Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — CLSA Conference Hong Kong (September 2011)
57 slides from Anz's conference presentation, September 2011
Slide 1: Investor Discussion Pack
I Investor t Discussion Di i Pack P k Mike Smith Chief Executive Officer AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011
Slide 2: Overview and strategy
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 Overview and strategy
Slide 3: ANZ is structured by Geography & Segment
ANZ is structured by Geography & Segment Asia Pacific, Europe & America (APEA) Retail (including Wealth Commercial Institutional partnerships) Australia Retail Wealth Commercial Institutional New Zealand Retail Wealth Commercial Institutional Institutional is a global business 3
Slide 4: Coherent strategy – driving competitive advantage
Coherent strategy – driving competitive advantage Geographic opportunity • Footprint p - exposure p to Asia’s more rapid p g growth • Growing financial services requirements • Regional connectivity • Strong domestic markets and businesses Building Super Regional capabilities Leading • Bench strength
Slide 5: Delivering Super Regional performance momentum
Delivering Super Regional performance momentum OUTPERFORM AND TRANSFORM OUTPERFORM Realise full 9 Move from a presence to a potential of Super real business in Asia – 14% of Group Earnings Regional aspiration – Beachhead in Greater RESTORE China, SE Asia, India, Mekong 9 Maintain M i i strong d dome
Slide 6: Super Regional - driving long term growth and differentiated returns
Super Regional - driving long term growth and diff differentiated ti t d returns t Denotes two way merchandise trade flow3 Forecast GDP growth1 (% p.a, 2011-14) FDI inward flow2 (USDb, 2009) (2009) KR EU 2 4.0% 4 0% US 1.6% JP UK 12 2.7% 1.6% 2.3% TW Asia-US CN 3 78 5.1% Trade: US$0.8trn 8.7% HK 48
Slide 7: Super Regional connectivity provides a competitive advantage
Super Regional connectivity provides a competitive advantage Growth in trade flows and direct investment between Asia and Australia is tracking at 11% and 26% pa respectively Surplus savings There is approximately $75b in direct foreign Linked through flows of investment into Australia trade, capita
Slide 8: Realising the full potential of Super Regional
Realising the full potential of Super Regional 2017 APEA sourced revenue to drive Aspiration 25% - 30% of Group profit Expanded view of • The more mature our business, the greater our opportunities opportunity in • Increasing our footprint, customers and access to trade, liquidity APEA and investmen
Slide 9: Realising the full potential of Super Regional
Realising the full potential of Super Regional 2017 APEA sourced revenue to drive Aspiration 25% - 30% of Group profit • Continue to build depth in international management and banking experience People p • Well defined succession planning • Remuneration and incentives aligned to delivery of strateg
Slide 10: Growth levers - organic, partnerships and M&A
Growth levers - organic, partnerships and M&A Continued Focus on Organic Growth Leveraging Super Regional connectivity Increasing productivity Focus on core customers Managing the value of ANZ’s Selective M&A opportunities Partnerships • Delivering g access to attractive markets// segments • Disloca
Slide 11: Emerging differentiation
Emerging differentiation • Super Regional Strategy giving us greater exposure to Asia Asia’s s growth • Building blocks in place via both acquisition and investment in capability • Developing p g stronger g customer p propositions p • Driving productivity gains from our hubs • Integrating the Super
Slide 12: Balance Sheet, Capital, Funding & Liquidity
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 Balance Sheet, Capital, Funding & Liquidity
Slide 13: Group loans and deposits
Group loans and deposits Group customer deposits Group net loans and advances (including acceptances) Growth Rates Growth Rates FY07 FY08 FY09 FY10 1H11 FY07 FY08 FY09 FY10 1H11 15% 13% 14% 11% 4% 13% 15% (1%) 4% 2% $b $b 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 Sep 07 Sep 0
Slide 14: Customer deposits by geography
Customer deposits by geography Australia (AUDb) New Zealand (NZDb) APEA (USDb) Growth Rates Growth Rates Growth Rates FY08 FY09 FY10 1H11 FY08 FY09 FY10 1H11 FY08 FY09 FY10 1H11 10% 16% 7% 2% 5% 1% 0% 5% 49% 49% 72% 22% 180 160 140 120 100 80 60 40 20 0 Sep Sep Sep Sep Mar Sep Sep Sep Sep Mar Sep Se
Slide 15: Customer deposit composition by segment
Customer deposit composition by segment Group deposits by segment Deposits composition (AUDb) March 2011 269 259 7 238 7 7 Group 37% 19% 42% 2% 118 113 105 Australia 29% 22% 48% 1% 40 44 40 APEA 77% 23% 99 100 86 New Zealand 19% 29% 44% 8% Mar 10 Sep 10 Mar 11 1 Wealth Retail Commercial Institutiona
Slide 16: Net loans and advances by geography
Net loans and advances by geography Australia (AUDb) New Zealand (NZDb) APEA (USDb) Growth Rates Growth Rates Growth Rates FY07 FY08 FY09 FY10 1H11 FY07 FY08 FY09 FY10 1H11 FY07 FY08 FY09 FY10 1H11 14% 0% 6% 3% 11% (1%) (1%) (1%) large (2%) 45% 19% 300 250 200 150 100 50 0 Sep Sep Sep Sep Mar Sep Se
Slide 17: Lending composition by segment
Lending composition by segment Group lending composition Lending composition by segment (AUDb) March 2011 367 376 353 20 20 18 Group 21% 22% 51% 5% 186 191 Australia 177 19% 17% 59% 5% APEA 80% 20% 84 85 84 New Zealand 7% 54% 37% 2% 73 76 80 Mar 10 Sep 10 Mar 11 Institutional Commercial Retail Mortg
Slide 18: ANZ has a well diversified and improved funding profile
ANZ has a well diversified and improved funding profile that continues to strengthen despite volatile market conditions Strong Funding Composition Minimal offshore short-term wholesale funding; Offshore CP accounts for <2% Short Term Wholesale Customer Funding Funding Shareholders equity & Term Debt
Slide 19: A disciplined focus on core funding sources
A disciplined focus on core funding sources - lessens reliance on short-term wholesale funding, promotes consistency of term debt issuance Stable term funding profile • Deposit growth exceeded loan growth by $14b during FY11 to the end of (AUD billion) August Senior Debt Govt Guaranteed Subordinated
Slide 20: Solid Liquidity position however B3 liquidity requirements remain uncertain
Solid Liquidity position however B3 liquidity requirements remain uncertain Strong liquidity position ($b) Recent Basel III Developments • The implementation of the new B3 liquidity 6.2 5.0 requirements i t remains i subject bj t tto consultation lt ti 7.8 and clarification • Key Definitions includi
Slide 21: ANZ well capitalised and positioned to manage transition to Basel III
ANZ well capitalised and positioned to manage transition to Basel III Basel II Basel III – Core Tier 1 15.5% 14.1% 13.0% 12.1% 11.9% 11.8% 10 7% 10.7% 10 6% 10.6% 10.5% 10.1% 9.5% 9.5% 8.5% 8.3% 7.7% 7.4% 7 0% 7.0% Capital Buffer 11.8% 2.5% Additional Basel 3 Full alignment to 8.5% 8.5% requirements
Slide 22: Basel III implementation timetable in Australia
Basel III implementation timetable in Australia Timetable for implementing Basel III transition in Australia reforms in Australia: 2013 2014 2015 2016 2017 2018 2019 At 1 January • Minimum capital targets from 1 Jan Per cent 2013 (Common Equity Tier 1 1, Tier 1 Mi i Minimum C Common E Equity it Ti T
Slide 23: Risk Management
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 Risk Management
Slide 24: Provision Charge and Impaired Assets
Provision Charge and Impaired Assets Total Provision Charge New Impaired Assets (IP charge by Division, total CP charge) by Division $m $m 1,800 1,621 4,000 1,435 3,600 1,600 3,500 3,126 1 400 1,400 3,035 3,000 1,200 1,098 2,437 2,500 2,319 1,000 Oswal 2,000 722 800 660 1,500 600 1,000 400 200 500 0
Slide 25: Individual Provision Charge
Individual Provision Charge Individual Provision Charge Individual Provision Charge by Segment composition $m $m 2,000 2,000 1,531 1,283 1,062 1,500 762 1,800 594 1,000 1,531 1,600 500 0 1,400 1,283 -500 1,200 1H09 2H09 1H10 2H10 1H11 1,062 New Increased Writebacks & Recoveries 1,000 Individual Prov
Slide 26: Collective Provision Charge
Collective Provision Charge Collective Provision Charge by Source Lending Growth Economic Cycle & Concentration Risk Profile Portfolio Mix $m 500 Total Group Australia New Zealand Global APEA Division Businesses Institutional (ex-Inst.) 400 66 116 (46) 5 (9) 300 56 16 29 12 200 -1 100 79 60 0 -19 -1
Slide 27: Credit Risk Weighted Assets
Credit Risk Weighted Assets Total Credit Risk Weighted Assets Credit RWA movement 1H11 $b $b 257.8 4.6 233.5 0.1 233.2 233.5 233.2 229.8 3.7 220 4 220.4 11 1.1 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 10 Growth Data FX Risk Mar 11 Review Impact 27
Slide 28: Impaired Assets
Impaired Assets Gross Impaired Assets Gross Impaired Assets by Type by Size of Exposure $m $ $m 8 000 8,000 Impaired Loans NPCCD Restructured 6,561 6,561 5,595 6,221 6,000 8,000 4,158 4,000 7,000 6,561 6,561 2,000 6,221 0 6,000 5,595 Oswal Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 5,000 > $100m $10-$99m <
Slide 29: Watch & Control Lists and Risk Grade Profiles
Watch & Control Lists and Risk Grade Profiles Group Risk Grade profile by Watch & Control List Exposure at Default Index Watch List by Limits Mar 2009 Watch List by No. Groups 6% 6% 6% 6% = 100 Control List by Limits 9% 9% 9% 8% Control List by No. Groups 180 13% 13% 13% 12% 160 13% 13% 14% 14% 140
Slide 30: Commercial Industry Exposures
Commercial Industry Exposures Finance & Insurance Property Services Manufacturing 80 14% 80 14% 80 14% 12% 12% 12% 60 60 10% 60 10% 10% 8% 8% 8% 40 40 40 6% 6% 6% 4% 20 4% 20 4% 20 2% 2% 2% 0 0% 0 0% 0 0% Mar 10 Sep 10 Mar 11 Mar 10 Sep 10 Mar 11 Mar 10 Sep 10 Mar 11 Agri, i Forestry & Fishing i hi
Slide 31: Australia 90+ Day Delinquencies
Australia 90+ Day Delinquencies Australia Retail Mortgage Delinquencies 90+ day delinquencies (up to March 11) Total Mortgage Portfolio • South East Queensland – higher than national NSW & ACT Mortgages average unemployment, impacted by stronger AUD (tourism), natural disasters 1.50% QLD Mortgages V
Slide 32: Australia Mortgages
Australia Mortgages Portfolio Statistics Dynamic Loan to Valuation Ratio % Portfolio Total Number of Mortgage Accounts 831k 60% March 2009 50% 19% >80% LVR Total Mortgage FUM $165b 40% March 2011 11% >80% LVR % of Total Australian Lending 59% 30% 20% 11% % of Total Group Lending 44% 9% 8% 10% 2% 0%
Slide 33: Australia Commercial
Australia Commercial Australia Commercial Regional Commercial Banking 90+ day delinquencies 90+ day delinquencies 3 00% 3.00% RCB Total Agri Other Commercial Business Banking 3.00% Regional Commercial Banking 2.50% 2.50% Esanda 2.00% Small Business Banking 1 50% 1.50% 2.00% 1.00% 0.50% 0.00% 1.50% J
Slide 34: The Queensland economy faced challenges before the onset of natural disasters
The Queensland economy faced challenges before the onsett off natural t l disasters di t Unemployment did not experience the Tourism flows have been declining level of decline experienced in the impacted by a strong AUD % national average 2 000 2,000 Net Tourism (lhs) 0 40 0.40 ual Rolling Sum 9.0 A
Slide 35: New Zealand
New Zealand Total Impaired Assets Total Provision Charge NZDm NZDm 2.31% 800 598 2.13% 600 400 291 330 1.89% 2,236 131 85 200 2,079 0 1,837 -200 1H09 2H09 1H10 2H10 1H11 1.24% IP Charge CP Charge 90+ Days Arrears 1,220 1.20% Mortgages 0.64% Commercial Rural 639 0.80% 0.40% Mar 09 Sep 09 Mar 10 Sep 1
Slide 36: Economic Update
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 Economic Update
Slide 37: Current Account Deficit – Government sector takes over from the banks
Current Account Deficit – Government sector takes over from the banks 15 % of GDP Current account deficit 10 5 0 5 -5 Securitisers Private Corporate Net debt Govt. Debt (incl NFC) Bank net borrowing -10 Net equity Current account deficit 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Slide 38: Bank sector balance sheets less reliant on wholesale funding and short-term debt
Bank sector balance sheets less reliant on wholesale funding and short-term sho t te m debt Bank liabilities Bank debt liabilities 200 300 150 4-quarter change 250 Debt issuance 100 Long-term 50 200 0 Short-term Short term $bn, 4 -50 150 -100 arter change -150 100 06 08 10 $bn, 4-qua 200 50 Deposits
Slide 39: Record terms of trade will drive investment and economic growth
Record terms of trade will drive investment and economic i growth th Annual private business capital expenditure (capex), actual and expected 120 Early estimates indicate Mi i Mining M Manufacturing f i O h industries Other i d i a $100bn mining capex spike in 2011-12 100 80 $bn p..a., nominal 60 40
Slide 40: A strong outlook for natural resources investment
A strong g outlook for natural resources investment Advanced minerals and energy projects, April 2011 Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 40
Slide 41: Third Quarter Trading Update
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 Third Quarter Trading Update
Slide 42: Third quarter trading update - August 2011
Third quarter trading update - 19 August 2011 Highlights: $m • YTD (9 months to end June) underlying 3 100 3,100 profit after tax1 up 16.1% PCP 2,818 2,727 • YTD deposit growth exceeded loan 2,600 growth by $14b 2,298 • Group margin (ex Markets) up 2bps from 1H11 2,100 1,908 1,864 • Provision covera
Slide 43: Business update
Business update ANZ has continued to execute its Super Regional Strategy and remains well placed for future opportunities In Australia, there was strong deposit growth, improving credit demand in the business and mortgage segments and improving delinquency trends in the mortgage portfolio In APEA, l
Slide 44: 2011 Interim Results
I Investor t Discussion Di i Pack P k AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED September 2011 2011 Interim Results
Slide 45: 2011 interim results
2011 interim results 1H11 Growth Growth AUDm vs 2H10 vs 1H10 Underlying Profit 2 818 2,818 3% 23% Revenue 8,430 3% 11% Expenses 3,821 3% 18% Provisions 660 (9%) (40%) EPS (cents) 109.6 2% 20% Customer deposits 268,705 4% 13% Net loans and advances including acceptances 375,833 2% 7% Performance by D
Slide 46: Adjust for acquisitions & FX – The Pro forma Numbers
Adjust for acquisitions & FX – The Pro forma Numbers Growth 1H11 v 2H10 – Underlying & Pro forma Profit before Revenue e e ue Expenses pe ses Net et Profit o t after a te Tax a P Provisions i i 5.5% 4.1% 4.1% 4.1% 3 4% 3.4% 2.6% 2.6% 2.7% Underlying Pro Forma Underlying Pro Forma Underlying Pro Form
Slide 47: Foreign Exchange impacts
Foreign Exchange impacts Earnings Composition by Region Earnings Per Share Impact & Average Translation Rates %G Group U Underlying d l i profit fi Current Hedging Unhedged 100% 1.40 ~(3.1%) 90% 1.30 80% 1 20 1.20 (2.5%) 70% 60% 1.10 (1.9%) 50% 1.00 ~(1.5%) 40% 0.90 30% 0.80 20% 10% 0.70 0% 0.60 2H0
Slide 48: Income composition
Income composition Income movement (Pro forma) Markets Revenue by Geography 1H11 v 2H10 ($m) $m 1,600 , 23% CAGR 1,200 800 Markets Mix Impact 8,430 400 234 1H08 2H08 1H09 2H09 1H10 2H10 1H11 Australia APEA New Zealand Pro forma NII movement 1H11 v 2H10 Up 9% $m 220 94 5,642 8,102 5,548 Up 2% 126 Up
Slide 49: Net Interest Margin
Net Interest Margin bps Movement 1H11 V 2H10 7.2 249.7 1.3 247.2 1.0 0.4 4.2 5.4 278.0 Up 2.9 bps Ex-Markets 280.9 Down 2.5 bps 2H10 Funding Funding Costs Deposits Assets Other Markets 1H11 & Asset Mix Movement 1H11 v 1H10 (bps) Funding & 1H10 Funding Costs Deposits Assets Other Markets 1H11 Asset M
Slide 50: Net Interest Margin
Net Interest Margin Net Interest Margin HOH Composition of margin relative to peers 2.70% 2.50% • Key differentiator is asset mix: g g • Mix of mortgages 2.30% • Institutional lending • Greater proportion of undrawn 2.10% 0% lines which are included in NII but not assets • Line fees included in NII
Slide 51: Investment continues in high growth businesses
Investment continues in high growth businesses Revenue & Expense Growth Pro forma 1H11 v 2H10 Mature Domestic Investing for Growth Businesses 18% 14% 8% 4% 4% 3% 1% -4% 4% Australia Division New Zealand Asia Pacific Institutional Businesses Europe & America Revenue growth Expense growth 51
Slide 52: Australia Division – Business update & strategy
Australia Division – Business update & strategy ANZ Australia delivered a solid outcome • Mortgages g g g growth 1.2x system y and customer Multiple of system (1H11)1 deposit growth 1.6x system for the half • Increased commercial customers - ANZ Household 1.2x Commercial Banking customers2 rose by l
Slide 53: APEA - Business update and strategy
APEA - Business update and strategy The APEA business continues to grow via organic build of customer relationships and core capabilities, and inter-connectivity across the network, together with Partnerships Performance Highlights • APEA derived revenue delivers an additional 3% of Group revenues o
Slide 54: New Zealand – simplifying structure, systems and processes
New Zealand – simplifying structure, systems and processes Simplifying our structure to be more customer focused • Management structure change will deliver greater external focus and faster decision making while reducing costs ¾ Moved from six national management structures to three across Retail, B
Slide 55: Institutional Division
Institutional Division Making Clear Progress on our Strategy Growing connectivity driven revenue • Growing our client base and diversifying our geographic mix: ¾ Brought on 676 new Institutional, Corporate and Financial Institutions clients in the past half, a 10% increase HOH Domestic ¾ ANZ recogni
Slide 56: Institutional - laying foundations for the future
Institutional - laying foundations for the future Foundations Laid Revenue Contribution by Product • Strengthened the Institutional Leadership Team, additional team members with i t international ti l experience i 1H11 Mix Target Mix • Starting to execute the technology and operations roadmap • Impr
Slide 57: www.anz.com
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 — CLSA Conference Hong Kong (September 2011) on 6ix