Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Investor Day (September 2005)
116 slides from Anz's investor day presentation, Sep 28, 2005
Slide 1: A focus on our customers has protected our customer base
*Source: ACNielsen © Consumer Finance Monitor. Sample size is 2500 per quarter; excludes ‘Don’t Know/Refused’ & ‘No Bank Accounts’ A focus on our customers has protected our customer base • The focus since acquisition has been on maintaining our customer franchises and building the business. • The A
Slide 2: Personal Segment: Share of Main Bank Customers
Personal Segment: Share of Main Bank Customers* (rolling Four quarter) 20% 22% 20% 18% 18% 16% 10% aos 4% O% igi zat o3qi ofet oq
Slide 3: A small loss of share in mortgages, but both brands improving
• We have retained our share in the competitive deposit market. • The ANZ on-line call account product has been a major success since launch in December 2004 *Source: ACNielsen© Consumer Finance Monitor. Sample size is 2500 per quarter; excludes ‘Don’t Know/Refused’ & ‘No Bank Accounts’; **Based on
Slide 4: In Institutional, we have strengthened our position following integration
• The gradual erosion of home loan market share has improved since integration • Alignment of our credit policies resulted in an improvement in our share of growth in September 2004. * Share of growth based on share of increase in balances over past 12 months In Institutional, we have strengthened o
Slide 5: Improvement based on excellent customer relationships
• • #1 domestic lead bank share (45%) • #1 in Trade – share (48% lead bank) and satisfaction • #1 in FX – share (51% lead dealer) and relationship • #1 in Interest Rate Derivatives –share (59% lead dealer) and relationship • #1 in cross sell of syndications and bond originations. • #2 Transactional
Slide 6: Gains have been made without leading the market down on price
Gains have been made without leading the market down on price.
Slide 7: Relationship Strength and New Zealand forecasts
Source: Peter Lee Associates Corporate and Institutional Relationship Banking 2005 Relationship Strength Index – based on a measure of all qualitative questions – from 0 = lowest to 1000 = highest Summary of forecasts – New Zealand (bank year) New Zealand 2003-04 2004-05 2005-06 2006-07 Real GDP 4.7
Slide 8: ANZ Strategy Day September 2005 Agenda
ANZ STRATEGY DAY 7 SEPTEMBER 2005 AGENDA Level 34, 100 Queen Street, Melbourne 10:00 am Welcome Stephen Higgins Head of Investor Relations 10:05 – 10:30 Group Overview (no Q&A) John McFarlane Chief Executive Officer 10:30 – 11:00 Corporate (inc Q&A) Graham Hodges Group Managing Director, Corporate 1
Slide 9: ANZ is positioned to become Australasia's leading major bank
ANZ is positioned with a track record to become Australasia’s leading, most-respected and fastest-growing major bank • Strengthened strategic position: Now #2 by number of personal customers across Australia/NZ 80% relative market capitalisation to leaders Only Australian bank with experience and ta
Slide 10: We are now the 2nd largest bank by number of customers
(1) - - Based on share of main bank relationships In our domestic markets, we are now the 2 nd largest bank by number of customers Dominant in NZ
Slide 11: Highest staff engagement of major Australian companies
* Source: Roy Morgan Research – Main Financial Institution 6 monthly moving average Highest staff engagement of major Australian companies Satisfaction measures no longer sufficient
Slide 12: A leader in corporate responsibility
Note: Average Total Share Holder Returns (TSR) 1999-02 avg Source: Hewitt Associates, August 2005 A leader in corporate responsibility • 100% for community management practice on Corporate Responsibility Index • “Community Involvement” No.2 value evident in ANZ’s culture according to our staff (Cust
Slide 13: One of the most efficient banks in the world
* Wallace Associates, Base: Total Metro Population 18+ (2M: Wtd MFI) One of the most efficient banks in the world Cost to Income Ratio For Top 100 Banks
Slide 14: Low risk
Low risk Non Accrual Loans as % of Total Advances (excl mortgages)
Slide 15: ANZ's strategic priorities
ANZ’s strategic priorities Maintain narrow geographic focus • Build a stronger strategic presence in Australia • Defend leadership in NZ, invest in underweight segments, and secure the benefits from integration • Expand selectively in emerging Asia – Pacific markets Actively manage portfolio of spec
Slide 16: Systematic approach to growing revenues by 7-9%
Systematic approach to growing revenues by 7-9% Defend Clients Defend existing clients to reduce natural customer attrition New Waves Position in next growth wave segments Growth Markets Build share where the pie is growing, rather than in stable markets Adjacent Markets Attack adjacent markets by l
Slide 17: Domestically, population growth is key
* Source – estimates by economics@anz # - East Asia ex Japan, Singapore, HK, China Domestically, population growth is key – focus on growth corridors
Slide 18: Invest in high growth priority areas
Invest in high growth priority areas, improve return from low growth areas or de-emphasise Australia & New Zealand
Slide 19: Total Shareholder Return premium over country index
ANZ Position Continue focus on costs and grow revenues Bain research on 150 global banks Total Shareholder Return (TSR) premium over country index
Slide 20: Specialisation has created strong accountability
Note: TSP premium (TSRp) over country index = 4yr bank TSR CAGR – 4 yr country (MSCI) index TSR CAGR; NLP is net loan provisions Source: Bain & Company Specialisation has created strong accountability
Slide 21: Achieving a low 40's Cost Income Ratio
How we responded so promptly • Anticipated the competitive threat and had a response ready to roll out, having completed test campaigns and detailed customer research Achieving a low 40’s Cost Income Ratio
Slide 22: Summary
No magic bullet - good execution across a range of initiatives • Technology simplification • Head office & overhead reduction • Leverage NZ integration • Centralisation of common operational activities • Key process re-engineering • Leverage low-cost offshore capability But – customer roles protecte
Slide 23: Total shareholder return and community investment
Total shareholder return since 1998 21% CAGR Our community investment strategy is leading practice Increasing the financial literacy and inclusion of adult Australians, particularly the most vulnerable MoneyMinded • Financial education program for adults facing financial difficulty. • Delivered by c
Slide 24: Corporate Division overview
Corporate Division overview Corporate Banking • Ranges from relationship banking to sophisticated financial solutions • Turnover between A$10m – A$150m • ~ 3000 customers Business Banking • Traditional relationship banking • A$50k business FUM to ~A$10m turnover • ~ 38,000 customers Small Business B
Slide 25: Successful track record of low risk growth
*excl. significant items and incremental integration costs We have a successful track record of low risk growth • Previous NPAT commitments 1. In 2001 15% NPAT CAGR in Business Banking to 2004 2. In 2003 double digit earnings growth for segment to 2005 • Increased revenue per FTE whilst growing foot
Slide 26: Increasing revenue per FTE whilst growing footprint
Increasing revenue per FTE whilst aggressively growing footprint # …
Slide 27: Good market conditions: significant opportunity
# Business Banking Good market conditions : Significant opportunity… Solid Business Credit Growth Forecast* (% annual change)
Slide 28: Lowest likelihood to switch Business Banks
…driving lowest likelihood to switch Business Banks*
Slide 29: Clear growth agenda with synergies across the businesses
*Source – TNS Business Finance Monitor We have a clear growth agenda with synergies across the businesses Strategy Corporate Banking Business Banking Small Business Banking Wall St to Main St Footprint Expansion Industry/Product Specialisation Deepen Share of Wallet Brokers as upside option Process
Slide 30: Focus and investment driving SBB business lending
Increased focus and investment driving SBB business lending
Slide 31: Summary
Summary Growth • Not a new journey, our team and track record are strong • Fundamentally, its about deepening existing relationships and winning new customers • Goal: Double digit earnings growth to 2008 Transformation • Strength of customer propositions driving market success (satisfaction, share,
Slide 32: Strong position in Corporate segment
Strong position in Corporate segment Strong Customer Satisfaction supporting Corporate proposition*
Slide 33: Strong credit quality driving low specific provisions
Strong credit quality driving low specific provisions
Slide 34: Share of primary deposit balances
Share of Primary deposit balances*
Slide 35: Share of primary lending balances
Share of Primary lending balances*
Slide 36: Business Banking financial performance and balance sheet growth
*Source – Roberts Research Business Banking – a good track record of financial performance and balance sheet growth Strong NPAT growth
Slide 37: Strong revenue and controlled cost growth
Strong revenue and controlled cost growth delivering good NPAT and CTI performances
Slide 38: Solid lending and deposit growth
*1H05 Annualised Solid Lending & Deposit growth
Slide 39: Lending and deposits
1s 10 a $b 2H03 "Lending Hos ™ Deposits 2HO4 1HOS
Slide 40: Strong Business Banking credit quality
Strong Business Banking credit quality Portfolio is well secured across different risk bands
Slide 41: Driving low specific provisions
Driving low Specific Provisions (accounting for ~2% of FY04 Group Net SP’s)
Slide 42: Behavioural risk profiles remain low
Behavioural risk profiles remain low % of customers exhibiting higher risk characteristics *
Slide 43: Strong Business Banking cash flow
Strong Business Banking Cash Flow (Est. % of GST payments from cash deposits)
Slide 44: Simple growth strategy in Business Banking
*Drop in Mar ‘03 partly due to scorecard enhancement **1H05 annualised Simple growth strategy in Business Banking - key is execution Business Banking has followed a structured and sustainable approach to achieving organic growth. Its core components are outlined in the stylised model shown below: •
Slide 45: Continued revenue growth whilst investing in footprint
We have continued to grow revenue whilst heavily investing in our footprint • Footprint investment has generated good returns • Revenue per FTE has increased in most regions • Investment focus remains on high growth geographies i.e. WA, QLD • De-leveraging of customer sets over recent years provides
Slide 46: Total revenue and FTE by state
TOTAL REVENUE 50 o ee 17%, o> ban 2% v 2057 ¢—> WA/SA 25% QLD 25% @1HO3 ™1HOS 100 150 200 FTE's 250
Slide 47: Esanda overview
Esanda overview
Slide 48: We have improved our core business performance
*excl. significant items and incremental integration costs We have improved our core business performance • We have delivered consistent NPAT growth through improving our core businesses • Cost to income reduced from ~50% to ~40% since 2000, despite increased investment in frontline FTE • Risk profi
Slide 49: Cost to income efficiency
50% 47% 44% 41% 38% 35% 49.5% 40.3% 2000 2001 2002 2003 2004 1HOS_
Slide 50: Retaining leadership is getting harder
Retaining leadership is getting harder • Asset finance market undergone significant shifts in size and competitive intensity • Highly fragmented market with many new entrants and wide ranging strategies • Consolidators (eg. GE) • Monoliners (eg. Flexirent) • Captives (eg. BMW finance) • Market growt
Slide 51: Estimated consumer and commercial outstandings
Estimated consumer and commercial outstandings
Slide 52: Strategic focus on revenue growth, strengthening core businesses
Our strategic focus is on revenue growth, starting by strengthening our core businesses… Responding to these pressures by re-doubling our focus on our core businesses and strengths • Retention & acquisition in dealer & broker channels • Growing phone & internet channels • Leveraging ANZ for Commerci
Slide 53: Share of the Total Auto Finance Market
Esanda Share of the Total Auto Finance Market (Consumer & Commercial)
Slide 54: Leveraging core capabilities to capture growth opportunities
…and then leveraging core capabilities to capture growth opportunities New markets & channels • Enter the market for private sales of vehicles • Leverage ANZ product expertise through cross-selling activities Growth asset classes • Expand Fleet capabilities into the Yellow Goods market Markets requi
Slide 55: Esanda Group - Business Overview
Esanda Group – Business Overview C&PR Commercial Asset Finance Fleet Mgt Services(1) Savings & Investments(1) UDC Finance(1) Business Profile Auto finance to consumer & commercial customers via car dealerships, brokers and directly over the phone, internet & branches Wholesale finance to dealers App
Slide 56: Competitor types in asset finance
Monoliners: • Monoliner focusing on specific asset class (eg. IT), distribution channel (eg. Retail chains) or risk category (eg. Non-prime) • High expertise in niche • Low regulatory oversight Banks or bank-owned: • Able to leverage customer relationships • Leverage product suite, particularly for
Slide 57: wat
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Slide 58: Esanda Online Saver momentum
(1) By outstandings (2) UMV (used motor vehicles), NMV (new motor vehicles) Source: ABS, RBA, ANZ Business Unit Financial Statements, Esanda Data, ABA, GSD Analysis, Esanda, Team Analysis 5 months into National launch and momentum has been building for the Esanda Online Saver • Esanda Online Saver l
Slide 59: Alison Hardacre
Source: Esanda finance team; Alison Hardacre
Slide 60: Institutional Division overview
Institutional Division overview Client Relationship Group • Clients with turnover above A$150m • ~ 1500 clients Markets • FX • Capital Markets • Commodities Trade and Transaction Services • Trade finance • Transaction banking services for Institutional and Corporate clients • Custody Corporate & Str
Slide 61: The market is growing, but intensely competitive
*excl. significant items and incremental integration costs The market is growing, but intensely competitive… Corporate debt trends
Slide 62: Reducing credit spreads have adversely impacted margins
Reducing credit spreads have adversely impacted margins
Slide 63: Revenue drivers are changing
…and the revenue drivers are changing Industry revenue pools*
Slide 64: Lead Relationship Market Share
* Covers corporate and institutional revenue pools During de-risking process, not enough focus on external market – no longer #1… Lead Relationship Market Share (%) * 2002-2005
Slide 65: A good base to build on
… but a good base to build on * • Strongest in relationship manager capability • Strongest advisor in complex and structured finance products • Best in understanding client funding and capital needs • Best understanding of clients offshore banking needs • Leader in Trade Finance services • Strongest
Slide 66: Winning back our #1 position
Step 2 - winning back our #1 position Building some essential capabilities Right people • retain and recruit key talent • improve training Right products • build up debt capital markets and alternative asset capabilities Right structure • successful integration of capital markets and foreign exchang
Slide 67: Some early successes
Some early successes Wins in the market • Capital markets league table improved to 8 th from 12 th * over past 12 months • First Kangaroo Bond issue • Sell down of Energy Infrastructure Trust • Four PPP deals done including Royal Women’s Hospital • Largest CMBS transaction in Australian market • Fir
Slide 68: Growth in higher quality assets
Growth in higher quality assets…
Slide 69: Lower specific provisions
…reflected in lower specific provisions
Slide 70: Net lending and specific provisions
0.55% 50 0.45% 0.35% 40 0.25% a 0.15% 0.05% 20 -0.05% 1HO32HO3. «= 1HO4 = -2HO4. HOS. MMENet Lending (A$b) —®=% SPs/Net Lending
Slide 71: Business Unit Details - Client Relationship Group
• One client coverage team • Three product areas delivering into it • Three geographies Business Unit Details – Client Relationship Group Client Relationship Group provides customised products and financial service solutions to large corporate, multinational, institutional and government clients glo
Slide 72: Slide 72
Slide 73: Credit quality and customer satisfaction indicators
B+ to CCC 3.0 % 3.2 % 1.9 % 1.8 % 0.7% Non Accrual 1.7 % 1.6 % 1.3 % 1.1 % 0.6% * March 2005 & September 2004 includes NBNZ Customer Satisfaction Indicators ANZ satisfaction scores
Slide 74: Metrix Global Banking Survey 2005
Source: FI Metrix Global Banking Survey 2005 Highlights • Survey of International Financial Institutions rating the product and service quality of ANZ compared to other local banks • Respondents maintain relationships with an average of 3 Australian banks, one of which is ANZ for nearly all responde
Slide 75: Staff engagement
These engagement scores were recorded at a time of significant structural change in the business. We are committed to improving the level of staff engagement to above the banking and finance average and have put in place a number of initiatives during 2005 to facilitate this
Slide 76: Upside from moving nearly engaged staff to engaged
Substantial upside from moving some of these “nearly engaged” staff to “engaged” staff
Slide 77: Personal Division overview
Personal Division overview Mortgages • ANZ Proprietary & Third Party mortgages • Origin Wholesale business Banking Products • Transaction & deposit accounts, Margin Lending, Trustees Consumer Finance • Credit Cards • Personal Lending Regional & Rural • Commercial & Agri-products sold in Regional are
Slide 78: Personal banking remains an attractive market
*excl. significant items and incremental integration costs Personal banking remains an attractive market We are operating in a favourable credit growth environment
Slide 79: FY05 Credit Growth Forecasts (Aust.)
FY05 Credit Growth Forecasts (Aust.) • Mortgages 15% • Other Personal Credit 14% • Deposits 8.5% Housing credit includes housing & other personal credit Source – ANZ Economics With a number of clear market segments
Slide 80: Customer insights drive our strategy
ANZ’s focus is on • Service driven prime and premium segment • Defending share via price as necessary • ‘Price’ is only one potential lever to secure premium customers Customer insights drive our strategy Key Decision Factors for Customers (importance out of 10) Why would customers choose to bank wi
Slide 81: Differentiating ANZ on convenience and simplicity
People increasingly “time poor” – looking for convenient, simple solutions Differentiating ANZ on “convenience and simplicity” • “More Convenient Banking” • $5 transaction account • 24 x 7 Call Centre • “Bank of the Year” • New service channels e.g. brokers, Mortgage Solutions to extend reach • More
Slide 82: Building a sustainable competitive advantage
We are building a sustainable competitive advantage… • leading main bank customer satisfaction • a highly engaged workforce • best-in-market product set – Personal Investor Bank of the Year last six years • investing in a strong brand • reducing support costs to invest in marketing and distribution
Slide 83: Leading major bank customer satisfaction
% 80 50+ Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- 01 01 02 O02 03 03 04 04 05 —ANZ —=Closest major peer —~Ave. Peer Banks
Slide 84: Delivering market share gains
# Source: Roy Morgan Research – Main Financial Institution Satisfaction % Satisfied (Very or Fairy Satisfied), 6 monthly moving average * Hewitt Research …that is delivering market share gains ANZ is now the #3 Retail Bank in Australia (share of Main Financial Institution*) Delivering above system g
Slide 85: Our organic growth philosophy is simple
Product ANZ System Mortgages % ~14 % Cards % ~13 % Retail Deposits % ~8 % * Source: Roy Morgan Research – Share of Main Financial Institution 12 monthly moving average ** 12 months to July 2005, mortgages data sourced from RBA Our organic growth philosophy is simple… 1. Acquire New Customers • under
Slide 86: Strong customer acquisition
15 new branches in FY05 Strong customer acquisition (Access Accounts)
Slide 87: Increase customer awareness
Increase customer awareness
Slide 88: Increase share of wallet
~$4m spent on signage in FY05 2. Increase Share of Wallet • engineer cross sell into front-end acquisition process • build strong CRM “backend” sales capability • grow financial planning footprint to drive JV FUM growth • integrate cross sell into third party channels Positive share of wallet trends
Slide 89: New customers taking a mortgage plus additional products
% new customers taking a Mortgage plus 2 or more additional products
Slide 90: Retain customers
*Source: Roy Morgan Research – Traditional Banking 12 monthly moving average 3. Retain Customers Engaged Staff + Deep Customer Insight + Market Leading Products + Increased convenience +
Slide 91: We still have large growth opportunities
*Roberts Research Group We still have large growth opportunities • 89% of the market doesn’t bank with us…..yet! • Improving our needs assessment and cross sell at point of sale • Increasing share of wallet (“SOW”) with existing customers • Increasing our footprint in high growth areas • Extending o
Slide 92: Summary
Summary Growth • Building share, now #3 retail bank • Expanding distribution footprint • Deepening customer relationships • Goal: Double digit earnings growth thru Transformation • Strong and differentiated brand position: “ More convenient banking ” • Specialist product focus delivering simple, awa
Slide 93: Customer service improving, risk of defection falling
*in 2005 the Group shifted to measuring staff engagement, a more robust measure and closer aligned to shareholder value We are continuing to improve our customer service Risk of defection is falling* (customers moved or seriously considering moving)
Slide 94: Branch wait times have shortened
Branch wait times have shortened (% customers served within 5 minutes)
Slide 95: Call handling in our Contact Centre has improved
Source: branches with Qmatic systems Call handling in our Contact Centre has also improved (% first point contact resolution)
Slide 96: Branch Mystery Shopping results are strong
Branch Mystery Shopping results are strong (mystery shopping score)
Slide 97: Mortgage retail market share has grown
Source: Gap Busters & CBS; Metro and Rural networks Mortgage retail market share has grown Australian Mortgage Lending
Slide 98: ANZ Market Share
Source: ANZ Economics; RBA, Annual reports, (includes Equity lines) ANZ Market Share
Slide 99: Mortgages Market Share
* “Mortgages Retail” represents ANZ branded mortgages sourced from our own distribution network and brokers. “Total Mortgages” includes white-labelled mortgages written through our Origin subsidiary Mortgages Market Share as at Mar 05
Slide 100: Loan Size
* Based on half to date. **Std Variable includes Equity Loans Loan Size
Slide 101: Mortgage sales and FUM growth remain strong
Mortgage Sales & FUM growth remain strong Monthly Sales (ANZ Retail)
Slide 102: Annual Growth by State for Mortgages Retail
Annual Growth by State for Mortgages Retail (12 month period ending June 05)
Slide 103: Monthly Prepayment Rates
Monthly Prepayment Rates (Payment in advance of schedule)
Slide 104: Mortgage Solutions Sales and FUM
Mortgage Solutions Sales and FUM
Slide 105: ANZ network channels performing well
ANZ network channels performing well Mortgages Referrals – conversion rates remain at high levels
Slide 106: Mortgage Solutions Sales and FUM
Mortgage Solutions Sales and FUM
Slide 107: ANZ Network accounts for majority of Home Loans
ANZ Network accounts for majority of Home Loans (Loans Outstanding)
Slide 108: Rollout of ANZ Mortgage Solutions Franchises
Rollout of ANZ Mortgage Solutions Franchises
Slide 109: Origin remains an important part of Mortgage's growth strategy
*2H05 to date Origin remains an important part of Mortgage’s growth strategy • Origin acts as a mortgage wholesaler by acquiring retail mortgages from Mortgage Managers and holding them on ANZ’s balance sheet or securitising them via the issuance of RMBS. • Origin remains a sizeable part of ANZ Mort
Slide 110: Transaction Savings and ANZ Online Saver
sm 350 318 300 250 200 150 100 Dec. Jan- Feb Mar- Apr> May Jun- Jul 0¢ 05 05 05 05 05 05 05 Transaction Savings ANZ Online Saver
Slide 111: Majority of FUM from competitor offerings
Majority of FUM from competitor offerings
Slide 112: Solid Wealth Management distribution
Solid Wealth Management distribution Network Referrals
Slide 113: asa
12,486 asa see asi ave 11,088 12,027 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05
Slide 114: Mar-04 Jun-05
45% 39% Mar-04 Jun-05
Slide 115: Improved momentum in Insurance Risk Sales
Improved momentum in Insurance Risk Sales (3 monthly rolling average)
Slide 116: Disclaimer and investor relations contact
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
Australia and New Zealand Banking Group — Investor Day (September 2005) on 6ix