Slide 1: Corporate Evolution: The ANZ Journey
Corporate Evolution The ANZ Journey John McFarlane Chief Executive Officer March 2004
Slide 2: Companies and industries have life cycles
Companies and industries have life cycles Maturity Fade Foundation
Slide 3: Companies and industries have life cycles
Companies and industries have life cycles a Renewal PA AUN AMANNNIIIN NI fr ( Fa Foundation
Slide 4: Australian banking conforms to the life cycle - ANZ experience
Australian banking conforms to the life cycle - ANZ experience Next phase “Renewal and $m Re-~invention” NPAT* 2,500 7 = “Maturity and 2,000 T Fade” 1,500 + 1,000 7 -500 ~1,000 * before abnormal items and significant transactions
Slide 5: The Seven Levels of Corporate Evolution
The Seven Levels of Corporate Evolution SERVICE TO HUMANITY - INTERGENERATIONAL Social responsibility. Future generations. SUSTAINABLE Long term viability. Ethics. Legacy. Health of the Planet. INTERDEPENDENT COHERENCE Making a difference in people's lives Inclusion. Employee fulfillment. Community
Slide 6: ANZ has journeyed from Viable through Transformational
ANZ has journeyed from Viable through Transformational SUSTAINABLE SERVICE TO HUMANITY - INTERGENERATIONAL HOLISTIC INTERDEPENDENT COHERENCE COHERENT TOTAL ORGANISATIONAL COHERENCE TRANSPO! PROFESSIONALISM AND RELATIONSHIPS FOUNDATION AND VIABILITY Corporate Transformation Tools®
Slide 7: Five steps in the ANZ journey
Five steps in the ANZ journey
Slide 8: Five steps in the ANZ journey — Unique specialist business model
Five steps in the ANZ journey — Unique specialist business model Unique specialist business model
Slide 9: Value of focus and specialisation
Value of focus and specialisation Specialisation and focus yields better return than generalisation from the perspective of individual challenges and tasks, as this Olympic example demonstrates Javelin The Generalist Mens Decathlon Gold Medal 2) Winner Sydney 2000 gs . Toe eee Pee eee ) 65.8m Specia
Slide 10: Specialists win over generalists...but returns are more volatile
Specialists win over generalists...but returns are more volatile (Boston Consulting Group Study) Average ROE 25 20.8 20 15.7 Generalists Specialists % Average Volatility 30 35 23.6 20 15 10.6 Generalists Specialists Generalists focus on size and scale as the basis of competition Specialists insight
Slide 11: ANZ has developed a rich portfolio of specialised businesses
ANZ has developed a rich portfolio of specialised businesses A specialist portfolio, each with Portfolio approach reduces a distinctive strategy volatility High 30 5 27.6 18.1 Market Attractiveness Cards Low Weak Strong Current ANZ Position Mortgages Size of bubble representative of contribution to
Slide 12: SME Banking - a specialisation success story
SME Banking ~ a specialisation success story 90% 80% 70% 60% 50% 40% 30% 20% Staff Satisfaction Significant improvement achieved... 85% 80% 75% 70% 65% 60% 55% 50% Mar-01 Mar-02 Mar-03 Mar-04 First business to put all staff through the cultural change program Shift from administration to sales focus
Slide 13: Five steps in the ANZ journey — World-leading efficiency
Five steps in the ANZ journey — World-leading efficiency World- leading efficiency
Slide 14: ANZ has materially outperformed peers in efficiency
ANZ has materially outperformed peers in efficiency " The Australian banking Cost to Income* sector has enjoyed a decade of efficiency gains « ANZ has outstripped its competitors and has achieved world class efficiency « ANZ was in the top 5 banks in the world in terms of efficiency, TSR and risk- a
Slide 15: Five steps in the ANZ journey — Systematic value & risk approach
Five steps in the ANZ journey — Systematic value & risk approach Systematic value & risk approach
Slide 16: ANZ systematically optimises variables to create value
ANZ systematically optimises variables to create value Risk Returns
Slide 17: ANZ has systematically reduced risk
ANZ has systematically reduced risk Standard ELP charge Market risk reduction reflected reduced (bps) 23.0 in Average VaR ($m) &@ELP Top-Up la Standard ELP 1.3 ' ; Pe , 1998 2003 1998 2003 Offshore lending assets as Reduced beta supports lower % of group reduced risk profile* 8.97% 1.31 1.02 4.80% 3
Slide 18: Institutional Financial Services - a case study
Institutional Financial Services ~— a case study « No sustainable competitive advantage in simply lending money - as a result ROE from IFS in ‘99 below group average « Management constrained IFS balance sheet, and significantly reduced offshore lending (from ~9% of NLA* in 2001 to ~3.5% today) * By
Slide 19: Trading income represents a sustainable income stream
Trading income represents a sustainable income stream e Despite significantly reducing Value at Risk levels, we have consistently grown trading revenues at a CAGR of 7% since 2000 ¢ Volatility in this earnings stream is low, with a focus on customer driven trading rather than proprietary trading Sig
Slide 20: Five steps in the ANZ journey — Focus on attractive domestic markets
Five steps in the ANZ journey — Focus on attractive domestic market Focus on attractive domestic markets
Slide 21: Australia and New Zealand are attractive low-risk markets
Australia and New Zealand are attractive low-risk markets High Return Low Risk « Australia and NZ have had high compared to « The New Zealand banking market has a other developed markets lower credit risk history Average Real GDP Growth Doubtful debts expense/ Average Loans (1993-2003)* and Advances
Slide 22: The portfolio shift and acquisition of NBNZ are transformational
The portfolio shift and acquisition of NBNZ are transformational Corporate versus Retail Lines of Business* Shift driven by: « Growth in retail franchise, particularly in mortgages « De-risking of corporate book « Concentration on core geographic markets Sep-97 Dec-03 # Retail Businesses fa Corporat
Slide 23: One of the largest and most respected companies in Australia and New Zealand
One of the largest and most respected companies in Australia and New Zealand « Market Capitalisation - A$34bn « Full spectrum banking in Australia - some leading positions and need to build consumer and small business segments « The leading bank in New Zealand and the largest company in New Zealand
Slide 24: Five steps in the ANZ journey — Renewal and reinvention: Cultural energy release
Five steps in the ANZ journey — Renewal and reinvention: Cultural energy release Renewal and reinvention: Cultural energy release
Slide 25: The bank with a human face
The bank with a human face Put our customers first s s Perform and grow to create value for our shareholders s Lead and inspire each other s Earn the trust of the community s Breakout, be bold and have courage to be different perform grow breakout
Slide 26: Breakout projects to create a high performing organisation
Breakout projects to create a high performing organisation ra (| Breakout Chamnpiga Achieve.a Breakout Ming — | folent joe. moarkel J
Slide 27: ..and an engaged and satisfied workforce
..and an engaged and satisfied workforce % Overall Staff Satisfaction 100 - 90 + 80 + 70 + 60 50 5 40 5 30 5 20 1999 2000 2001 2002 2003
Slide 28: Performance Ethic Shift 2000-2003
Performance Ethic Shift 2000-2003 Clear compelling mission Stretching targets and goals Effective working of the organisation Clear feedback on performance Visible consequence management Best people Financial control Operational effectiveness Rewards and recognition Opportunities Values 2000 2003 Av
Slide 29: ANZ has successfully moved to the transformational stage 3 (est.)
ANZ has successfully moved to the transformational stage 1993 (est.) . Sustainable . Holistic . Coherent . Transformational . Best-practice . Professional . Viable @ Positive value ® Limiting value
Slide 30: ..and is positioning for stage - Total Organisational Coherence
..and is positioning for stage 5 - Total Organisational Coherence Personal Values Current ANZ Values Sustainable 7 [ow 7 k 3% 8% 6 Holistic & Coherent 5 Transformational Best-practice Professional 2 Viable 1 fos 6% 18% Desired ANZ Values 7 ke 6% 7% Key focus in phase 0% 20% 40% 0% 20% 40% 0% 20% 40%
Slide 31: Five key steps in ANZ journey
Five key steps in ANZ journey Our specialist businesses model is distinctive in its focus, energy empowerment, and speed to market Superior management execution is well- recognised in ANZ being one of the best- managed and most-efficient banks in the world Pervasive Economic Value Added systems comb
Slide 32: ANZ's focus is on growth and sustainability
ANZ’s focus is on growth and sustainability ANZ’s mission is to be the leading, most successful and most respected bank in Australia and New Zealand and Australia’s international bank ANZ has established the foundation for growth Growth and sustainability are now the main focus st ’ Ripe" « Advance
Slide 33: Copy of presentation available on www.anz.com
Copy of presentation available on www.anz.com
Slide 34: The material in this presentation is general background information
The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and