Anz Group Holdings Limited · ASX:ANZ
Anz — Non-Deal Roadshow (June 2010)
109 slides from Anz's roadshow presentation, Jun 28, 2010
Slide 1: Investor Discussion Pack
For personal use only Investor Discussion Pack Graham Hodges Deputy Chief Executive Officer AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 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. 3-18 • Maintaining strong businesses in our home markets: • Australia p. 19-27 • New Zealand p.
Slide 3: Overview and strategy
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 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: regional growth
Super Regional Strategy For personal use only ANZ regional focus positions us for stronger growth: Global growth2 Annual % Change Forecast • Asia is now the world‟s best performing 11 region with growth of almost 8% excluding Japan and growing more than 6 twice the global average • Growing demand fo
Slide 7: Super Regional Strategy: trade interconnectedness
Super Regional Strategy For personal use only Asian, Australian & New Zealand Australian 2 way trade weights interconnectedness increasing: US & Europe3 • Following and supporting our customers 25.0 Index to the region, developing relationships 20.0 to work both ends of the trade flows. 15.0 • Trade
Slide 8: 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 9: Building a genuinely pan regional business
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 and Australia are tracking 17% to 25% pa trade, capital and population Surplus savings Key focus is to bridge gaps a
Slide 10: 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 • Agreed to acquire RBS¹ businesses in six Country Business Branches Customers Deposits countries, aligned with current strategy: Taiwan Retail 21 ~1.3m ~US $2.7b Retail, wealth & commercial Commerc
Slide 11: Disciplined approach to M&A – ING Australia and NZ JVs
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 $1,760m1 Australia ~11x multiple of normalised 2008 earnings2 Acquired ING's 51% in ING Au
Slide 12: Disciplined approach to M&A – Landmark loan and deposit book
Strategy is supported by a disciplined approach to M&A - Landmark Loan and Deposit book For personal use only Overview of transaction Overview of Landmark • Acquisition of Landmark Financial Services • Leading Australian agribusiness (LFS) loan and deposit book from AWB‟s rural company, offering mer
Slide 13: ANZ has continued to invest for growth
ANZ has continued to invest for growth notwithstanding recent tougher economic conditions For personal use only Revenue and Expenses Net Profit by region 17% 12% 12% 5% 4% 2% 4% 4% 9% 8% 9% 10% 6% 7% 7% 10% 14% 8% 8% 17% 23% 22% 22% 14% 6% 72% 66% 69% 64% 68% FY05 FY06 FY07 FY08 FY09 FY05 FY06 FY07
Slide 14: Group loans and deposits
Group loans and deposits For personal use only Group Customer Deposits Group Net Loans and Advances (including acceptances) 07 08 09 1H10 07 08 09 1H10 17% 11% 14% 2% 13% 16% (1%) 1% ($b) ($b) 350 346 348 238 303 233 204 269 183 157 Sep 06 Sep 07 Sep 08 Sep 09 Mar 10 Sep 06 Sep 07 Sep 08 Sep 09 Mar
Slide 15: Customer deposits by geography
Customer deposits by geography For personal use only Australia New Zealand (NZD) APEA (USD) FY07 FY08 FY09 1H10 FY07 FY08 FY09 1H10 FY07 FY08 FY09 1H10 20% 12% 14% (1%) 7% 5% 1% (1%) 25% 67% 31% 39% ($b) 200 180 160 140 120 100 80 60 40 20 - Sep Sep Sep Sep Mar Sep Sep Sep Sep Mar Sep Sep Sep Sep Ma
Slide 16: 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 1H10 FY07 FY08 FY09 1H10 FY07 FY08 FY09 1H10 ($b) 13% 14% 0% 3% 13% 11% (1%) (1%) 31% 98% (14%) 6% 350 300 250 200 150 100 50 - Sep Sep Sep Sep Mar Sep Sep Sep Sep Mar Sep Sep Sep Sep Mar
Slide 17: Diversified lending portfolio, weighted to secured mortgage portfolio
Diversified lending portfolio, weighted to secured mortgage portfolio For personal use only 1 Net Loans and Advances by product line (A$b) 348 18 Cards & Other 162 (A$b) Mortgages 13 Cards & Other 2 189 149 45 Mortgages 5 40 Australia NZ & APEA (A$b) 92 Insto 14 Commercial (ex rural) Commercial / 32
Slide 18: Corporate responsibility framework supporting business objectives
Our corporate responsibility framework is supporting business objectives across the region For personal use only “We are focused on growing our business responsibly, managing risks rather than taking them and approaching our role in society with a heightened sense of duty and care towards the custom
Slide 19: Australia Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 Australia Division
Slide 20: High value strategy has delivered
High value strategy has delivered For personal use only Australia Division Revenue & Expense Australia Division growth1 Cost to Income Ratios 2 3 1. 2005 to 2008 based on “Personal Division” structure, 2009 and 1H1 based on “Australia Division” structure 2. Acquisition adjusted 3. Peer analysis base
Slide 21: Australia division: Investing in the business
Australia division: Investing in the business For personal use only Investing in the business Growing our Retail and Commercial Footprint • Acquired the remaining 51% of INGA and • Investment continues in metro and regional Landmark Assets & Liabilities areas to increase access to small business • 5
Slide 22: How will we continue to differentiate
How will we continue to differentiate For personal use only • “Easy to do business with” Uncomplicated/ • Investing in our brand and brand delivery – Simple products and transparent pricing People Shaped – Enhanced delivery (online, phone, iphone etc) • Differentiate through service and insight • AN
Slide 23: Super Regional strategy provides opportunities across Australian business
ANZ‟s Super Regional strategy provides opportunities across our Australian business For personal use only Retail In-country Migrant Business • By 2015 15% of the Australian population will banking Development be of Asian origin platforms Managers • Student volume is driving much of the in-flow Asian
Slide 24: Greater deposit market share through acquisition & cross-sell
A compelling proposition has led to greater deposit market share through acquisition & account cross-sell For personal use only Leader in customer satisfaction1 Now leading in trial intention2 (day to day transaction accounts) % satisfied or very satisfied % of respondents Driving new account openin
Slide 25: Well positioned for mortgage growth
Well positioned for mortgage growth - strong customer satisfaction and trial intention, and robust credit quality For personal use only ANZ well placed with MFI Customer ANZ „punching above its weight‟ in Satisfaction1 trial intention2 Mortgage customers, % satisfied % of respondents ANZ has held ma
Slide 26: Our Wealth Business
Our Wealth Business For personal use only Relative wealth contribution to ANZ Market Share Group earnings ANZ ranking No 2 No 5 No 3 Peer 9% to 10% to 6% to 10% to range1 14% 16% 11% 12% 100% 80% 7.0% 60% Includes impact of 40% acquisition of 51% of 20% 6.0% ING Joint Venture 0% Planner Retail Inv.
Slide 27: Australian Commercial business
Australian Commercial business For personal use only Portfolio Growth Commercial net loans and advances including acceptances • Invested in providing customers greater access to $bn 43.8 43.8 46.2 small business specialists • Leveraged Institutional markets and trade expertise to bring cross-regiona
Slide 28: The Asia Pacific Europe & America Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 The Asia Pacific Europe & America Division
Slide 29: 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 30: 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 31: Delivering on strategic and financial commitments
We are delivering on our strategic and financial commitments For personal use only Strong funding growth APEA contribution to Group profit Net Loans & advances1, Deposits (USD b) % of underlying PBP & NPAT 37.4 Net Loans and Advances 20% Profit before provisions Reported Deposits 26.8 NPAT Normalise
Slide 32: 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 33: 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 34: Delivering for Institutional 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 35: Retail & Wealth and Private Bank for the affluent
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 36: 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 37: 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 38: The New Zealand Division
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 The New Zealand Division
Slide 39: ANZ market position in New Zealand
ANZ market position in New Zealand For personal use only ANZ position in New Zealand Two strong banking brands with a • ANZ holds a unique position in NZ powerful market presence • NZ‟s Largest full-service bank • ~33% of total NZ registered bank assets • Assets of NZ$124b and Liabilities of NZ$116b
Slide 40: Strategy to leverage leading market position
Our strategy is to fully leverage ANZ‟s leading market position to deliver superior growth and returns For personal use only Our strategy is underpinned by a Leveraging leading market share program of initiatives. Our positions1 priorities include: 40% 33% 34% 34% • Aligning our services to customer
Slide 41: New Zealand – Provisions reducing from 2H09 highs
New Zealand – Provisions reducing from 2H09 highs, impaired loans reflective of protracted recovery For personal use only Total Provision Charge (NZDm) A well secured lending book Gross Lending Assets 1H10 598 100% Secured 194 80-100% Secured 60-80% Secured 330 291 63 40-60% Secured 207 77 Up to 40%
Slide 42: NZ Retail & Wealth: Lower provisions and ING acquisition
NZ Retail & Wealth: Lower provisions and ING acquisition driving profit For personal use only Supported customers through downturn; Underlying Performance1 NZDm received 2 Gold awards for Financial Wellbeing Half Year movement (1H10 vs 2H09) Programme at NEXUS awards Balance sheet growth flat, incom
Slide 43: NZ Corporate & Commercial Banking
NZ Corporate & Commercial Banking: conditions were stabilising at the half year but were still fragile For personal use only • Business conditions have stabilised but more Maintained Number 1 Market Share1 time is required for the full credit impacts of the downturn to work through; risk profile of
Slide 44: NZ Rural: some improvement in fundamentals
NZ Rural: some improvement in fundamentals For personal use only Current market situation Dairy and lamb price movement1 $ / head $ / kg • ANZ continues to support customers through the down turn 100 10 75 8 • We have seen a greater focus by borrowers on cash 6 flows, liquidity and a resolution by m
Slide 45: The Institutional Business
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 The Institutional Business
Slide 46: Global Institutional business focus redefined
Global Institutional business focus redefined For personal use only Foundations laid in 2009 Revenue Contribution by Product • Strengthened the Institutional Leadership Team, additional team members with international experience • Starting to execute the technology and operations roadmap • Improving
Slide 47: 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 $40-400m • Global representation support
Slide 48: Well positioned - customer service & product offerings
Well positioned - distinguishing through customer service & product offerings For personal use only Well positioned business Strong ANZ product penetration • ANZ origins are in commercial banking • Customers have 5.7 products on average • Well established customer relationships • Achieves the highes
Slide 49: Financial position
Financial position For personal use only Underlying Profit and Loss Lending growth returned to more normalised levels in 2009 Revenue Profit before Provisions (Institutional NLA including Acceptances) ($m) Expenses Underlying NPAT ($bn) 5% CAGR 6 month Perform- ance Balance sheet mix ($bn) Deposits
Slide 50: Regional networks, superior insights & service
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 51: 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 52: 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 53: 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 54: 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 55: Priority products – Rates, 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 56: ANZ #1 Syndicated Loan House In Asia-Pacific
ANZ #1 Syndicated Loan House In Asia-Pacific1 For personal use only • Nearly one in every five syndicated loan transactions in Asia-Pacific in 2009 was led by ANZ • #1 Mandated Lead Arranger in Asia-Pacific (ex Japan) for 2009 in terms of number of transactions • #1 Mandated Lead Arranger in Asia-Pa
Slide 57: Treasury
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 Treasury
Slide 58: Capital position provides strength and flexibility
Capital position provides strength and flexibility to manage prudential change and fund business opportunities For personal use only Mar 10 FSA Mar 10 Mar 09 Sep 09 Mar 10 pro forma1 pro forma1 Core Tier 12 6.4% 9.0% 8.5% 8.2% 11.1% Tier 1 8.2% 10.6% 10.7% 10.4% 13.5% Total Capital 11.0% 13.7% 13.0%
Slide 59: Reconciliation of capital position to FSA Basel II guidelines
Reconciliation of ANZ‟s capital position to FSA Basel II 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) inclu
Slide 60: Group funding composition continues to improve
Group funding composition continues to improve, term wholesale debt issuance requirement remains stable For personal use only Funding composition improved • Strong credit ratings maintained: AA / Aa1 (S&P / Moody‟s) 18% 17% 14% 5% • 81% of all funded assets financed by customer 6% 5% 15% 15% 17% lia
Slide 61: ANZ maintains a consistent annual funding strategy
ANZ maintains a consistent annual funding strategy For personal use only Balanced term debt maturity profile • ANZ has a well balanced maturity profile and ($b) strong investor diversification, which results in a 30 manageable forward funding requirement; 25 Benchmark issues in 20 AUD, USD, EUR, J
Slide 62: Liquidity Position
Liquidity Position For personal use only Maintaining post GFC liquidity position • Prime liquid asset portfolio increased to ($b) $63b (from average $60b over FY09): Covers well in excess of 12mth offshore wholesale funding maturities Portfolio well diversified by geography & counterparty 7.4 7.
Slide 63: Regional treasury centres located in APEA
Regional treasury centres located in Asia Pacific Europe & America For personal use only APEA deposit book 1H10 40 USD b Deposit pools managed through our Local currency treasury centres, majority of APEA deposits Statutory deposits in interchangeable currencies deposits, 30 liquidity & other deposi
Slide 64: Managing earnings denominated in non-AUD currencies
Managing the Group‟s earnings denominated in non- AUD currencies For personal use only USD and Asian local currency hedging position • NZD remains ANZ‟s most significant single • 1H10 revenues have been translated at an non-AUD currency revenue exposure average AUD/USD rate of 0.9060 • USD and Asian
Slide 65: 2010 First Half Results
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 2010 First Half Results
Slide 66: ANZ performance for First Half 2010
ANZ performance for First Half 2010 For personal use only 1H10 Growth Growth $m vs 2H09 vs 1H09 Underlying Profit1 2,298 23% 20% Revenue1 7,567 3% 7% Net Interest Margin 2.43% +6bp +21bp Net Interest Margin (Ex Markets) 2.68% +15bp +32bp Expenses1 3,249 4% 10% Provisions1 1,098 (32%) (23%) EPS1 91.3
Slide 67: Geographic performance
Geographic performance For personal use only 1H10 vs Global Institutional division1 2H09 1H09 Net Profit After Tax 22% 23% Contribution to Group Net Profit (AUD): 36% Asia Pacific, Europe & 1H10 vs America (APEA) region (USD) 2H09 1H09 Net Profit After Tax 19% 1% Contribution to Group Net Profit (AU
Slide 68: Underlying profit up 23% from moderate revenue growth
Underlying profit up 23% from moderate revenue growth supported by continued investment & lower provisions For personal use only Underlying Performance 1H10 vs 2H09 523 (204) Adjusted growth rates Earnings Per Share up 15% 1H10 vs 2H09 $m 2,298 Acq‟n FX & Acq‟n adjusted adjusted 37 (125) Net Interes
Slide 69: Total income increased from solid growth in Net Interest
Total income increased from solid growth in Net Interest, partly offset by Markets income and FX drag For personal use only Underlying income 1H10 vs 2H09 $m 5,980 6,315 7,040 7,327 7,567 3%1 FX adjusted $205m acquisition impact including 8,000 5,863 6,249 6,728 7,206 7,567 5% $195m from ING Fee inc
Slide 70: Markets income delivering long run growth across the region
Markets income, whilst down on unprecedented 2009, is delivering long run growth across the region For personal use only Markets income Markets income by source Half year 2H07 1H08 2H08 1H09 2H09 1H10 (1H10)1 growth 7% 31% 14% 58% 10% (17%) 100% $m 80% Trading & 1200 1,148 60% balance sheet 1,047 40
Slide 71: NIM improvements from repricing & lower margin assets
NIM improvements from repricing & lower margin assets reductions, although continued funding pressure remains For personal use only Group Net Interest Margin ex Institutional lending growth Markets movement 1H10 v 2H09 5% CAGR $b 85 2.9 ( 8.9) 81 71 67 14.1 58 bps 8.3 ( 5.4 ) 242.8 (5.0) 236.8 1H07
Slide 72: Subdued balance sheet growth, largely in Corporate sector
Subdued balance sheet growth, largely in the Corporate sector reflects lower demand and portfolio repositioning For personal use only Net Loans and Deposits growth Credit RWA impact (1H10 vs 2H09) $b Reported 3.0 (2.1) 3% 2% 229.8 (4.4) Group Total1 2% 1% (1.8) 2% (4.1) Australia Division 5% 220.4 2
Slide 73: Tightening of Jaws in 1H10
Tightening of “Jaws” in 1H10 a function of 2009 strong income performance and continued targeted investment For personal use only Revenue / Expense “Jaws” Expense growth composition1 (1H10 vs 2H09) 17% Reported growth Australia 4% 8% 10% 3% 4% Division 5% 12% 12% APEA Division2 13% (USD) 10% 10% 19%
Slide 74: Gross impaired assets increased with slower run off
Gross Impaired assets increased with slower run off. New impaired assets stabilising and more broadly based For personal use only Gross impaired New Impaired New impaired loans assets Assets by industry1 $b $b 100% Other 7 7 Finance 90% Business 6 6 Health 80% Manuf 5 5 70% W‟sale 4 60% 4 Agri 50% 3
Slide 75: Total Provision charge has reduced across the region
Total Provision charge has reduced across the region with lower IP in Wholesale, Commercial and Consumer For personal use only Total Provision Charge Individual Provision Charge ($m) Half year ($m) Half year 5% 13% (32%) 71% (16%) (17%) 1,800 growth 1,800 growth 1,621 1,600 1,600 1,531 1,435 1,400 1
Slide 76: CP charge down on prior half
CP charge down on prior half, with release of management overlay in Australia offset by NZ increases For personal use only CP Charge Higher provision balance $m $m maintained 600 5,000 470 500 4,000 348 338 400 3,000 300 (96) 2,000 200 1,000 100 36 0 0 2H08 1H09 2H09 1H10 -100 Cycle & Concentration
Slide 77: Risk Management
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 Risk Management
Slide 78: Credit risk charge on Credit Intermediation Trades decreased
Credit risk charge on Credit Intermediation Trades decreased For personal use only Counterparty Rating No. Notional Mark to Credit Risk Credit Risk Notional purchased Market on on Principal protection (US$m) Derivatives Derivatives Amount on principal (US$m) (A$m) corresponding amount Sold Protectio
Slide 79: Reduced credit exposure on Credit Intermediation Trade Portfolio
Reduced credit exposure on Credit Intermediation Trade Portfolio For personal use only • Overall credit exposure under the Credit Credit Intermediation Trades Intermediation Trade Portfolio is now substantially lower following the unwind of selected trades and AUDm USDb stabilisation of credit marke
Slide 80: CP coverage strengthened
CP coverage strengthened from higher CP balance and a reduction in Credit Risk Weighted Assets For personal use only Collective Provision Balance ($m) Total Credit Risk Weighted Assets ($b) 3,000 3,037 2,822 2,742 2,340 257.8 249.2 250.8 229.8 220.4 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 CP & Total Prov
Slide 81: Rate of growth in total gross impaired facilities is slowing
Rate of growth in total gross impaired facilities is slowing For personal use only $m Institutional Impaired Assets Impaired Assets Greater than $10m 5,000 (by number of customers) 4,000 3,000 2,000 100% 1,000 0 90% Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 80% $m Commercial Impaired Assets 5,000 70% 4,000
Slide 82: Watch & control list also stabilising
Watch & control list also stabilising For personal use only Watch & Control list by limits Watch List by Industry (March 2009 Watchlist index = 100) % Total Watch List Limits Index -100 -50 0 50 100 150 Agriculture, Forestry & Fishing Manufacturing Mar 09 Wholesale Trade Finance & Insurance Apr 09 C
Slide 83: Risk Grade Profiles
Risk Grade Profiles For personal use only Group Risk Grade profile by Institutional Risk Grade profile by Exposure at Default Exposure at Default 4.4% 5.7% 6.3% 6.4% 2.7% 4.9% 4.7% 5.4% 9.0% 8.9% 8.8% 9.4% 5.8% 5.2% 5.0% 4.8% 11.6% 11.6% 12.2% 11.6% 13.5% 13.0% 12.6% 13.0% 16.0% 17.2% 17.0% 13.6% 13
Slide 84: Australian Portfolios: 90+ Days Past Due
Australian Portfolios: 90+ Days Past Due For personal use only Australia Mortgages 90+ day Australia Cards delinquencies % of GLAs 90+ day delinquencies % of Gross Lending Assets (GLAs) 1.50% 1.50% 1.00% 1.20% 0.50% 0.00% 0.90% Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Australia Commercial % of GLAs
Slide 85: Australia Retail - Mortgages
Australia Retail - Mortgages For personal use only Portfolio Statistics New Mortgage customer quality index • All lending on a full recourse basis Index Mar 08 = 100 HIGHER QUALITY NEW CUSTOMERS • Average loan size at origination - $218k 104 103 • Average LVR at origination - 62.6% 102 • Average dyn
Slide 86: New Zealand – Provisions reducing from 2H09 highs
New Zealand – Provisions reducing from 2H09 highs, impaired loans reflective of protracted recovery For personal use only Total Provision Charge (NZDm) Total Impaired Loans (NZDm) and as % Gross Lending Assets 598 1.78% 194 330 291 63 1.21% 207 77 66 404 93 214 267 46 141 0.61% 47 1H08 2H08 1H09 2H0
Slide 87: 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 Australia Offices Retail 29.6 28.2 Residential 27.2 0.8 26.7 0.8 26.1 Industrial 0.7 0.7 6.1 1.0 6.1 Tourism 6.6 5.2 5.9 Other New Ze
Slide 88: Economics
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED June 2010 Economics
Slide 89: Record population growth coupled with undersupply
Record population growth coupled with undersupply For personal use only Population growth vs dwelling Housing vacancies & rental prices completions 000‟s Sources: ABS, ANZ Economics and Markets Research 89
Slide 90: Changing complexion in those seeking finance approvals
Changing complexion in those seeking finance approvals For personal use only Persons per household Housing finance approvals (Aus) $b annualised (value) 120 120 First homebuyer 100 100 Upgrader Investor 80 80 jjj Billions $, annualised 60 60 40 40 20 20 - 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Slide 91: Recovery in dwelling prices has been broadly-based
Recovery in dwelling prices has been broadly-based For personal use only Australian dwelling prices 108 Index Feb 2008=100 106 Bottom 20% (+8.5%) 104 102 100 Middle 60% 98 (+10.0%)* Top 20% (+11.9%) 96 94 92 90 2008 2009 Sources: RP Data, Economics@ANZ 91
Slide 92: House prices in Australia have recovered following GFC
House prices in Australia have recovered following GFC For personal use only Australia - median house price by city Sydney 650 $000 (5.9%*) 600 Melb. (8.4%*) 550 Perth 500 (4.4%*) Bris. 450 (5.6%*) 400 Adel. (3.7%*) 350 Hobart 300 (5.4%*) 250 200 150 100 50 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Slide 93: Conservative lending critical to sustainability
Conservative lending critical to sustainability and reflected in the low level of delinquencies in Australia For personal use only
Slide 94: 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 income households with the capacity property, not personal consumption to service Source: RBA paper “Aspects of A
Slide 95: Housing price and mortgage debt dynamics
Housing price and mortgage debt dynamics For personal use only Leverage on the Housing Stock Mortgage debt as a per cent of housing assets RHS: Board of Governors of the Federal Reserve System, RBA, Thompson Reuters 95
Slide 96: 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 take
Slide 97: 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 97
Slide 98: Labour market is now stronger
Labour market is now stronger 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
Slide 99: 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 40% 35% 30% 25% 20% 15% 10% 5% 0% Sydney Melbourne Brisbane Perth Adelaide 1982 Recession 1991 Recession 2001 Slowd
Slide 100: 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 10 % of GDP ● The current account deficit is the gap between national saving and national investment ● That Australia has run a deficit for such a long 5 period suggests the count
Slide 101: Economics – New Zealand
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED May 2010 Economics – New Zealand
Slide 102: Economy is out of recession, recovery data mixed
The economy is out of recession, but the hard economic data relating to the pace of recovery has been mixed For personal use only Migration still supportive Commodity price nearing peaks Permanent and long-term migration ANZ Commodity Price Index '000 (sa) Index 240 10 9 World Prices Arrivals 220 8
Slide 103: Economic activity still supported by policy stimulus
Economic activity is still being supported by policy stimulus For personal use only Official Cash Rate Fiscal impulse (June years) Official Cash Rate Fiscal impulse (June years) Perc ent % of GDP 9.0 4 8.0 3 Contrac tionary Treasury forecasts 7.0 2 6.0 1 5.0 4.0 0 3.0 -1 2.0 -2 1.0 -3 Expansionary 0
Slide 104: Cyclical upswing in residential investment could be delayed
Cyclical upswing in residential investment could be delayed. No housing shortage at present. For personal use only Building Consents and House Sales Consents (sa) House sales (sa) 3500 11000 10000 3000 Consents (LHS) 9000 2500 8000 2000 7000 6000 1500 5000 House sales 1000 (adv 4 mths, RHS) 4000 500
Slide 105: NZ property markets have recovered off lows
In New Zealand property markets have recovered off lows and house prices are starting to rise For personal use only Stratified Median NZ House prices 550 $'000 500 Auckland (+9.0%*) 450 Wellington 400 (+8.7%*) NZ (+5.3%*) 350 Canturbury (+10.2%*) 300 Other South 250 Island (+1.5%*) 200 150 100 50 92
Slide 106: Economics – Forecasts
For personal use only Investor Discussion Pack AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED May 2010 Economics – Forecasts
Slide 107: Economic updates
Economic updates For personal use only Australia New Zealand 2009 2010 2011 2012 2009 2010 2011 2012 GDP 0.9 3.0 3.2 3.6 -2.3 1.5 3.4 2.9 Inflation 2.2 2.6 2.6 3.0 1.7 1.8 3.1 2.1 Unemployment 5.3 5.3 4.9 4.5 6.5 7.2 6.0 5.8 Current A/C (% GDP) -3.3 -4.4 -2.7 -3.0 -3.2 -5.4 -3.9 -4.3 Cash rate 3.00
Slide 108: Growth Forecasts – An uneven recovery in 2010
Growth Forecasts – An uneven “recovery” in 2010 For personal use only • China and India lead the way toward an incomplete recovery – output gaps are narrowing. • The rest of region recovers to various degrees, largely still below potential (levels). • 2006-07 GDP growth rates not seen until 2012, wh
Slide 109: 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 Limited (ANZ) — Non-Deal Roadshow (June 2010) on 6ix