Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Non-Deal Roadshow (November 2016)
106 slides from Anz's roadshow presentation, November 2016
Slide 1: 2016 Full Year Investor Discussion Pack
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016
Slide 2: Contents
CONTENTS FY16 Results CEO and CFO FY16 results presentations 3 CEO Presentation 3 CFO Presentation 17 Corporate profile 39 Treasury 49 Risk 59 Housing portfolio trends 76 Divisional performance 83 Australia Division 84 New Zealand Division and Geography 89 Institutional 93 Wealth Australia 103 All f
Slide 3: FY16 Results Presentation - CEO
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 F Y 1 6 R E S U LT S P R E S E N TAT I O N S H AY N E E L L I O T T CHIEF EXECUTIVE OFFICER
Slide 4: Headline Financial Performance
H E AD L I N E F I N AN C I AL P E R F O R M AN C E $m 2016 FULL YEAR 2016 SECOND HALF FY16 vs FY15 2H16 vs 1H16 Statutory Profit 5,709 -24% 2,971 9% Cash Profit 5,889 -18% 3,107 12% Operating Income 20,577 0% 10,261 -1% Operating Expenses -10,422 11% -4,943 -10% Profit Before Provisions 10,155 -9%
Slide 5: Headline Components
H E AD L I N E C O M P O N E N T S OPERATIONAL PERFORMANCE Strong operating performance in Impact from Productivity Change in credit cycle retail & commercial in reshaping Institutional Aus & NZ SPECIFIED ITEMS1 Asia minority investments Capitalised software Esanda dealer finance sale -$231m -$522m
Slide 6: Adjusted Pro-forma Financial Performance
AD J U S T E D P R O - F O R M A FINANCIAL PERFORMANCE $m 2016 FULL YEAR 2016 SECOND HALF Adjusted Pro-forma FY16 vs FY15 2H16 vs 1H16 Operating Income 20,936 3.5% 10,498 0.6% Operating Expenses -9,384 0.9% -4,683 -0.4% Profit Before Provisions 11,552 5.7% 5,815 1.4% Provisions -1,933 79.8% -1,028 1
Slide 7: Four Priorities
FOUR PRIORITIES BUILDING A BETTER BANK 1. Create a simpler, better 2. Focus our efforts on attractive capitalised, better balanced and areas where we can carve out a more agile bank winning position 4. Build a superior everyday 3. Drive a purpose and values led experience for our people and transfor
Slide 8: Getting Fit For Performance
G E T T I N G F I T F O R P E R F O R M AN C E Sustainable growth New operating model Rebalancing FY16 FY17 FY18 FY19 onward 8
Slide 9: Work To Date
W O R K T O D AT E 1. Reset strategy 2. Rebuilt executive team 3. Rebalanced portfolio organically 4. Progressed on disposals 5. Reshaped workforce 6. Changed cost trajectory 7. Adjusted operating model 8. Responding to changing expectations 9
Slide 10: Retail & Commercial Performance
R E TAI L & C O M M E R C I AL P E R F O R M AN C E AUSTRALIA & NEW ZEALAND HIGHLIGHTS AND DRIVERS1 AUSTRALIA NEW ZEALAND Movement vs prior half 1H16 2H16 1H16 2H16 Customer acquisition +43k +110k +36k +26k Small Business Lending (NLA’s) +5% +3% +7% +4% Net interest margins (NIM) +3bps -2bps -6bps -
Slide 11: Institutional Performance
I N S T I T U T I O N AL P E R F O R M AN C E TRANSFORMATION PROGRESS HIGHLIGHTS AND DRIVERS1 INSTITUTIONAL Movement vs prior half 1H16 2H16 Customers >10% reduction >13% reduction Focus on reducing off-strategy low return RWA reductions $16b $14b -8% -7% Net interest margin (NIM)2 +10bps +4bps Reve
Slide 12: A Good Start
A G O O D S TAR T A BETTER BALANCED, HIGHER RETURN BUSINESS COMPOSITION OF TOTAL ANZ CAPITAL COMPOSITION OF TOTAL ANZ CAPITAL SEPTEMBER 20151 SEPTEMBER 20161 Institutional Retail & Comm Institutional Retail & Comm Aus & NZ Aus & NZ Wealth Wealth Capital2 Capital2 $53.4b $58.6b Charts are Illustrativ
Slide 13: Operating Environment
O P E R AT I N G E N V I R O N M E N T Low and negative Dynamic competitive Stubborn cost interest rates landscape pressures Higher capital and Turning credit cycle Increased regulation liquidity thresholds Cyclical Structural 13
Slide 14: Capital Efficiency
C AP I TAL E F F I C I E N C Y EXECUTIVE FOCUS COMMON EQUITY TIER 1 GENERATION CET1 bps FY12-FY15 FY16 Change FY avg FY16 vs FY12-FY15 avg Cash Profit 204 1731 -31 RWA growth -42 25 +67 Capital Deductions2 -32 -21 +11 Net capital generation 130 177 +47 Gross dividend -135 -127 Dividend Reinvestment
Slide 15: Business Outlook
BUSINESS OUTLOOK GETTING MORE STUFF DONE 1. Continued strength and cautious growth in Australia and NZ 2. Ongoing re-positioning of Institutional 3. Continued focus on re-balancing our business portfolio 4. Execution on four business priorities • Create a simpler better bank • Focus where we can win
Slide 16: Focus For 2017
FOCUS FOR 2017 1. Delivering the benefits of decisions taken in 2016 2. Further re-shaping of our portfolio including decisions on our Wealth business as a result of our strategic review 3. Continued reductions in Institutional RWA 4. Further strengthening of our core franchises in Australia and New
Slide 17: FY16 Results Presentation - CFO
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 F Y 1 6 R E S U LT S P R E S E N TAT I O N MICHELLE JABLKO CHIEF FINANCIAL OFFICER
Slide 18: Overview
OVERVIEW • Specified items • Portfolio movement • Operating performance • Capital management 18
Slide 19: Financial Performance
F I N AN C I AL P E R F O R M AN C E CASH PROFIT FULL YEAR 2016 $m 7,216 -250 5,889 -1,077 Cash Profit growth -18.4% EPS (basic) growth -22.2% ROE 10.3% FY15 cash profit Growth FY16 specified items FY16 cash profit (ex specified items) SECOND HALF 2016 $m 685 2,782 3,107 Cash Profit growth 11.7% -36
Slide 20: Specified Items
SPECIFIED ITEMS ALL TAKEN THROUGH CASH PROFIT TOTAL FY16 Capitalised Restructuring Asian Minority Esanda Dealer CVA change in Specified Items software expenses investments Finance sale methodology Costs, including Expenses incurred AMMB Impairment Pro-forma adjustment Revised methodology Cash Profit
Slide 21: Specified Items: CVA Methodology Adjustments
SPECIFIED ITEMS CVA METHODOLOGY ADJUSTMENTS • CVA is a valuation adjustment made in determining the fair value of TOTAL FY16 CVA change in methodology derivative instruments to incorporate the risk of default by a Specified Items counterparty to a derivative transaction Revised methodology Cash Prof
Slide 22: Specified Items: Capitalised Software
SPECIFIED ITEMS CAPITALISED SOFTWARE CAPITALISED SOFTWARE SPECIFIED ITEM COMPONENTS TOTAL FY16 Capitalised $m 1H16 2H16 FY16 Specified Items software Accelerated Amortisation 556 - 556 Costs, including Cash Profit accelerated impact ($m) Amortisation benefit (88) (95) (183) amortisation, resulting f
Slide 23: Specified Items: Capitalised Software Policy
SPECIFIED ITEMS CAPITALISED SOFTWARE TOTAL FY16 Capitalised CAPITALISED SOFTWARE POLICY CHANGES Specified Items software o Increased the threshold for capitalisation of software Costs, including Cash Profit accelerated development costs impact ($m) amortisation, resulting from software o Directly ex
Slide 24: Restructuring Expenses
SPECIFIED ITEMS RESTRUCTURING EXPENSES TOTAL FY16 Restructuring RESTRUCTURE EXPENSES Specified Items expenses Expenses incurred o Reshaping the workforce to reduce complexity and Cash Profit in relation to duplication impact ($m) organisational restructures o Aligning to the new organisation structu
Slide 25: Portfolio Movement: Risk Weighted Assets
PORTFOLIO MOVEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS CREDIT RWA MOVEMENT $b (Sep 16 vs Sep 15) 402 409 387 14 388 18 CRWA increase $2.2bn 362 14 16 38 39 $b 33 2.2 21 38 26 32 Home loan CRWA 25.9 regulatory changes 0.5 Risk 340 350 334 326 352 309 -4.4 FX Impact (1H16 -2.0bn) (2H16 -11
Slide 26: Portfolio Movement: EAD & Lending CRWA
PORTFOLIO MOVEMENT EAD & LENDING CRWA MOVEMENT1 (Sep 16 vs Sep 15) $b 29.0 Home loan CRWA regulatory changes 16.3 6.9 5.0 3.1 2.8 1.6 0.3 -0.2 -3.8 -4.6 -8.1 -17.9 -21.1 -23.7 Total AUS HL AUS Non HL NZ other Esanda DF Institutional Credit RWA lending movement Exposure at Default movement 1. FX adju
Slide 27: Institutional CRWA & Margins
PORTFOLIO MOVEMENT INSTITUTIONAL CRWA & MARGINS INSTITUTIONAL CREDIT RWA MOVEMENT1 INSTITUTIONAL NIM1,3 $b 1H16 2H16 FY16 (Mar 16 vs Sep 15) (Sep 16 vs Mar 16) change Aus & NZ International Aus & NZ International Total % 2.57% 2.65% 2.40% Trade -1.0 -5.6 -0.1 -2.6 -9.2 2.16% 2.06% 2.20% 2.02% 1.79%
Slide 28: Operating Performance
O P E R AT I N G P E R F O R M AN C E CASH PROFIT FULL YEAR 2016 $m 7,216 40 Cash Adj. Pro- Profit forma change change 428 5,889 -1,044 Income 0.2% 3.5% -751 Expenses 11.1% 0.9% PBP -9.0% 5.7% Provisions 62.3% 79.8% Net Profit -18.4% -2.5% EPS (basic) -22.2% -7.0% FY15 Income Expenses Provisions Tax
Slide 29: Portfolio Contribution
PORTFOLIO CONTRIBUTION ADJUSTED PRO-FORMA INCOME CONTRIBUTION (Adjusted Pro-forma) $m 20,936 20,231 Adjusted Pro-forma FY16 vs FY15 2H16 vs 1H16 AUSTRALIA DIVISION Income 8.8% 1.7% Expenses 3.0% 1.1% 8,606 9,365 Profit Before Provisions 12.2% 2.0% Australia Cash Profit 10.3% 2.7% NEW ZEALAND DIVISIO
Slide 30: Income Drivers: Net Interest Margin
INCOME DRIVERS GROUP NET INTEREST MARGIN FY16 INCOME CONTRIBUTION Basis points 204 5 201 0 200 (3) (3) (2) (1) Includes Improvement largely 2bp impact in Australian from the consumer & Asia sale of trade Esanda DF (1)bp (4)bps 2H15 1H16 change 1H16 Funding & Funding cost Deposits Assets Markets & 2H
Slide 31: Income Drivers: Markets Income
INCOME DRIVERS MARKETS INCOME TOTAL INCOME YOY SALES TRADING $m $m $m 2,242 625 2,169 589 1,800 531 543 533 543 345 374 317 337 266 2,037 221 -237 1H14 2H14 1H15 2H15 1H16 2H16 1H14 2H14 1H15 2H15 1H16 2H16 FY14 FY15 FY16 Total markets (ex CVA methoodology change) CVA methodology change TOTAL INCOME
Slide 32: Cost Management
C O S T M AN AG E M E N T EXPENSE TREND EXPENSE DRIVERS $m Cash Adjusted 11.1% Pro-forma FY15 expenses 9,378 -$211m on a constant Personnel -132 currency basis Premises 6 6.8% 6.1% Technology 198 Other 8 Specified items FY15 charge: $31m 247 (Restructuring) FY16 charge: $278m Specified items 717 (Ot
Slide 33: Restructuring Costs Driving Simplification, Reducing FTE
C O S T M AN AG E M E N T RESTRUCTURING COSTS DRIVING SIMPLIFICATION, REDUCING FTE EXPENSES ACTIONS $m • FTE reductions ~ 3,600 (7%) in 2016 10,422 278 • ~50% from role eliminations, utilising restructuring spend 278 • FY16 actions (from restructuring charge spent: $166m of $278m) 90 Institutional •
Slide 34: Provisions
PROVISIONS TOTAL PROVISION CHARGE PROVISION MOVEMENT (2H16 vs 1H16) $m $m Up $120m 1,038 1,050 147 120 918 900 36 24 750 -35 695 -52 Total Oswal Comm. Retail Institutional CP 600 461 Settlement (ex Oswal) 510 450 COLLECTIVE PROVISION COVERAGE $b (CRWAs) 350 352 300 309 0.89% 0.88% 150 0.85% 0.82% 0
Slide 35: Capital Management & Dividend
C AP I TAL M AN AG E M E N T & D I V I D E N D APRA COMMON EQUITY TIER 1 (CET1) POSITION DIVIDEND & PAYOUT RATIO % DPS (cents) DPOR (%) 200 90 178 181 0.22 80 0.90 164 160 -0.06 145 70 150 -0.54 95 95 60 9.81 91 80 50 9.61 79 -0.07 100 Net Organic Capital -0.60 -0.05 40 Generation +106 bps 30 50 83
Slide 36: Transition Of Asia Retail And Wealth Portfolio
T R AN S I T I O N O F AS I A R E TAI L AN D W E ALT H P O R T F O L I O • No impact in FY16 • Estimated premium of $110m to NTA • Estimated CET1 release of 15-20bps • Net transaction P&L impact of $265m, expected to be slightly higher in the first half of financial year 2017, but offset back to ~$2
Slide 37: ANZ Retail & Wealth Transaction Overview
AN Z R E TAI L & W E ALT H T R AN S AC T I O N O V E R V I E W Overview • ANZ to sell its retail and wealth business in Singapore, China, Hong Kong, Taiwan and Indonesia to DBS Bank Limited • Sale reflects the bank’s strategic priority to create a simpler, better capitalised and better balanced bank
Slide 38: ANZ Asia Portfolio
AN Z AS I A P O R T F O L I O ONGOING BUSINESS1 NON CORE BUSINESS ANZ Institutional Asia Retail and Wealth Asia – this transaction2 Gross loans and advances $43b Gross loans and advances ~$11b Deposits $41b Deposits ~$17b FTE 1,490 Countries 5 Coverage (Asian Markets) 15 Minority investments in Asia
Slide 39: Corporate Profile
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 C O R P O R AT E P R O F I L E
Slide 40: Corporate Profile Overview
C O R P O R AT E P R O F I L E OVERVIEW • Founded in 1835 and headquartered in Melbourne, Australia, ANZ is one of the four largest Australian banks and ranked in the top 25 banks globally by market capitalisation • ANZ serves over 10 million retail, commercial and institutional customers1, with con
Slide 41: Strategic Focus
C O R P O R AT E P R O F I L E STRATEGIC FOCUS 1. Create a simpler, better capitalised, better balanced and more agile bank 1. Reduce operating costs and risks by removing product and management complexity 2. Exit low return and non-core businesses 3. Reduce reliance on low-return aspects of Institu
Slide 42: Digital, Technology & Operations
C O R P O R AT E P R O F I L E DIGITAL, TECHNOLOGY & OPERATIONS OUR PORTFOLIO OF DIGITAL SOLUTIONS DELIVERING BETTER CUSTOMER EXPERIENCE • First major Australian bank to launch Apple PayTM and Android PayTM. the only bank in New Zealand to offer Apple PayTM • Over 1 million customers using goMoneyTM
Slide 43: Earnings
C O R P O R AT E P R O F I L E EARNINGS INCOME BY DIVISION INCOME BY CUSTOMER2 INSTITUTIONAL INCOME $m $m $m 6% 6% 6% 26% 26% 47% 48% 44% 47% 15% 20% 9% Australia Institutional Asia Retail & Pacific Retail Institutional Australia International New Zealand Wealth Aust. Commercial Wealth New Zealand P
Slide 44: Balance Sheet
C O R P O R AT E P R O F I L E BALANCE SHEET LENDING BY REGION1 INSTITUTIONAL GRADE BALANCE SHEET EAD3 $b EAD2 $b $b 400 600 300 400 19% 17% 550 300 21% 200 200 500 100 79% 81% 83% 100 0 450 0 Australia NZ International Sep 14 Sep 15 Sep 16 400 Retail Institutional Investment Sub-investment Default
Slide 45: Risk Weighted Assets By Division
C O R P O R AT E P R O F I L E RISK WEIGHTED ASSETS BY DIVISION $b (AUD) Australia Institutional New Zealand Other1 TOTAL Division Division Divisional Sep 2015 Credit Risk Weighted Assets 114 169 49 18 350 Market & Operational Risk Weighted Assets 16 29 6 1 52 Total Risk Weighted Assets 130 198 55 1
Slide 46: Volumes & Margins
C O R P O R AT E P R O F I L E VOLUMES & MARGINS ANZ GROUP GROUP NET INTEREST MARGIN1 $b bps 570 576 204 1 2 1 205 200 522 (2) (1) (5) 483 428 FY15 Aus. NZ Inst. Asia Other FY16 markets FY16 2.31% Div. Div. Div. Retail ex 2.22% 2.13% (ex & markets 2.04% 2.00% markets) Pacific NET LOANS AND ADVANCES
Slide 47: Productivity
C O R P O R AT E P R O F I L E PRODUCTIVITY ANZ GROUP COST TO INCOME $m % 442 +20bps -50bps +800bps +450bps -510bps 409 69.2% 63.5% 387 389 56.7% 370 36.0% 39.6% Aus. Div. NZ Div. Inst. Div. Wealth Aust. Asia Retail & Pacific 50.6% 47.7% 44.9% 44.7% 45.7% FTE -3% -2% -14% -10% -17% -7% 24,506 8,864
Slide 48: Profitability
C O R P O R AT E P R O F I L E PROFITABILITY ANZ GROUP RORWA DIVISION $m % 78.80 7,117 7,216 2.27 1.78 1.14 6,492 0.75 5,830 5,889 Aus. Div. NZ Div. Inst. Div. Wealth Aus. Asia Retail & Pacific RISK WEIGHTED ASSETS $b 168 157 1.96% 1.93% 1.97% 1.80% 59 1.44% 13 0 Aus. Div. NZ Div. Inst. Div. Wealth
Slide 49: Treasury
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 TREASURY
Slide 50: Regulatory Capital
R E G U L ATO RY C AP I TAL CAPITAL UPDATE APRA COMMON EQUITY TIER 1 (CET1) Capital Position % APRA CET1 ratio of 9.6% on an APRA basis or 14.5% on an 0.90 0.22 9.59 9.81 9.61 Internationally Comparable1 basis – comfortably above Basel top -0.06 -0.54 -0.60 -0.07 -0.05 quartile2 CET1 of 13.1% Net
Slide 51: Regulatory Capital Generation
R E G U L ATO RY C AP I TAL G E N E R AT I O N Second half Full year COMMON EQUITY TIER 1 GENERATION (bps) average 2H16 average FY16 2H12 – 2H15 FY12 – FY15 Cash Profit 102 901 204 1731 RWA movement (16) 22 (42) 25 Capital Deductions2 (13) (6) (32) (21) Net capital generation 73 106 130 177 Gross di
Slide 52: Internationally Comparable Regulatory Capital Position
I N T E R N AT I O N AL LY C O M PAR AB L E 1 R E G U L ATO RY C AP I TAL P O S I TI O N APRA Common Equity Tier 1 (CET1) – 30 September 2016 9.6% Corporate undrawn EAD Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in and unsecured LGD 1.5% many jurisdictions
Slide 53: CET1 And Leverage In A Global Context
C E T 1 AN D L E V E R AG E I N A G L O B AL C O N T E X T CET1 RATIOS1 LEVERAGE RATIOS1,2 0% 5% 10% 15% 20% 25% 0% 1% 2% 3% 4% 5% 6% 7% 8% Swedbank DBS Svenska Handelsbanken Intesa Sanpaolo SEB OCBC Nordea UOB ABN Amro Erste Bank Morgan Stanley ANZ Danske Bank RBS UBS BBVA RBS Standard Chartered AN
Slide 54: Balance Sheet Structure
B AL AN C E S H E E T S T R U C T U R E FUNDED BALANCE SHEET NET STABLE FUNDING RATIO (NSFR) September 2016 September 2016 $781bn $781bn Pro-forma NSFR > 105% Other Short Term 6% Short-term assets funded Liquids Short Term Funding with short- 21% 9% term liabilities Wholesale Funding Term Funding <1
Slide 55: Balance Sheet Composition
B AL AN C E S H E E T C O M P O S I T I O N The structural composition of the balance sheet improved in FY16 LONG TERM SHORT TERM $b +$9.2b improvement to Long Term -$9.2b reduction in funding position Short Term funding -7.0 2.6 -11.0 32.1 -21.7 14.2 -4.2 -3.9 -14.2 13.1 Stable Term Debt FX on Capi
Slide 56: Liquidity Coverage Ratio
L I Q U I D I T Y C O V E R AG E R AT I O Liquidity Coverage Ratio (LCR) Liquidity Coverage Ratio (LCR) March 2016 September 2016 Average1 LCR 126% ($37b Surplus) Average1 LCR 125% ($35b Surplus) $176b $178b Internal RMBS Internal RMBS $37b $139b $36b $143b Wholesale Wholesale Other ALA5 Other ALA5
Slide 57: Term Wholesale Funding Portfolio
T E R M W H O L E S AL E F U N D I N G P O R T F O LI O Issuance1,2 Maturities2,3 Increase in FY16 issuance driven $b by ~9% appreciation of AUD 32 26 24 24 22 20 19 17 17 17 16 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22+ Senior Unsecured Covered Bonds Tier 2 WEIGHTED AVERAGE TENOR PORTF
Slide 58: Aus Home Loans Funding Costs
AU S H O M E L O AN S F U N D I N G C O S T S INCREASE IN FUNDING COSTS RELATIVE TO OFFICIAL RBA CASH RATE DRIVEN MAINLY BY INCREASED COMPETITION FOR DEPOSITS Weighted difference in Home Loans Funding Costs to Official Cash Rate 2.0% Short Term Wholesale 1.6% Wholesale Funding accounts for ~30% of L
Slide 59: Risk Management
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 RISK MANAGEMENT
Slide 60: Total & Collective Provision Charge
R I S K M AN AG E M E N T TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE CP BALANCE BY DIVISION $m $m 2,956 2,876 2,000 0.4 3,000 1,500 0.3 FY16 vs FY15 $m 2,000 Divisional mvt 17 1,000 0.2 FX impact (19) 500 0.1 1,000 Esanda DF sale (78) 0 0.0 0 -500 -0.1 Sep 15 Sep 16 FY12 FY13 FY
Slide 61: Individual Provision Charge
R I S K M AN AG E M E N T INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL OBSERVED LOSS RATES IP CHARGE COMPOSITION bps $m 300 1,500 1,047 892 595 572 602 655 200 1,000 542 455 100 500 0 0 Sep92 Sep95 Sep98 Sep01 Sep04 Sep07 Sep10 Sep13 Sep16 -500 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 IP Loss Rate
Slide 62: Impaired Assets
R I S K M AN AG E M E N T IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS1 BY DIVISION Index Sep 09 =100 $m 150 6,000 5,196 4,264 100 4,000 2,889 3,173 2,719 50 2,000 0 Sep Sep Sep Sep Sep Sep Sep Sep 0 09 10 11 12 13 14 15 16 FY12 FY13 FY14 FY15 FY16 Control List by limits Control List by no. of
Slide 63: Risk Weighted Assets
R I S K M AN AG E M E N T RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b 402 409 4.3 408.6 401.9 2.2 0.8 38 39 -0.6 362 14 18 340 32 29 21 23 Sep 15 Credit Op RWA IRRBB Mkt. RWA Sep 16 RWA RWA CRWA MOVEMENT 350 352 $b 309 288 349.8 24.0 0.5 352.0 -4.4 -17.9 Sep 13 Sep 14 Se
Slide 64: Group EAD & CRWAs
R I S K M AN AG E M E N T RISK WEIGHTED ASSETS GROUP EAD1 & CRWAs GROUP EAD1 MOVEMENT 919 910 SEP 15 V SEP 16 $b $b 918.6 813 920 2.6 910.4 741 900 -7.0 -3.8 880 860 840 Sep 15 FX Impact Lending Data/Meth. Sep 16 Mvmt. Review 38.9% 38.0% 38.1% 38.7% GROUP EAD1 & CRWA GROWTH2 MOVEMENT 35.8% $b SEP 15
Slide 65: Portfolio Composition
R I S K M AN AG E M E N T PORTFOLIO COMPOSITION EXPOSURE AT DEFAULT (EAD) AS A % OF Category % of Portfolio in Non Portfolio Balance % of Group EAD Performing in Non Performing GROUP TOTAL Sep 15 Sep 16 Sep 15 Sep 16 Sep 16 TOTAL GROUP EAD (Sep 16) Consumer Lending 38.6% 40.6% 0.2% 0.1% $427m = $895
Slide 66: Group Resources Portfolio
R I S K M AN AG E M E N T GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR Total EAD (Sep 16): $16b ↓ $4b YoY As a % of Group EAD (Sep 16): 1.8% ↓ 40 bps YoY $b 8.6 7.8 6.8 4.9 5.1 4.0 4.0 2.6 3.0 2.5 3.1 2.9 2.2 2.3 1.7 1.5 1.0 1.3 1.1 0.9 Coal Mining Metal Ore Mining Oil & Gas Extraction Oth
Slide 67: Commercial Property Portfolio
R I S K M AN AG E M E N T COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY COMMERCIAL PROPERTY OUTSTANDINGS BY REGION1 SECTOR1 $b 38.4 % 37.4 37.5 37.9 8.0 100 3.9 3.6 33.9 4.5 4.7 80 4.1 7.5 60 8.8 9.5 40 8.3 8.4 20 6.9 7.0 Sep 14 Sep 15 Sep 16 Offices Retail Industrial Residential
Slide 68: ANZLMI Has Maintained Stable Loss Ratios
R I S K M AN AG E M E N T ANZLMI HAS MAINTAINED STABLE LOSS RATIOS FINANCIAL YEAR 2016 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 2016 (% FUM) Gross Written Premium ($m) $196m LVR<80% Not LMI Insured Net Claims Paid ($m) $26m 83% Loss R
Slide 69: Group Agriculture Portfolio
R I S K M AN AG E M E N T GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) NEW ZEALAND DAIRY CREDIT QUALITY Total EAD (Sep 16) As a % of Group EAD PD increase reflects impact of NZ$b lower milk prices A$34.5b 3.9% 14.0 12.7 12.0 11.6 11.9 12.4 12.4 Dairy 9.7% Beef 2.2% Sheep & 1.8%
Slide 70: New Zealand Market Characteristics
R I S K M AN AG E M E N T NEW ZEALAND MARKET CHARACTERISTICS GDP CONTRIBUTION BY INDUSTRY1 BANKING MARKET2 88% of NZ banking sector Net Loans & Advances ($365b) are with the big 4 banks 7% Finance & Business 12% Government 12% 29% ANZ Services and other 31% Peer 1 6% Primary sector 19% Peer 2 Manufa
Slide 71: New Zealand Risk
R I S K M AN AG E M E N T NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED NEW ZEALAND GEOGRAPHY TOTAL PROVISION ASSETS CHARGE2 NZ$m NZ$m % 1,818 200 105 2.5 85 103 1,451 99 2.0 97 100 44 30 955 1.5 22 31 46 50 708 419 491 1.0 0 0.5 0.0 -100 -39 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 1H11 2H11 1H
Slide 72: ANZ Institutional Portfolio
R I S K M AN AG E M E N T ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Sep 16): A$358b2 400 Finance (Banks and Central Banks) Government Admin. 350 27% Property Services³ 32% Services to Fin. & Ins.
Slide 73: ANZ Asian Institutional Portfolio
R I S K M AN AG E M E N T ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Sep 16): A$83b2 EAD (Sep 16): A$83b2 7.0% Finance 3.0% 23% Property Services 4.0% Basic Material Wholesaling 26.0% Machinery & Equip Mnfg 5.0% 3% 54% P
Slide 74: ANZ China Portfolio
R I S K M AN AG E M E N T ANZ CHINA PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ CHINA INDUSTRY COMPOSITION EAD (Sep 16): A$22b2 EAD (Sep 16): A$22b2 China EAD • Total China EAD of A$22b, with 52% or A$11.3b booked 3% 8% 6% Finance (Banks and Central Banks) onshore in China Ma
Slide 75: ANZ Indonesia Portfolio
R I S K M AN AG E M E N T ANZ INDONESIA PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ INDONESIA INDUSTRY COMPOSITION EAD (Sep 16): A$3.7b2 EAD (Sep 16): A$3.7b2 Indonesia EAD • Total Indonesia EAD of A$3.7b, with 72% or A$2.7b booked 20% 23% Finance (Banks & Central Banks) onsh
Slide 76: Housing Portfolio Trends
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 HOUSING PORTFOLIO TRENDS
Slide 77: Australia Home Loans Portfolio Overview
AU S T R AL I A H O M E L O AN S PORTFOLIO OVERVIEW Portfolio2 Flow Portfolio FY15 FY16 FY16 FY15 FY16 Average LVR at Origination4,5,6 71% 71% Number of Home Loan accounts 954k 975k 177k13 Average Dynamic LVR5,6,7 50% 52% Total FUM2 $231bn $246bn $65bn Market Share1 15.6% 15.5% Average Loan Size $24
Slide 78: Australia Home Loans Portfolio Trends
AU S T R AL I A H O M E L O AN S PORTFOLIO TRENDS HOME LOAN BALANCE & LENDING FLOWS1 HOME LOAN PORTFOLIO: LOAN TO VALUE RATIO1,2,3 $b % of portfolio +7% 15 50 1 -53 246 231 52 40 30 20 10 0 Sep-15 New sales Net OFI Refi Redraw & Repay Sep-16 0-60% 61-75% 76-80% 81-90% 91-95% 95%+ exc Refi-in Interes
Slide 79: Australia Division Portfolio Performance
AU S T R AL I A D I V I S I O N PORTFOLIO PERFORMANCE AUS DIV 90+ DAY DELINQUENCIES1 HOME LOAN DELINQUENCIES1 % % 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Sep Mar Sep Mar Sep Mar Sep- Sep Mar Sep Mar Sep Mar Sep- 13 14 14 15 15 16 16 13 14 14 15 15 16 16 Home Loans (inclusive of hardship change) Cons
Slide 80: Quality Assurance, Info Verification & Policy Reviews
AU S T R AL I A H O M E L O AN S UNDERWRITING PRACTICES AND MATERIAL POLICY CHANGES 2015/2016 changes to lending standards and underwriting: Multiple checks during origination process Serviceability Interest rate floor applied to new and existing mortgage lending Pre - application1 Income & Expens
Slide 81: New Zealand Mortgages Portfolio Overview
N E W Z E AL AN D M O R T G AG E S PORTFOLIO OVERVIEW 1 Portfolio Growth Portfolio FY15 FY16 FY16 FY15 FY16 Number of Home Loan accounts 502k 511k 1.8% Average LVR at Origination2 64% 60% Total FUM NZ$68b NZ$73b 7.4% Average Dynamic LVR3 47% 44% Average Loan Size at Origination NZ$306k NZ$300k (2.0%
Slide 82: New Zealand Home Lending
N E W Z E AL AN D HOME LENDING1 FLOW2 PORTFOLIO 11% 10% 6% 6% 25% 24% 24% 23% 41% 41% 9% 9% 7% 7% 11% 10% 75% 76% 48% 49% 43% 45% FY15 FY16 FY15 FY16 FY15 FY16 Branch Broker Mobile mortgage managers Fixed Variable Auckland Christchurch Other Nth Is. Wellington Other Sth Is. Other³ MARKET SHARE4 AUCK
Slide 83: Divisional Information
2 0 1 6 F U L L Y E AR I N V E S T O R D I S C U S S I O N PA C K AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED November 2016 D I V I S I O N A L I N F O R M AT I O N
Slide 84: Australia: Simpler, Better Capitalised & More Agile Bank
AU S T R AL I A SIMPLER, BETTER CAPITALISED & MORE AGILE BANK SALE OF ESANDA DEALER FINANCE MORE EFFICIENT OPERATIONS 3% more transactions -4% Reduction in Lending assets sold, comprising point-of- operations unit costs $8bn sale finance and bailment facilities offered to 5% lower ($/txn/min) motor
Slide 85: Australia: Home Loans
AU S T R AL I A HOME LOANS GOOD BUSINESS GROWING STRONGLY MANAGED PRUDENTLY Home Loan Portfolio Dynamic LVR of the $247b (43% of group lending) $65b Gross sales of $65bn 52% portfolio #3 Achieved market share1 7% Strong FUM growth driving $3.3b revenue Balanced volume and margin, optimising reven
Slide 86: Small Business Banking
AU S T R AL I A SMALL BUSINESS BANKING GOOD BUSINESS GROWING STRONGLY MANAGED PRUDENTLY Small Business Lending New business lending to $49b & Deposit Portfolio 36% startups, supporting innovation 70% % portfolio that is well secured 9% Strong lending FUM growth Increase in core transaction 17% acc
Slide 87: Investing In Capability And Capacity In NSW
AU S T R AL I A INVESTING IN CAPABILITY AND CAPACITY IN NSW FOCUSED INVESTMENT IN NSW DRIVING STRONGER GROWTH IN NSW vs NATIONAL GROWTH Expanding our sales capacity with 184 additional Home Loan 13% 184 FTE hired in NSW since FY15. FUM1 7% C&CB total 9% Investing in our branch network with 25 new an
Slide 88: Performance Drivers
AU S T R AL I A PERFORMANCE DRIVERS NET CUSTOMER GROWTH GROW PRODUCTS PER CUSTOMER Australia Division (‘000) Retail Products per Customer +325k % 6,000 5,900 5,800 Multiple 58 59 60 5,700 5,600 5,500 Single 42 41 40 5,400 Sep 14 Sep 15 Sep-16 Sep 14 Sep 15 Sep 16 DEEPENING CUSTOMER RELATIONSHIPS STR
Slide 89: Key Products Market Share
N E W Z E AL AN D KEY PRODUCTS MARKET SHARE Mortgages1 Household Deposits1 Credit Cards1 Life Insurance2 KiwiSaver3 29.3% 31.6% 31.5% 31.2% 31.7% 29.7% 27.2% 28.7% 24.4% 24.7% 9.8% 9.7% Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Jun-16 Share of Balances Share of Spend Mortgages •
Slide 90: Auckland
N E W Z E AL AN D AUCKLAND NET MIGRATION FOR AUCKLAND1 HOUSE PRICES2 Net Migration 000’s NZ$’000 1,000 21.0k 28.4k 32.8k 60 800 Auckland 600 40 Rest of NZ 400 20 200 0 0 Sep 14 Sep 15 Sep 16 Sep Sep Sep Sep Sep Arrivals Departures 00 04 08 12 16 EXPOSURE TO AUCKLAND HOME LOANS3 ANZ MORTGAGE LVR PROF
Slide 91: Agriculture Portfolio
N E W Z E AL AN D AGRICULTURE PORTFOLIO1 AGRI PORTFOLIO (GLA) AGRI CREDIT QUALITY – GIA AS % OF GLAs NZ$b 40 Dairy as a % of total NZ Geog 12% 11% 11% 10% 10% 3.63% 30 20 1.99% 1.05% 1.15% 10 0.69% 0 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Dairy Sheep & Beef Other Rural MARKET SHARE2 AGRIC
Slide 92: New Zealand Geography
N E W Z E AL AN D G E O G R AP H Y 2016 FULL YEAR GROWTH RATES (% CHANGE) SECOND HALF 2016 GROWTH RATES (% CHANGE) Adjusted Adjusted Cash Cash Pro- forma1 Pro-forma1 FY16 vs FY15 NZ(NZD) NZ(NZD) 2H16 vs 1H16 NZ(NZD) NZ(NZD) Income (2%) 0% Income 2% 4% Net interest 5% 5% Net interest 3% 3% Other inco
Slide 93: Institutional: 2016 Financial Performance
I N S T I T U T I O N AL 2016 FINANCIAL PERFORMANCE IMPACTED BY TRANSFORMATION REVENUE1 EXPENSES2 TOTAL PROVISIONS $m $m $m +5% +274% -10% 5,715 5,762 2,806 2,935 741 5,175 2,540 1,291 1,340 1,350 5,715 5,762 5,412 2,500 2,798 2,821 144 198 -237 40 8 114 FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16
Slide 94: Significant One-Off-Items In 2016
I N S T I T U T I O N AL SIGNIFICANT ONE-OFF-ITEMS IN 2016 ONE-OFF ITEM1 DESCRIPTION $m 237 5,412 Revenue Derivatives credit Revised methodology for 5,175 valuation determining the credit valuation adjustment adjustment (CVA) for derivatives FY16 Revenue CVA Adjusted FY16 Revenue $m 2,935 Expenses R
Slide 95: Immediate Focus
I N S T I T U T I O N AL PROGRESS ON INSTITUTIONAL TRANSFORMATION AGENDA PRIORITIES ACTIONS PROGRESS 1H16 2H16 Actively sell down or run off low-returning RWAs across Loans & Specialised Finance, Markets and Transaction RWA Improve capital Banking efficiency Improve return on RWA through disciplined
Slide 96: Institutional Transformation Progress
I N S T I T U T I O N AL INSTITUTIONAL TRANSFORMATION PROGRESS BUSINESS SIMPLIFICATION AND SHARPENED FOCUS REDUCING FTE, COST AND RWA CUSTOMER MOVEMENT1 STAFF2 EXPENSES $m 8% -13% -1% 1% 5% 47 9% 1% -14% 2,861 18 2,821 91% 63 90% -46% -16% 2,798 -105 FY15 Customer Customer FY16 Central Functions Sen
Slide 97: Managing The Portfolio For The Changing Credit Environment
I N S T I T U T I O N AL MANAGING THE PORTFOLIO FOR THE CHANGING CREDIT ENVIRONMENT DISCIPLINED PORTFOLIO MANAGEMENT PORTFOLIO CREDIT WEIGHTING EMERGING CORPORATES EAD1 $b -8% CRWA2 $b -83% 388 355 2.0 330 1% 18% 1% 21% 17% 79% 81% 82% 0.3 Sep 14 Sep 15 Sep 16 Sep 15 Sep 16 Investment Sub-investment
Slide 98: Priority Products Performing Well Given Market Conditions
I N S T I T U T I O N AL PRIORITY PRODUCTS PERFORMING WELL GIVEN MARKET CONDITIONS MARKETS REVENUE COMPOSITION1 MARKETS SALES REVENUE1 HALF ON HALF $m $m Sales Trading Balance Sheet -3% +5% -11% -13% 1,121 1,168 1,060 -19% +5% 547 603 599 574 398 592 529 626 542 516 544 378 FY14 FY15 FY16 FY14 FY15
Slide 99: Managing Cost Through Simplification
I N S T I T U T I O N AL MANAGING COST THROUGH SIMPLIFICATION PROGRESS ON EXPENSE MANAGEMENT EXPENSES IMPACT OF TRANSFORMATION ON EXPENSES $m +1% $m -1% Transformation 2,821 47 2,500 2,798 delivering $105m 52% 63 reduction 49% 2,861 44% 18 2,821 2,798 -105 FY14 FY15 FY16 FY15 FX FY15 D&A Personnel O
Slide 100: Progress On Capital Efficiency Initiatives
I N S T I T U T I O N AL PROGRESS ON CAPITAL EFFICIENCY INITIATIVES TARGETED, CONSISTENT RISK WEIGHTED ASSET REDUCTIONS RWA REDUCTION: 2 YEARS RWA REDUCTION: FY16 $b $b -7% -$16b 12 $37b 198 11 -$14b 182 -7 1 182 1 -21 168 -10 168 -16 -12 -3 Sep 14 FX Growth Dilutive asset Business Sep 16 Sep 15 FX
Slide 101: Balance Sheet Discipline Focus Continues
I N S T I T U T I O N AL BALANCE SHEET DISCIPLINE FOCUS CONTINUES PORTFOLIO MANAGEMENT LOAN AND TRADE BOOK REDUCTION PORTFOLIO BY REGION Net Loans and Advances Targeted Net Loans and Advances $b $b -18% reduction of 118 lower returning 113 118 97 113 97 NLAs 28 24 22 13 54% 53% 43% 19 22 6% 7% 6% 66
Slide 102: Globally Consistent Customer Experience Through Digital Investment
I N S T I T U T I O N AL GLOBALLY CONSISTENT CUSTOMER EXPERIENCE THROUGH DIGITAL INVESTMENT CUSTOMER SOLUTIONS HOST-TO-HOST SOLUTION1 DIGITAL TRANSACTIONAL VOLUMES1 # Cash Mgt customers Continued Host-to-Host rollout driving Transactions (m) uplift +12% +14% 67 135 154 60 118 55 Sep 15 Mar 16 Sep 16
Slide 103: Wealth Australia Financial Highlights
W E ALT H AU S T R AL I A FINANCIAL HIGHLIGHTS EMBEDDED VALUE GROWTH1 REVENUE/ FTE $m $k CAGR +7.9% 14.0% 4,801 +9.5% 4,308 910 70 3,732 843 852 831 3,244 65 60 55 FY13 FY14 FY15 FY16 FY13 FY142 FY153 FY164 CTI % (incl. Regulatory & Compliance costs) Revenue/FTE ($k) INCREASING REGULATORY AND COMPLI
Slide 104: Insurance – Consistent, Diversified Product Mix
W E ALT H AU S T R AL I A INSURANCE – CONSISTENT, DIVERSIFIED PRODUCT MIX COMPOSITION OF RETAIL INSURANCE IN-FORCE STABLE LAPSE RATES1 $m $m % -60bps +2% +6% 14.6% 14.0% 1,569 1,603 1,603 13.5% 13.3% 1,516 1,516 28% 28% 28% 28% 28% 72% 72% 72% 72% 72% 2H15 1H16 2H16 FY15 FY16 FY13 FY14 FY15 FY16 Gro
Slide 105: Funds Management – Simpler, Lower Margin, Lower Risk Model
W E ALT H AU S T R AL I A FUNDS MANAGEMENT – SIMPLER, LOWER MARGIN, LOWER RISK MODEL FUNDS MANAGEMENT AVERAGE FUM1 SMARTCHOICE ACTIVE MEMBERS ARE GROWING % Impacted by investment markets Retail $b +1.9% $b Employer -0.9% 47 47 48 48 48 72% 42% 16% 24% 2H15 1H16 2H16 FY15 FY16 FY14 v FY15 FY15 v FY16
Slide 106: Further Information
Further Information DISCLAIMER & IMPORTANT NOTICE: 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 upo
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