AUSTRALIA HOME LOAN 90+ DAY DELINQUENCIES1 % % 1.2 2.5 0.9 2.0 1.5 0.6 1.0 0.3 0.5 0.0 0.0 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 VIC/TAS NSW/ACT QLD WA SA/NT Portfolio 90+ Owner Occupied 90+ Investor Mar-16 Mar-17
Slide 28: Australia Division
AUSTRALIA DIVISION CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS VOLUMES 1H19 1H19 v 1H19 v ($m) 2H18 1H18 $b 340 341 337 Income 4,769 -4% -6% 204 203 203 Net interest income 4,113 -2% -5% 6.07% 5.89% 5.86% Other operating income 656 -17% -12% Mar-18 Sep-18 Mar-19 Expenses 1,787 0% -2% Risk
Slide 29: Australia Division - Retail
AUSTRALIA DIVISION - RETAIL CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS HOUSING COMPOSITION1 1H19 v 1H19 v 2H18 1H18 Total Retail Income -5% -9% 4% 3% 3% 3% 3% 14% 12% 18% 16% 21% Net interest income -2% -8% 6% 8% 11% 13% Other operating income -21% -13% 19% 15% 18% 16% 15% Net Loans & Adv
Slide 30: Australia Division - Business & Private Bank
AUSTRALIA DIVISION - BUSINESS & PRIVATE BANK CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS LENDING COMPOSITION 1H19 v 1H19 v 2H18 1H18 $b 58 58 58 58 57 Total Business Income -3% -1% 1 1 2 2 2 Net interest income -2% 1% 16 16 15 15 14 Other operating income -8% -9% Net Loans & Advances -2% -
Slide 31: Institutional
INSTITUTIONAL CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS VOLUMES 1H19 1H19 v 1H19 v ($m) 2H18 1H18 $b 191 206 205 Income 2,705 6% 8% 138 150 153 Net interest income 1,579 4% 7% 2.17% 2.29% 2.36% Other operating income 1,126 8% 10% Mar-18 Sep-18 Mar-19 Expenses 1,313 -2% -4% Risk Adj. NIM3
Slide 32: Institutional - Income Performance
INSTITUTIONAL - INCOME PERFORMANCE CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS INSTITUTIONAL INCOME COMPOSITION1 MARKETS INCOME COMPOSITION2 $m $m 3,041 59 1,361 2,705 2,552 2,506 2,559 45 162 56 56 42 1,361 947 349 983 947 891 902 983 902 67 891 11 52 256 241 276 232 229 292 229 274 219 3
Slide 33: New Zealand Division
NEW ZEALAND DIVISION CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS VOLUMES 1H19 1H19 v 1H19 v (NZDm) 2H18 1H18 NZDb 119 122 124 Income 1,756 0% 1% 84 87 89 Net interest income 1,460 0% 3% 5.21% 5.31% 5.36% Other operating income 296 1% -4% Mar-18 Sep-18 Mar-19 Expenses 638 1% 2% Risk Adj. NI
Slide 34: Group & Divisional Financial Performance
2019 HALF YEAR RESULTS — GROUP & DIVISIONAL FINANCIAL PERFORMANCE INVESTOR DISCUSSION PACK 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 35: Financial Performance
FINANCIAL PERFORMANCE CONTINUING OPERATIONS CONTINUING OPERATIONS EX. LARGE / NOTABLE ITEMS $m $m Change Change Change Change 1H18 2H18 1H19 1H18 2H18 1H19 (v 2H18) (v 1H18) (v 2H18) (v 1H18) Income 9,870 9,497 9,746 3% -1% Income 9,510 9,561 9,553 0% 0% Net Interest Income 7,350 7,164 7,299 2% -1%
Slide 36: Impact of Divestments & Other Large / Notable Items
FINANCIAL PERFORMANCE IMPACT OF DIVESTMENTS & OTHER LARGE / NOTABLE ITEMS FIRST HALF 2019 ($m) Gain/(Loss) Divested Pre-tax Post-tax on Sale Bus. Results 3,514 50 3,564 36 9 70 3,478 OPL NZ -197 -14 -201 Paymark -37 -4 TOTAL -234 -18 -201 1H19 Cash Discontinued 1H19 Divestments1 Restructuring Royal
Slide 37: Financial Performance
FINANCIAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS 1H19 v 2H18 Group drivers $m 72 48 3,483 68 3,478 -80 -113 1% -3% -1% +40% 2H18 NII OOI Expenses Provisions Tax & NCI 1H19 Divisional contribution to Cash Profit $m 2H18 Australia Institutional ex Markets Markets
Slide 38: Financial Performance - Divisions
FINANCIAL PERFORMANCE - DIVISIONS IMPACT OF DIVESTMENTS & OTHER LARGE / NOTABLE ITEMS ON DIVISIONS $m 1H19 ex 1H18 ex 2H18 ex 1H19 cash 1H18 cash 2H18 cash Other L/N Australia Division Divestments Other L/N large / Divestments Other L/N large / Divestments large / continuing continuing continuing no
Slide 39: Balance Sheet Composition
BALANCE SHEET COMPOSITION BY DIVISION NLA ($b) CUSTOMER DEPOSITS ($b) Divisional Contribution1 Segment Contribution Divisional Contribution1 Segment Contribution 605 610 605 610 493 493 592 592 487 487 3 1 3 1 473 473 3 2 150 153 150 153 138 138 206 205 206 205 191 191 111 119 97 97 98 111 15 14 14
Slide 40: FTE Composition & Capitalised Software
FTE COMPOSITION & CAPITALISED SOFTWARE FTE MOVEMENT BY DIVISION1 CAPITALISED SOFTWARE BALANCE FULL TIME EQUIVALENT STAFF $m 46,834 2.90 794 Avg. amortisation 44,169 period 4.9 yrs 5,318 786 4,637 39,655 759 37,364 1,172 640 1,096 12,303 2.25 11,268 2.20 10,986 10,520 1.92 6,570 1.86 6,417 6,319 Avg.
Slide 41: Australia Division
AUSTRALIA DIVISION FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Slower credit demand Absolute costs down Lower Volume growth Productivity offsetting inflation Provision charge remains low Profit and returns Reduced fee income Reduction in FTE Income ($m) Expenses ($m)
Slide 42: Australia Division
AUSTRALIA DIVISION INCOME & EXPENSES: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS 1H19 VS 1H18 (PRIOR COMPARATIVE PERIOD VIEW) EXPENSE DRIVERS ($m) INCOME DRIVERS ($m) Full Time Equivalent Staff (FTE) Expenses down 2% from ~900 14,332 14,111 13,914 lower FTE YOY and productivity 13,020 Rev
Slide 43: Australia Division
AUSTRALIA DIVISION INCOME & EXPENSES: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS 1H19 VS 2H18 (HALF ON HALF VIEW) INCOME DRIVERS ($m) EXPENSE DRIVERS ($m) Revenue by business Unit ($m) Cost by business Unit ($m) Revenue down 4% - home loan re- 1,831 1,794 1,787 pricing benefits more than
Slide 44: Australia Division: Balance Sheet
AUSTRALIA DIVISION BALANCE SHEET ASSET PROFILE Commercial NET LOANS & ADVANCES1 More subdued system growth, flat in Small Business Retail - Housing $b $b Refer ‘Housing section’ for further detail 40.9% 41.6% 42.2% 41.5% 41.2% 327 335 340 341 337 58 58 58 58 57 13 13 11 11 11 87 88 87 86 83 324 333
Slide 45: Institutional
INSTITUTIONAL FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Credit provisions remain low Returns continue to improve Continued momentum with Sixth consecutive half of reflecting continued benign driven by focus on profitable growth in customer revenue absolute cost red
Slide 46: Institutional
INSTITUTIONAL INCOME & EXPENSES: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS 1H19 v 1H18 1H19 v 2H18 INCOME DRIVERS1 ($m) INCOME DRIVERS1 ($m) 85 2,705 27 3 2,705 68 48 45 12 -11 56 12 2,506 2,559 1H18 Markets Trade PCM L&SF Other 1H19 2H18 Markets Trade PCM L&SF Other 1H19 EXPENSE DRIVERS
Slide 47: Institutional
INSTITUTIONAL INCOME & EXPENSES: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS INCOME COMPOSITION EXPENSE COMPOSITION $m $m 1,418 1,392 1,365 3,041 1,335 1,313 2,552 2,559 2,705 2,506 661 687 650 649 643 1,720 1,475 1,368 1,463 1,456 86 90 82 84 81 343 278 266 276 260 671 615 633 602 589 978
Slide 48: Institutional: Markets Income
INSTITUTIONAL MARKETS INCOME: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS MARKETS INCOME CONTRIBUTION MARKETS AVERAGE VALUE AT RISK (99% VAR) $m $m 1,361 40 162 30 20 10 349 983 947 0 67 902 1H17 2H17 1H18 2H18 1H19 891 11 52 256 Traded Non-traded 276 292 274 367 VOLATILITY 236 190 161 110
Slide 49: Institutional
INSTITUTIONAL VOLUME & MARGINS: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS VOLUMES1 NIM BY REGION3 $b bps 122 94 95 98 99 108 112 92 103 106 239 242 145 148 163 164 168 237 139 209 212 210 1H17 2H17 1H18 2H18 1H19 1H17 2H17 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 1H18 2H18 1H19 1H18
Slide 50: New Zealand Division
NEW ZEALAND DIVISION FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Solid home lending growth Increased investment and Movement HOH reflects CP Consistent returns reflecting offset by customer preference inflation partially offset by release in prior half stable revenue
Slide 51: New Zealand Division
NEW ZEALAND DIVISION INCOME & EXPENSES: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS INCOME 1H19 v 1H18 (PCP) EXPENSES 1H19 v 1H18 (PCP) NZDm NZDm 60 5 1,756 -23 3 638 1,731 -12 9 -4 1H19 v 1H18 $m % Net interest income 37 3% 625 Retail NII 14 2% Commercial NII 22 4% Central Functions NII 1
Slide 52: New Zealand Division: Balance Sheet
NEW ZEALAND DIVISION BALANCE SHEET ASSET PROFILE GROSS LOANS & ADVANCES NZDb NZDb 119 122 124 48.5% 46.4% 46.2% 115 118 44.7% 44.6% 12% 11% 14% 14% 13% 117 119 122 124 115 52% 53% 54% 56% 51% 56 55 55 55 55 32% 32% 32% 31% 31% 3% 2% 2% 3% 2% 1H17 2H17 1H18 2H18 1H19 Mar-17 Sep-17 Mar-18 Sep-18 Mar-1
Slide 53: Market Share and Brand Strength
NEW ZEALAND DIVISION MARKET SHARE AND BRAND STRENGTH NZ SEGMENT MARKET SHARE1 AGRI LENDING MARKET SHARE1 % NZDb 39.1% 32.4% 28.5% 31.1 62.5 47.4 53.4 Mortgages1 31.0 18.5 17.3 17.8 31.0 Sep-10 Sep-14 Feb-19 34.1 Household ANZ Agri share ANZ Agri Total Banks Agri 33.7 Deposits 1 33.8 27.7 ANZ BRAND C
Slide 54: Wealth Australia
WEALTH AUSTRALIA DIVESTED BUSINESSES - PENSIONS AND INVESTMENTS (P&I) FINANCIAL PERFORMANCE GROSS MARGIN2 $m $m 52 1 48 55.8% 56.2% 57.5% -5 163 164 154 1H18 NPAT Income Expense 1H19 1H18 2H18 1H19 Pro forma Pro forma CTI NPAT1 NPAT1 AVERAGE FUM3 GUIDE TO FINANCIAL PERFORMANCE $b -3% • Prepared on a
Slide 55: Wealth Australia
WEALTH AUSTRALIA DIVESTED BUSINESSES – P&I FUM AND FLOWS INFLOWS AND OUTFLOWS BY SOLUTION 1H19 NETFLOWS BY SOLUTION $b $m Open solutions Closed solutions 1H18 2H18 1H19 Inflows Outflows Inflows Outflows Inflows Outflows (69) Open solutions 2.1 (2.0) 2.1 (2.5) 1.7 (2.3) (119) (152) ANZ Smart Choice 1
Slide 56: Treasury
2019 HALF YEAR RESULTS — TREASURY INVESTOR DISCUSSION PACK 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 57: Regulatory Capital
REGULATORY CAPITAL CAPITAL UPDATE APRA LEVEL 2 COMMON EQUITY TIER 1 (CET1) Capital Position % Net Organic Capital APRA Level 2 CET1 ratio of 11.5% (or 16.9% on an Internationally Comparable basis1), Generation +84bp which is in excess of APRA’s ‘unquestionably strong’ benchmark2, well ahead of the
Slide 58: Regulatory Capital Generation
REGULATORY CAPITAL GENERATION COMMON EQUITY TIER 1 GENERATION First half average Organic Capital Generation 1H19 (bp) 1H12-1H18 Net organic capital generation of +84bp for 1H19 is Cash NPAT1 96 86 stronger than historical averages by +13bp. RWA movement (12) 2 Excluding the halves with Instituti
Slide 59: Internationally Comparable Regulatory Capital Position
INTERNATIONALLY COMPARABLE1 REGULATORY CAPITAL POSITION APRA Level 2 CET1 – 31 March 2019 11.5% Corporate undrawn EAD and Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many jurisdictions 1.7% unsecured LGD adjustments APRA requires 100% deduction from CET1
Slide 60: CET1 and Leverage in a Global Context
CET1 AND LEVERAGE IN A GLOBAL CONTEXT CET1 RATIOS1 LEVERAGE RATIOS1,2 5% 10% 15% 20% 2% 4% 6% 8% SEB UOB ABN Amro OCBC Swedbank DBS Svenska Handelsbanken Danske Bank Raiffeisen Bank International (RBI) Nordea BBVA Morgan Stanley Erste Bank ANZ Rabobank RBS Rabobank ANZ Groupe BPCE Intesa Sanpaolo Cr
Slide 61: Balance Sheet Structure
BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET COMPOSITION1 SOURCES AND USES OF FUNDS Sep 2018 to Mar 2019 $b (including FX impact) STRUCTURAL FUNDING POSITION SHORT TERM $1.1b increase to Structural funding $1.1b reduction in Short Short Term Wholesale Debt & position Term funding position Liquid and
Slide 62: Funding & Liquidity Metrics
FUNDING & LIQUIDITY METRICS1 NSFR COMPOSITION NSFR MOVEMENT Mar 2019 Sep 2018 v Mar 2019 $513b $446b 1.2% 1.7% 0.0% Wholesale Liquids 114.6% 115.0% Funding & Other2 -0.2% Non Financial and Other Assets3 -0.8% Corporates -1.5% Other Loans4 Retail/SME Residential Mortgages5,6 Capital <35% Available Re
Slide 63: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 ISSUANCE MATURITIES $b 32 27 24 24 22 22 23 19 18 15 14 14 12 12 FY13 FY14 FY15 FY16 FY17 FY18 1H19 2H19 FY20 FY21 FY22 FY23 FY24 FY25+ Senior Unsecured Covered Bonds Tier 2 RMBS PORTFOLIO PORTFOLIO BY CURRENCY 7% 5% 1% 15% 23% Domestic (AUD, NZD) 35% Senior Unsecur
Slide 64: Impacts of Rate Movements
IMPACTS OF RATE MOVEMENTS BILLS/OIS SPREAD CAPITAL & REPLICATING DEPOSITS PORTFOLIO (AUSTRALIA) bp % 65 3.0 60 55 50 45 2.5 40 35 30 25 20 2.0 15 10 5 0 1.5 Oct- Jan- Apr- Jul- Oct- Jan- Mar- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Mar- 17 18 18 18 18 19 19 16 17 17 17 17 18 18 18 18 19 19
Slide 65: Risk Management
2019 HALF YEAR RESULTS — RISK MANAGEMENT INVESTOR DISCUSSION PACK 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 66: Key Risk Metrics
KEY RISK METRICS CREDIT IMPAIRMENT CHARGE ($m) INDIVIDUAL PROVISION (IP) CHARGE ($m) COLLECTIVE PROVISION (CP) BALANCE & COVERAGE ($m) 1,038 918 1,047 3,336 3,378 892 787 2,862 2,876 720 554 2,785 2,662 2,579 2,523 0.36% 430 343 0.32% 479 380 408 393 0.99% 0.98% 0.25% 0.86% 0.82% 0.81% 0.79% 280 0.7
Slide 67: Risk Management: Provisions
RISK MANAGEMENT PROVISIONS CREDIT IMPAIRMENT CHARGE ANZ HISTORICAL LOSS RATES $m bp 1,500 250 1,200 1,038 918 200 900 720 695 510 479 150 600 408 280 393 300 100 0 50 -300 0 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Mar 90 93 96 99 02 05 08 11 14 17 18
Slide 68: Collective Provision
COLLECTIVE PROVISION COLLECTIVE PROVISION (CP) BALANCE & MOVEMENT CP BALANCE TOTAL PROVISION BALANCE $m BY DIVISION ($m) BY AASB 9 STAGES ($m) 1H19 charge: $13m 4,269 813 29 69 72 14 3,378 3,336 3,378 -142 2,523 Further detail on 2,523 AASB 9 contained on following page 2H18 Transition FX Economic C
Slide 69: AASB 9 Provisions
AASB 9 PROVISIONS TRANSITIONED TO AASB9 ON 1 OCTOBER 2018 PORTFOLIO EXPOSURE BY STAGE Stages • Stage 1 - 12 months Expected Credit Loss (ECL) $b • On origination, Stage 1 for all facilities, remains unless significant increase in credit risk 900 • Stage 2 – Lifetime ECL 800 • Significant increase in
Slide 70: Risk Management: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 3,173 2,883 2,940 3,000 2,708 2,719 100 2,384 2,034 2,013 2,022 2,000 50 1,000 0.55% 0.48% 0.47% 0.51% 0.51% 0 0.41% 0.34% 0.33% 0.33% Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Mar 0 09 10 11 12 13
Slide 71: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS CRWA MOVEMENT $b $b 402 409 2.7 0.1 345.5 397 391 396 391 396 3.6 1.5 388 38 39 337.6 39 37 37 38 38 38 14 18 17 17 16 16 13 16 Sep-18 FX Impact Lending Data/Meth. Risk Mar-19 Mvmt. Review GROUP EAD & CRWA GROWTH MOVEMENT1,2 350 352 342
Slide 72: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE ACTIONS TAKEN TO IMPROVE RISK PROFILE EXPOSURE AT DEFAULT BY ASSET CLASSES3 Sold Asia Retail & Wealth businesses (IEL 151bp)1 955.3 896.0 2 (IEL 100bp) 21% Sold Esanda Dealer Finance business 19% EXPOSURE AT DEFAULT (IEL 41bp) 1 (<5bp loss rate) Largely exited Emergi
Slide 73: Portfolio Composition
RISK MANAGEMENT PORTFOLIO COMPOSITION % of Portfolio in Non Portfolio Balance EXPOSURE AT DEFAULT (EAD) DISTRIBUTION Category % of Group EAD Performing in Non Performing Mar-18 Sep-18 Mar-19 Mar-18 Sep-18 Mar-19 Mar-19 TOTAL GROUP EAD (Mar-19) Consumer Lending 40.5% 39.7% 38.8% 0.1% 0.1% 0.1% $477 =
Slide 74: Group Resources Portfolio
RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE AT DEFAULT (EAD) BY SECTOR ($b) THERMAL COAL EXPOSURE within ‘coal mining’ sector ($b) 2.0 1.70 TOTAL EAD (Mar-19): $15.6b (Resources exposures as a % of Group EAD: 1.6%) 1.5 1.18 0.94 9.4 1.0 0.81 0.75 8.6 7.2 7.8 7.0 7.6 7.4 7.3 0.5 Sep-
Slide 75: Commercial Property Portfolio
RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY REGION COMMERCIAL PROPERTY OUSTANDINGS BY SECTOR $b % % 42.4 100 40.2 12 80 2.8 38.4 37.9 37.7 37.4 37.5 37.5 37.6 2.9 11 60 3.9 3.6 2.7 2.4 3.0 40 4.5 4.7 10 10.7 9.8 20 9 8.8 9.5 9.5 9.7 9.7 8.3 8.4 8 Mar-17 Sep-17 M
Slide 76: Residential Development
RESIDENTIAL DEVELOPMENT OVERVIEW PROFILE (MAR 19) Total Residential Limits: $10.58b • Overall Apartment Development limits have increased by $0.2bn (4%) to $4.1bn as at 1H19 and account for 39% (prior half: 29% 39%) of total Residential limits. 22% Apartment Development Other Development1 • Inner Ci
Slide 77: Group Agriculture Portfolio
RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) GROUP AGRICULTURE EAD SPLITS1 Total EAD (Mar-19) As a % of Group EAD A$36.1b 3.7% 6.2% 2.8% 42.2% 14.8% 10.5% 98.9% 76.2% 57.5% 12.3% 36.4% 0.2% 1.1% <60% Secured Australia Productive 60 - <80% Secured New Zealand Imp
Slide 78: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Mar-19): A$423b2 Finance (Banks and Central Banks) 400 Government Admin. 26% 31% Services to Fin. & Ins. 350 Property Services3 Basic Mat
Slide 79: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Mar-19): A$106b2 EAD (Mar-19): A$106b2 Finance (Banks & Central Banks) 5% 19% Basic Material Wholesaling 3% 3% Machinery & Equip Mnfg 23% 3% Petroleum,Coal,Chem
Slide 80: Housing Portfolio
2019 HALF YEAR RESULTS — H O U S I N G P O RT F O L I O INVESTOR DISCUSSION PACK 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 81: Australia Home Loans: Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio1 Flow2 Portfolio1 1H17 1H18 1H19 1H18 1H19 1H17 1H18 1H19 Number of Home Loan 992k 1,018k 1,000k 79k 64k3 Average LVR at Origination9,10,11 70% 68% 67% accounts1 Total FUM1 $256b $271b $269b $31b $21b Average Dynamic LVR10,11,12,13 55% 54% 55% Averag
Slide 82: Australia Home Loans: Portfolio Growth
AUSTRALIA HOME LOANS PORTFOLIO GROWTH HOME LOAN COMPOSITION1,2 LOAN BALANCE & LENDING FLOWS1 $b $b 256 264 271 272 269 10 9 9 8 8 16 31 37 43 37 49 271 -2 269 54 17 -53 22 29 33 52 38 49 44 Mar-18 New Sales Net OFI Refi Redraw & Repay / Other Mar-19 39 exc Refi-In Interest 33 ANZ MORTGAGE LENDING3 %
Slide 83: Australia Home Loans: Portfolio & Flow Composition
AUSTRALIA HOME LOANS PORTFOLIO1,2 & FLOW3 COMPOSITION BY PURPOSE BY ORIGINATION LVR4 Portfolio Flow Flow 4% 3% 3% 1% 21% 19% 17% 31% 26% 34% 32% 17% 15% 19% 65% 66% 73% 64% 68% 62% 60% Mar-17 Mar-18 Mar-19 1H19 1H17 1H18 1H19 Owner Occ Investor Equity <80% LVR 80% LVR >80% LVR BY LOCATION BY CHANNEL
Slide 84: Australia Division: Portfolio Dynamics
AUSTRALIA DIVISION PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE1,2 71% of accounts ahead of repayments % composition of accounts (March 19) 25% 26% Investment:5 Interest payments may receive 38 37 negative gearing/tax benefits 17% 21 20 New Accounts:
Slide 85: Australia Division: Portfolio Performance
AUSTRALIA DIVISION PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES1,2,3 HOME LOAN DELINQUENCIES1,2,5 % % 5.0 2.5 4.0 2.0 3.0 1.5 2.0 1.0 1.0 0.5 0.0 0.0 Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar 12 12 13 13 14 14 15 15
Slide 86: Australia Home Loans: Western Australia
AUSTRALIA HOME LOANS WESTERN AUSTRALIA • Exposure to WA has decreased since Mar-16 driven by the economic WA OUTSTANDING BALANCE environment and credit policy tightening (mining town lending, etc) $b • Currently WA comprises 13% of portfolio FUM (and is decreasing), 40 however it comprises 30% of 90
Slide 87: Australia Home Loans: New South Wales/ACT
AUSTRALIA HOME LOANS NEW SOUTH WALES/ACT Portfolio1 HOUSING PORTFOLIO2 HOUSING FLOW • NSW/ACT makes up 32% of the portfolio FUM and 23% of 90+ days past due. • 71% in advance of repayments which is the same as the total portfolio. $b $b 264 271 272 269 • 21% of the portfolio is Interest Only & reduc
Slide 88: Australia Home Loans: Interest Only
AUSTRALIA HOME LOANS INTEREST ONLY INTEREST ONLY FLOW COMPOSITION1 • Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan % • 84% of Interest Only customers have net income >$100k p.a. APRA’s 30% limit removed December 2018
Slide 89: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Pre – application2 Income & Expenses • Effective hardship & collections processes • Full recourse lending Quality assurance, info ver
Slide 90: Underwriting Practices and Policy Changes - June 2015 to March 2019
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 - JUNE 2015 TO MARCH 2019 ANZ LVR caps • LVR cap reduced to 70% in high risk mining towns in June 2015; reduced to 90% for investment loans July 2015. • Restricted new housing lending (new security to ANZ) to max. 80% LVR for all apartm
Slide 91: Stress Testing the Australian Mortgage Portfolio
AUSTRALIA HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO Assumptions Base1 Year 1 Year 2 Year 3 • ANZ conducts regular stress tests of its loan portfolios to meet risk management Unemployment 5.2% 6.3% 10.1% 10.6% objectives and satisfy regulatory requirements. rate • Stress tests are h
Slide 92: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE MARCH HALF YEAR 2019 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 31 Mar 19 (% New Business FUM Oct-18 to Mar-19) Gross Written Premium ($m) $43.4m LVR<80% Not LMI Insured Net Claims Paid ($m) $17.6m 86% Loss Rate (of
Slide 93: New Zealand Home Loans: Portfolio Overview
NEW ZEALAND HOME LOANS PORTFOLIO OVERVIEW1 Portfolio Flow Portfolio 1H17 1H18 1H19 1H18 1H19 1H17 1H18 1H19 Number of Home Loan Accounts 515k 523k 527k 31k 37k Average LVR at Origination2 59% 58% 57% Total FUM NZ$75b NZ$79b NZ$83b NZ$8b NZ$9b Average Dynamic LVR2 42% 42% 42% Average Loan Size2 NZ$14
Slide 94: New Zealand Division: Home Lending & Arrears Trends
NEW ZEALAND DIVISION HOME LENDING & ARREARS TRENDS1 NZ DIVISION 90+DAYS HOUSING FLOWS2 HOUSING PORTFOLIO DELINQUENCIES % 1.5 22% 20% 16% 1.0 34% 38% 41% 0.5 78% 80% 84% 66% 62% 59% 0.0 Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- 1H17 1H18 1H19 Mar-17 Mar-18 Mar-19 08 09 10 11 12 13 1
Slide 95: Corporate Profile & Sustainability
2019 HALF YEAR RESULTS — C O R P O R AT E P R O F I L E & S U S TA I N A B I L I T Y INVESTOR DISCUSSION PACK 1 M AY 2 0 1 9 AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED
Slide 96: ANZ Corporate Profile
ANZ CORPORATE PROFILE CORPORATE PROFILE OUR BUSINESSES • Top 5 listed corporate in Australia and the largest bank in HALF YEAR 2019 CASH PROFIT ($m)2 New Zealand by bank market share 66 OTHER • Market capitalisation of AU$74b1 Includes Wealth Australia, Pacific, TSO and Group Centre • Total Assets o
Slide 97: Creating Value for Our Stakeholders
CREATING VALUE FOR OUR STAKEHOLDERS CUSTOMERS EMPLOYEES COMMUNITY SHAREHOLDERS5 8.7m total retail, commercial 39,359 people employed $137m contributed in >500,000 Retail & Institutional and Institutional customers (FTE) community investment in FY183 shareholders ~150,000 net new customers 608 people
Slide 98: Sustainability: Our Approach
SUSTAINABILITY OUR APPROACH Our Sustainability Framework supports our business strategy. We seek to shape a world where people and communities thrive through our focus on fair and responsible banking and our priority issues of environmental sustainability, housing and financial wellbeing. Fair and r
Slide 99: Sustainability: Half Year Progress Snapshot
SUSTAINABILITY HALF YEAR PROGRESS SNAPSHOT Sustainability target (half year progress snapshot) Progress FAIR AND RESPONSIBLE BANKING • Reduced time to make customer remediation payments – in some Continue to allocate dedicated resources to customer remediation to improve our cases by more than 50% p
Slide 100: Sustainability: Fair and Responsible Banking
SUSTAINABILITY FAIR AND RESPONSIBLE BANKING RESPONDING TO THE ROYAL COMMISSION Central to our commitment to Fair and responsible banking is how we respond to the ‘spirit and the letter’ of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Following
Slide 101: ANZ Learnings from the Royal Commission
ROYAL COMMISSION ANZ LEARNINGS FROM THE ROYAL COMMISSION What did we learn Work Underway How we serve customers 1. Product governance needs focus on customer needs and rigour in design, Focus on product suitability, including through updates to the execution and accountability for effectiveness to
Slide 102: ANZ Learnings from the Royal Commission
ROYAL COMMISSION ANZ LEARNINGS FROM THE ROYAL COMMISSION What did we learn Work Underway How we comply with the law 3. The imperative to understand and ensure compliance with the law Identify, Act, Monitor (I.AM) a rethinking of how we manage operational risk and compliance - creating an approach
Slide 103: ANZ Learnings from the Royal Commission
ROYAL COMMISSION ANZ LEARNINGS FROM THE ROYAL COMMISSION What did we learn Work Underway How we run the bank 5. Complexity makes it hard to prevent, identify and fix failures and, as such, should be Simplifying the bank reduced Simplification through use of technology, removing retail Complexity
Slide 104: Responding to the Royal Commission
RESPONDING TO THE ROYAL COMMISSION ‘IDENTIFIED SIXTEEN ACTIONS THAT WE CAN TAKE NOW’ COMMITMENT On 20 February 2019, ANZ announced it would take immediate steps to implement the first phase of its response to the recommendations from the Royal Commission into Misconduct in the Banking, Superannuatio
Slide 105: Sixteen Actions - Table of Commitments & FY19 Half Year Update
RESPONDING TO THE ROYAL COMMISSION SIXTEEN ACTIONS – TABLE OF COMMITMENTS & FY19 HALF YEAR UPDATE Commitment FY19 Half Year Update Retail customers 1. Make our products fairer and better matched to our customers by: 1.1 Removing overdrawn and dishonour fees on our ANZ has removed the Overdrawn Fee
Slide 106: Sixteen Actions - Table of Commitments & FY19 Half Year Update
RESPONDING TO THE ROYAL COMMISSION SIXTEEN ACTIONS – TABLE OF COMMITMENTS & FY19 HALF YEAR UPDATE Commitment FY19 Half Year Update Retail customers 3. Help customers by: In March 2019 we established an ongoing process to contact credit card customers who are carrying persistent debt. We provide th
Slide 107: Sixteen Actions - Table of Commitments & FY19 Half Year Update
RESPONDING TO THE ROYAL COMMISSION SIXTEEN ACTIONS – TABLE OF COMMITMENTS & FY19 HALF YEAR UPDATE Commitment FY19 Half Year Update Remuneration 5. Redesign how we manage and reward our people to better focus on the interests of our customers, the ANZ is working to launch a new approach to reward,
Slide 108: Responding to the Royal Commission
RESPONDING TO THE ROYAL COMMISSION SIXTEEN ACTIONS – TABLE OF COMMITMENTS & FY19 HALF YEAR UPDATE Commitment FY19 Half Year Update Remediation 12. Publicly report on how we are fixing our significant failures, including the nature of the issues and our progress on paying customers back. This will in
Slide 109: We Measure What Matters
WE MEASURE WHAT MATTERS RECOGNITION Highest ranked Australian We achieved a CDP Member of the 2018-19 leader in Recognised as Australian bank on the Dow Jones climate disclosure score FTSE4Good Index workplace gender Workplace Equality Index Sustainability Index, scoring of A- in 2018 equality (LGBT
Slide 110: Further Information
FURTHER INFORMATION Our Shareholder information shareholder.anz.com Equity Investors Jill Campbell Cameron Davis Harsh Vardhan Group General Manager Executive Manager Manager Investor Relations Investor Relations Investor Relations +61 3 8654 7749 +61 3 8654 7716 +61 3 8655 0878 +61 412 047 448 +61
Australia and New Zealand Banking Group — 1H19 Earnings Presentation on 6ix