Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Debt Investor Presentation (November 2017)
80 slides from Anz's debt investor presentation, November 2017
Slide 1: 2017 Full Year Results Debt Investor Update
2017 FULL YEAR RESULTS DEBT INVESTOR UPDATE AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED NOVEMBER 2017 ANZ staff volunteers helping out on Daffodil Day to raise vital funds for Cancer Council Australia. Volunteers used ANZ BladePay™ devices powered by the Shout app to facilitate cashless purcha
Slide 2: Important Information & Disclaimer
I M P O R TA N T I N F O R M AT I O N & D I S C L A I M E R The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose the
Slide 3: Contents
CONTENTS 2017 FULL YEAR RESULTS FY17 RESULTS CEO FY17 Results Presentation 4 FY17 Group Financial Performance 12 FY17 Divisional Performance 21 Corporate Profile, Strategy and Sustainability 31 Group Treasury 33 Risk Management 41 Housing Portfolio Trends 56 Economics 66 All figures within this inve
Slide 4: Assumptions Underlying New Strategy
A S S U M P T I O N S U N D E R LY I N G N E W S T R AT E G Y OPERATING ENVIRONMENT 1. Constrained sector growth (High household debt, subdued business investment) 2. Changing customer preferences (More digital, more third party advice) 3. Industry transformation (Open data, new technologies) 4. Gro
Slide 5: Better Placed to Win
BETTER PLACED TO WIN GETTING FIT FOR PURPOSE Sustainable growth New operating model Rebalancing FY16 FY17 FY18 FY19 onward DRIVERS OF SUSTAINABLE GROWTH 1. Focus 2. Speed 3. Digital 4. Culture • A few things done • Listen to customers, • Balances digital • Stronger sense of core extremely well test,
Slide 6: A Better Balanced Bank
A BETTER BALANCED BANK CAPITAL ALLOCATION SEPTEMBER 2015 SEPTEMBER 2016 SEPTEMBER 2017 (%) Includes announced asset disposals2 Institutional1 Retail & Commercial Wealth RORWA 2.93% 2.55% 2.75% (Pre provision) RORWA (Post provisions) 1.90% 1.48% 1.73% NOTE: Allocation based on Regulatory Capital. 1.
Slide 7: Drivers of Performance
DRIVERS OF PERFORMANCE COST DISCIPLINE INSTITUTIONAL CREDIT RWAs $m $b 169 5,488 142 123 4,951 4,731 4,717 Sep 15 Sep 16 Sep 17 LEANER ORGANISATION Full time equivalent staff #s 50,152 46,554 44,896 1H16 2H16 1H17 2H17 Sep 15 Sep 16 Sep 17 7
Slide 8: Where We Can Win
WHERE WE CAN WIN STRATEGIC FOCUS 1. By being the best bank for people • ~250,000 net new retail customers • Bought and leveraging RealAs property ready who want to buy and own a • For the first time >1m home loan accounts in Aus. home, or start, run and grow a • Held #1 Market share in NZ Home Loans
Slide 9: How We Will Win
HOW WE WILL WIN COST PLUS CUSTOMER EXPERIENCE CONVENIENT, ENGAGING CUSTOMER SOLUTIONS Expanded digital channels • Digital Branches • Smart ATMs • Digital sales Leading the payment revolution (the only major bank supporting all mobile wallets) Voice Biometrics • Android PayTM • Apple PayTM • Apple Wa
Slide 10: How We Will Win: Culture
HOW WE WILL WIN CULTURE • Clarified ANZ Purpose, Values, Expectations • Long term focus on engaging our people • Rebalancing performance scorecards • Changing what we expect from leaders • Protecting social licence • Engaging with community and regulators 10
Slide 11: Key Indicators
K E Y I N D I C AT O R S FY15 FY16 FY17 14.0 10.3 11.9 Return on equity (%) Cash earnings per share (cents) 260 203 237 Economic profit (% growth year on year) -13 -56 +38 CET1 ratio (%) 9.6 9.6 10.6 NTA / Avg share ($) 16.9 17.1 17.7 Operating Expenses (% growth year on year) +6.8 +11.1 -9.5 Profit
Slide 12: Financial Update and Divisional Performance
2017 FULL YEAR RESULTS FINANCIAL UPDATE AND DIVISIONAL PERFORMANCE
Slide 13: Headline Financial Performance
HEADLINE FINANCIAL PERFORMANCE FY17 Change ($m) (FY17 vs FY16) Statutory Profit 6,406 12% Cash Profit 6,938 18% Operating Income 20,489 -1% Operating Expenses 9,448 -9% Profit Before Provisions 11,041 9% Provisions 1,199 -39% Cash EPS (cents) 237 17% Dividend per share (cents) 160 Stable Cash ROE (%
Slide 14: Financial Performance Drivers
FINANCIAL PERFORMANCE DRIVERS CASH PROFIT – FULL YEAR 2017 BUSINESS PERFORMANCE – FULL YEAR 2017 $m $m 550 6,938 5% excluding derivative valuation adjustment 800 231 599 700 -100 600 -100 550 331 -48 5,889 500 -52 400 From -$71m (FY16) 300 to +$160m (FY17) 86 200 102 8.5% 17.8% 100 0 FY16 Cash FY16
Slide 15: Risk Adjusted Margins & Returns
RISK ADJUSTED MARGINS & RETURNS TOTAL GROUP DIVISIONS2 NET INTEREST INCOME (NII) / AVERAGE CREDIT RWA1 NII / AVERAGE CREDIT RWA1 (%) Aus. ~150bp 4.54% 4.59% 4.39% 4.52% due to RWA changes 7.14 6.65 5.82 5.74 4.79 4.72 4.78 4.87 1.94 2.05 2.09 2.14 1H16 2H16 1H17 2h17 1H16 2H16 1H17 2H17 Aus. NZ (NZD
Slide 16: Income Drivers
INCOME DRIVERS TOTAL INCOME TOTAL INCOME GROWTH $m 10,325 10,269 10,303 10,186 Half Year growth Full Year 1,046 (vs prior half) growth 1,402 1,512 1,255 % 1H17 2H17 FY17 Group 0.3 -1.1 -0.5 2,945 2,469 Australia 0.3 2.8 2.1 2,716 2,464 New Zealand (NZD) -0.1 2.4 1.8 Institutional 19.5 -16.2 4.5 1,57
Slide 17: Group Net Interest Margin
INCOME DRIVERS GROUP NET INTEREST MARGIN GROUP NET INTEREST MARGIN NIM 2H17 TIMING IMPACTS bp 1 1 3rd Quarter 4th Quarter 2 1 200 Home loan repricing * * -2 -1 198 Home Loan switching * +2 -3 -1 Asia Retail exits * * -2 (China, Singapore) (& Hong Kong) Bank Levy * 1H17 Funding Funding Major Deposits
Slide 18: Expense Drivers
EXPENSE DRIVERS FULL YEAR 2017 EXPENSES1 DIVISIONAL EXPENSE CONTRIBUTION1 $m $m 10,439 4,783 4,805 4,731 4,717 55 124 9,448 1,077 1,100 1,059 1,037 -851 -305 -14 -1% 1,460 1,406 1,379 1,357 587 618 600 593 1,659 1,681 1,693 1,730 FY16 FY16 Personnel Premises Tech Other FY17 1H16 2H16 1H17 2H17 large
Slide 19: Provisions
PROVISIONS TOTAL PROVISION CHARGE LONG TERM IP LOSS RATES $m bp 1,200 1,038 250 1,000 918 200 Avg IP loss rate 720 FY14-FY17: 25bp 800 479 150 Avg ex Esanda & 600 Asia Retail: 21bp 400 100 200 50 0 0 -200 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 1H16 2H16 1H17 2H17 90 93 96 99 02 05 08 11 14 17 Consu
Slide 20: Credit Quality
CREDIT QUALITY GROSS IMPAIRED ASSETS CONSUMER 90+ DAY ARREARS $m % % of Total GLAs 6,561 1.5 1.8 1.0 5,581 1.6 5,196 0.5 1.4 0.0 4,264 1.2 Sep Mar- Sep Mar- Sep Mar- Sep Mar- 13 14 14 15 15 16 16 17 Home Loans Aus. Cards Aus. Home Loans NZ 1.0 3,173 2,889 2,719 0.8 HOME LOANS 90+ DPD BY STATE1 2,384
Slide 21: Australia
AUSTRALIA FINANCIAL PERFORMANCE REVENUE EXPENSES TOTAL PROVISIONS $m $m $m 9,408 9,602 920 897 8,875 3,426 3,423 852 3,232 785 837 36.4% 36.4% 718 35.6% FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Revenue Revenue/Avg FTE ($k) Expenses CTI CASH PROFIT RISK WEIGHTED ASSETS RETURN1 $m $b % 3,547 3,695
Slide 22: Australia Division Strategic Focus
AUSTRALIA DIVISION PRIORITIES MOVEMENTS PRIORITIES ACTIONS METRICS FY15 FY16 FY17 Simplified products # Products decommissioned <10 <10 47 More digital branches # Digital branches 5 40 81 Create a simpler, better capitalised, better More self service # OTC transactions 37.3m 33.8m 29.1m balanced and
Slide 23: Australia Division Digital
AUSTRALIA DIVISION DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES PEOPLE AND CUSTOMERS 3.6m 3.3m 3.3m Cutting Edge Experiences Launched Fitbit PayTM, Samsung PayTM and delivered Touch ID, 3.0m instant card replacement for customers with a digital wallet and voice d
Slide 24: Customer Experience
CUSTOMER EXPERIENCE STRONG FOUNDATION BUILT TO CAPITALISE ON EMERGING MOBILE PAYMENTS LANDSCAPE BUILDING KEY CAPABILITIES DIGITAL WALLET ADOPTION KEY ACHIEVEMENTS: Volume of cards provisioned and available per quarter ‘000 • 661k cards provisioned across eligible devices in digital wallets 661 with
Slide 25: Institutional: Delivering on Our Strategic Agenda
INSTITUTIONAL DELIVERING ON OUR STRATEGIC AGENDA RWA $50b (25%) reduction in RWA1 by focussing on higher return, on-strategy priority segments SIMPLIFICATION 22% fewer staff2 and 5% reduction in costs2 by simplifying and streamlining the business NETWORK 36% of Australia and 29% of New Zealand reven
Slide 26: Institutional
INSTITUTIONAL A SIMPLER, BETTER-BALANCED AND HIGHER RETURNING INSTITUTIONAL REVENUE1 EXPENSES1 TOTAL PROVISION CHARGES $m -6% 5% $m $m -5% -8% 5,748 5,180 5,414 2,873 2,958 743 2,736 57% 1,098 50% 51% 913 929 199 80 -237 10 92 FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Revenue Restructuring costs
Slide 27: Institutional: Smaller, Better Balanced, Higher Returning
INSTITUTIONAL SMALLER, BETTER BALANCED AND HIGHER RETURNING TOTAL RWA CREDIT RWA CRWA REDUCTION $b $b $b -25% -12% -27% -13% -13% 198 169 142 29 168 142 149 123 -2 26 82 26 60 51 10 11 1 123 169 8 142 123 77 71 64 -16 -2 Sep 15 Sep 16 Sep 17 Sep 15 Sep 16 Sep 17 Sep-16 FX Lending1 Risk Data & Sep-17
Slide 28: New Zealand Financial Performance
NEW ZEALAND FINANCIAL PERFORMANCE1 REVENUE EXPENSES TOTAL PROVISIONS NZDm NZDm NZDm 3,320 3,381 1,303 1,316 1,271 3,211 129 521 538 40.6% 39.6% 37.6% 491 83 59 FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Revenue Revenue/Avg FTE ($k) Expenses CTI CASH PROFIT RISK WEIGHTED ASSETS RETURN NZDm NZDb 1,4
Slide 29: New Zealand Strategic Focus
NEW ZEALAND STRATEGIC FOCUS – SIMPLER, BETTER BALANCED BANK BALANCE SHEET1 PROFITABILITY & MARGIN2 NZDb Focus on customer deposit growth NZDm encouraging New Zealanders to save NIM stabilised 2H17 29.5 29.3 28.1 1,459 1,339 1,361 2.6% 2.4% 114.4 120.7 124.9 84.9 91.4 96.8 2.2% 2.0% Sep 15 Sep 16 Sep
Slide 30: New Zealand Digital
NEW ZEALAND DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR PEOPLE TRANSLATING INTO BUSINESS OUTCOMES AND CUSTOMERS 1.4m +171k 1.3m 1.3m Apply & Open functionality in goMoney for Everyday 1.2m Accounts, Savings, Cards, Loans and KiwiSaver digitally active customers 1.1m Sep 15 Sep 16 Sep 17 Banker Wo
Slide 31: Corporate Profile and Sustainability
2017 FULL YEAR RESULTS CORPORATE SUSTAINABILITY PROFILE
Slide 32: ANZ's Corporate Sustainability Framework
ANZ’S CORPORATE SUSTAINABILITY FRAMEWORK OUR APPROACH 2017 HIGHLIGHTS Funded and facilitated in low carbon and sustainable $7b solutions – as part of our $10 billion commitment by 2020 Reduction in Greenhouse Gas emissions in 20% Australia3 >113k Hours volunteered by employees People reached through
Slide 33: Treasury
2017 FULL YEAR RESULTS TREASURY
Slide 34: Regulatory Capital
R E G U L AT O RY C A P I TA L CAPITAL UPDATE APRA COMMON EQUITY TIER 1 (CET1) Capital Position % 0.25 0.05 APRA CET1 ratio of 10.6% achieves APRA’s ‘unquestionably strong’ 0.88 0.09 10.57 requirements well ahead of 2020 implementation. 10.13 9.61 -0.58 -0.25 Internationally Comparable1 CET 1 ra
Slide 35: Regulatory Capital Generation
R E G U L AT O RY C A P I TA L G E N E R AT I O N Second half Full Year Organic Capital Generation COMMON EQUITY TIER 1 average 2H17 average FY17 • Strong net organic capital generation in FY17 GENERATION (bps) 2H12 – 2H16 FY12-FY16 and 2H17. Reflects progress on the Group’s Cash Profit1 98 88 195 1
Slide 36: Internationally Comparable Regulatory Capital Position
I N T E R N AT I O N A L LY C O M PA R A B L E 1 R E G U L AT O RY C A P I TA L P O S I T I O N APRA Common Equity Tier 1 (CET1) – 30 September 2017 10.6% Corporate undrawn EAD Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in and unsecured LGD 1.4% many jurisd
Slide 37: CET1 and Leverage in a Global Context
CET1 AND LEVERAGE IN A GLOBAL CONTEXT CET1 RATIOS1 LEVERAGE RATIOS1,2 5% 10% 15% 20% 25% 30% 3% 4% 5% 6% 7% 8% Swedbank UOB Svenska Handelsbanken DBS Nordea SEB OCBC ABN Amro Intesa Sanpaolo Danske Bank BBVA Morgan Stanley HSBC ANZ Standard Chartered Cedit Agricole Group APRA Top ANZ HSBC quartile o
Slide 38: Balance Sheet Structure
BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET SOURCES AND USES OF FUNDS Sep 2017 Sep 16 to Sep 17 $786b $786b LONG TERM SHORT TERM +$16.1b improvement to Long Term -$16.1b reduction in Short Other Short Term 6% funding position Term funding position Liquids Short Term 22.0 22% Funding 8% Term Funding
Slide 39: Funding & Liquidity Metrics
FUNDING & LIQUIDITY METRICS NSFR COMPOSITION NSFR MOVEMENT Sep 2017 Sep 16 v Sep 17 $483b 1% 114% Wholesale $425b % 2% Funding Liquids & Other1 and 1% Non Financial Other Assets2 2% Corporates 108% 1% Other 107% Loans3 -1% Retail/SME Residential Mortgages4 <35% Capital Available Required Sep- Asia S
Slide 40: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 ISSUANCE MATURITIES $b 32 24 24 23 22 21 19 18 16 15 13 3 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24+ Senior Unsecured Covered Bonds Tier 2 RMBS WEIGHTED AVERAGE TENOR PORTFOLIO BY TYPE PORTFOLIO BY CURRENCY years 5.5 5.3 9% 6% 4.9 1% 33% 3.9 3.9 22
Slide 41: Risk Management
2017 FULL YEAR RESULTS RISK MANAGEMENT
Slide 42: Total & Collective Provision Charge
RISK MANAGEMENT TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE CP BALANCE BY DIVISION $m $m 1,956 2,876 2,000 1,258 0.4 3,000 2,662 1,199 Sep17 vs Sep16 $m 1,500 1,197 989 1,205 0.3 2,000 Divisional mvt (142) 1,000 0.2 FX impact (72) 500 1,000 0 0.1 -500 -142 0.0 0 Sep 16 Sep 17 FY1
Slide 43: Individual Provision (IP) Charge
RISK MANAGEMENT INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL LOSS RATES IP CHARGE COMPOSITION bps $m 300 3,000 1,637 1,939 1,167 1,144 1,341 2,000 1,110 200 1,000 100 0 0 -1,000 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep FY12 FY13 FY14 FY15 FY16 FY17 90 93 96 99 02 05 08 11 14 17 IP Loss Rate Median
Slide 44: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m bp 150 6,000 5,196 150 4,264 100 4,000 117 3,173 100 2,889 2,719 2,384 87 50 2,000 50 55 47 55 41 0 0 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep FY12 FY13 FY14 FY15 FY16 FY17 09 10 11 12 13 14 15 16 17 Au
Slide 45: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b 402 409 391 408.6 38 39 362 37 14 18 340 32 17 391.1 29 21 -15.2 -1.4 -0.1 -0.8 23 142 123 169 151 Sep 16 Credit RWA Op RWA IRRBB Mkt. RWA Sep 17 138 RWA CRWA MOVEMENT $b 210 214 352.0 181 150 158 -3.8 10.6 336.
Slide 46: Risk Weighted Assets: EAD and CRWA
RISK MANAGEMENT RISK WEIGHTED ASSETS GROUP EAD1 & CRWAs GROUP EAD1 MOVEMENT $b SEP 17 v SEP 16 ($b) 919 910 917 910.4 18.0 1.0 917.0 813 -12.4 741 Sep’16 FX Impact Lending Mvmt. Data/Meth. Sep’17 Review 39% 38% 38% 39% 37% GROUP EAD1 & CRWA GROWTH2 MOVEMENT SEP 17 v SEP 16 ($b) 19.5 5.1 3.4 0.5 0.2
Slide 47: Portfolio Composition
RISK MANAGEMENT PORTFOLIO COMPOSITION % of Portfolio in Portfolio Balance EXPOSURE AT DEFAULT (EAD) AS A % Category % of Group EAD Non Performing in Non Performing OF GROUP TOTAL Sep 16 Sep 17 Sep 16 Sep 17 Sep 17 TOTAL GROUP EAD (Sep 17) Consumer Lending 40.6% 41.5% 0.1% 0.1% $436m = $903b1 Finance
Slide 48: Group Resources Portfolio
RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR TOTAL EAD (Sep 17): $14b As a % of Group EAD (Sep 17): 1.5% 8.6 7.8 6.8 7.0 4.9 4.0 4.0 3.5 3.1 2.9 2.6 2.3 1.5 1.3 1.7 1.4 1.1 1.0 1.1 1.0 Coal Mining Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining Sep 14
Slide 49: Commercial Property Portfolio
RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY COMMERCIAL PROPERTY OUSTANDINGS BY REGION1 SECTOR1 $b % 38.3 37.9 37.7 100 37.5 37.2 8.5 3.9 3.6 2.7 2.3 80 4.7 8.0 60 8.8 9.5 40 9.5 10.2 8.4 7.5 20 7.0 Sep 14 Sep 14 Sep 16 Jun 17 Offices Retail Industrial Residentia
Slide 50: Residential Apartment Development
R E S I D E N T I A L A PA R T M E N T D E V E L O P M E N T PROPERTY EXPOSURE OVERVIEW PROFILE (Sep 17) $b Total Residential Limits: $9.5bn • Overall Apartment Development limits reduced by $0.7bn (17%) in the second half of 2017. 34% • Tightening strategies were introduced to moderate appetite for
Slide 51: Group Agriculture Portfolio
RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) NEW ZEALAND DAIRY CREDIT QUALITY NZ$b FY16 PD increase reflects customer downgrades Total EAD (Sep 17) As a % of Group EAD driven by continued low milk price; FY17 PD decrease A$34.0b 3.8% reflects subsequent impact o
Slide 52: New Zealand Geography Risk
RISK MANAGEMENT NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED NEW ZEALAND GEOGRAPHY TOTAL PROVISION ASSETS CHARGE1 NZ$m NZ$m 1,818 200 105 1,451 2.5 103 99 2.0 97 100 44 30 40 955 1.5 22 31 46 50 19 708 419 491 1.0 0 368 0.5 0.0 -100 -39 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 2H11 1H12
Slide 53: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Sep 17): A$3532 400 Finance (Banks and Central Banks) Government Admin. 350 24% 31% Property Services³ Services to Fin. & Ins. 300 2% 3%
Slide 54: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Sep 17): A$91b2 EAD (Sep 17): A$91b2 Finance 6% 22% Basic Material Wholesaling 3% Machinery & Equip Mnfg 3% Petroleum,Coal,Chem & Assoc Prod Mnfg 27% 3% Communic
Slide 55: ANZ China Institutional Portfolio
RISK MANAGEMENT ANZ CHINA INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ CHINA INDUSTRY COMPOSITION EAD (Sep 17): A$21b2 EAD (Sep 17): A$21b2 China EAD Finance (Banks and Central Banks) • Total China EAD of A$21b, with 39% or A$8.0b booked 2% 8% Manufacturing 12% W
Slide 56: Housing
2017 FULL YEAR RESULTS HOUSING
Slide 57: Australia Home Loans Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio1 Flow2 Portfolio1 FY16 FY17 FY17 FY16 FY17 Number of Home Loan accounts 975k 1,008k 178k3 Average LVR at Origination8,9,10 71% 69% Total FUM1 $246bn $264bn $67bn Average Dynamic LVR9,10,11 52% 50% Average Loan Size $252k $262k $379k Market Share12 15
Slide 58: Australia Home Loans Portfolio Trends
AUSTRALIA HOME LOANS PORTFOLIO TRENDS LOAN BALANCE & LENDING FLOWS1 DYNAMIC LOAN TO VALUE RATIO1,2,3 $b % of portfolio +7% 50 5 15 -53 264 40 246 52 30 20 10 0 FY16 New Sales Net OFI Redraw & Repay FY17 0-60% 61-75% 76-80% 81-90% 91-95% 95%+ exc Refi-In Refi Interest / Other Sep-12 Sep-13 Sep-14 Sep
Slide 59: Australia Division Portfolio Performance
AUSTRALIA DIVISION PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES1 HOME LOAN DELINQUENCIES1,3 % % 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 12 13 14 15 16 17 12 13 14 15 16 17 Home Loans Personal Loans 30+ DPD % 90+ Investor Consumer Cards Corporate
Slide 60: Australia Home Loans Areas of Interest
AUSTRALIA HOME LOANS AREAS OF INTEREST WESTERN AUSTRALIA HOME LOAN INTEREST ONLY (IO) • Greater focus on Acquisition & Collection management strategies • Serviceability assessment is based on ability to repay principal & have been applied interest repayments calculated over the residual term of loan
Slide 61: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 Multiple checks during origination process Serviceability Aug'15 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Pre - application2 Income & Expenses Apr'16 Introduction of an income adjusted living
Slide 62: Stress Testing the Australian Mortgage Portfolio
AUSTRALIA HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO Assumptions Current Year 1 Year 2 Year 3 ANZ conducts regular stress tests of its loan portfolios to meet risk management objectives and satisfy regulatory Unemployment rate 5.8% 9.0% 10.5% 11.5% requirements. Stress tests are
Slide 63: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE ANZLMI HAS MAINTAINED STABLE LOSS RATIOS FINANCIAL YEAR 2017 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 2017 (% New Business FUM) Gross Written Premium ($m) $173.6m LVR<80% Not LMI Insured Net Claims Paid ($m)
Slide 64: New Zealand Mortgages Portfolio Overview
NEW ZEALAND MORTGAGES PORTFOLIO OVERVIEW 1 Portfolio Growth Portfolio Growth FY16 FY17 FY17 FY16 FY17 FY17 Number of Home Loan accounts 511k 520k 1.7% Average LVR at Origination2 60% 59% -108bps Total FUM NZ$73b NZ$77b 5.0% Average Dynamic LVR2 44% 43% -106bps Average Loan Size at Origination2 NZ$30
Slide 65: New Zealand Home Lending
NEW ZEALAND HOME LENDING1 FLOW2 PORTFOLIO 11% 11% 6% 6% 24% 21% 23% 22% 40% 37% 9% 9% 7% 7% 10% 10% 76% 79% 49% 52% 45% 46% FY16 FY17 FY16 FY17 FY16 FY17 Branch Broker Mobile mortgage managers Fixed Variable Auckland Christchurch Other Nth Is. Wellington Other Sth Is. Other³ MARKET SHARE4 ANZ MORTGA
Slide 66: Economics
2017 FULL YEAR RESULTS ECONOMICS
Slide 67: Australian Economy
AUSTRALIAN ECONOMY GDP GROWTH1 CONSUMER PRICE INFLATION*1 CREDIT GROWTH BY SECTOR 1 AUSTRALIAN GOVERNMENT BUDGET BALANCE*1 (year ended) Per cent of nominal GDP 67 Sources: 1. RBA Chart Pack Oct 2017
Slide 68: Australian Economy and Population
A U S T R A L I A N E C O N O M Y A N D P O P U L AT I O N POPULATION GROWTH1 – AUSTRALIA AND G7 INDUSTRY SHARE OF OUTPUT2 % yoy Australia G7 Weighted Average 2.00% Australia 1.00% G7 Weighted Average 0.00% 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 POP
Slide 69: Australian Labour Market
AUSTRALIAN LABOUR MARKET UNEMPLOYMENT AND UNDEREMPLOYMENT1 JOB VACANCIES AND ADVERTISEMENTS WAGE PRICE INDEX GROWTH2 LABOUR COSTS AND INFLATION3 5 10.0 4 7.5 % change y/y 3 5.0 % change y/y 2 2.5 1 0.0 0 -2.5 00 02 04 06 08 10 12 14 16 18 Domestic market services inflation (lhs)* Non-farm unit labou
Slide 70: Commodity Prices
COMMODITY PRICES1 RBA INDEX OF COMMODITY PRICES BASE METALS, RURAL, AND OIL PRICES SDR, 2015/16 Average = 100, log scale Weekly BULK COMMODITY PRICES TERMS OF TRADE* Free on board basis 2014/15 average = 100, log scale 70 1. RBA Chart Pack Oct 2017
Slide 71: Australian Economy – State by State
A U S T R A L I A N E C O N O M Y – S TAT E B Y S TAT E STATE FINAL DEMAND (STATE GDP)1 STATE UNEMPLOYMENT2 % yoy trend 4 2 0 -2 -4 -6 -8 -10 NSW VIC TAS SA QLD WA 2014 2015 2016 000’s POPULATION GROWTH1 % yoy MAJOR INFRASTRUCTURE PROJECTS3 3 22 Metronet (WA) Natural Increase ('000) Snowy Hydro Expa
Slide 72: Australian Economy – State by State
A U S T R A L I A N E C O N O M Y – S TAT E B Y S TAT E ANZ STATEOMETER1 STATE FINAL DEMAND2 Year-ended growth 1.0 ABOVE TREND, ABOVE TREND, ACCELERATING DECELERATING 0.5 TAS Latest index value (3m average) VIC SA 0.0 ACT NSW AUS WA QLD -0.5 NT -1.0 -1.5 BELOW TREND, BELOW TREND, ACCELERATING DECELE
Slide 73: Australian Economy – WA and QLD
A U S T R A L I A N E C O N O M Y – WA A N D Q L D STRONG 6 MONTH JOB GROWTH IN WA AND QLD WA AND QLD GDP HAS IMPROVED 16 30 NT 14 26 12 22 ACT 10 18 Tas 8 14 y/y % change (trend) y/y % change (trend) 6 10 SA 4 6 2 WA 2 0 -2 Vic -2 -6 -4 Qld -6 -10 -8 -14 NSW -10 -18 -15 -10 -5 0 5 10 15 20 25 30 35
Slide 74: Australian Economy – Service Exports
AUSTRALIAN ECONOMY – SERVICE EXPORTS SERVICE EXPORTS AND AUD1 INTERNATIONAL TOURIST VISA’S GRANTED2 5 3.0 40 2.5 45 28% growth 2.0 50 1.5 55 AUDbn, 3-month sum 1.0 60 0.5 65 4 Index 0.0 70 -0.5 75 -1.0 80 -1.5 85 -2.0 90 3 95 97 99 01 03 05 07 09 11 13 15 17 2013 2014 2015 2016 Net tourism & educati
Slide 75: Australian Housing Dynamics
AUSTRALIAN HOUSING DYNAMICS MEDIAN HOUSE PRICES1 HOUSE PRICE GROWTH2 1,200 ‘000 All Sep 2017 Houses Units dwellings 1,000 All Capitals Perth City yoy % yoy % yoy % Melbourne Brisbane Sydney 10.5 10.9 9.5 800 Sydney Adelaide Melbourne 12.0 13.0 9.2 Brisbane 2.9 4.0 -2.9 600 Adelaide 5.0 5.5 1.3 Perth
Slide 76: Australian Housing Dynamics
AUSTRALIAN HOUSING DYNAMICS PRIVATE RESIDENTIAL BUILDING APPROVALS1 DWELLING APPROVALS BY STATE2 Monthly Yearly HOUSING LOAN APPROVALS1 SUPPLY/DEMAND ANZ CHART Forecast 200 150 100 Dwellings ('000) Shortage 50 0 Surplus -50 -100 -150 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 Housing Balance
Slide 77: Dynamics Supporting NSW & VIC Housing
DYNAMICS SUPPORTING NSW &VIC HOUSING CHANGE IN EMPLOYMENT BY STATE2 NSW – Dwelling completions per million population2 Past 3 years quarterly NT (trend) Completions per million population (LHS) Tas 2,500 Long run average (LHS) 0.0% 2,300 Population growth yoy % - inverted (RHS) ACT (trend) 2,100 0.5
Slide 78: Australian Housing: Household Debt and Income
AUSTRALIAN HOUSING HOUSEHOLD DEBT AND INCOME Household Debt and Deposits1 Household Debt-to-income2 % % of annual household disposable income Income quintile, median* 200 Household Debt to Income 193.7% 160 Household Net debt to Income 120 111.0% 80 Household 40 Deposits as % of Income 83.3% 0 Jun-1
Slide 79: Mortgage Buffers: Offset Balances
MORTGAGE BUFFERS: OFFSET BALANCES HOUSEHOLD MORTAGE BUFFERS1 LOAN-TO-VALUATION RATIOS2 Offset Balances Balanced-Weighted Share of Securitised Loans • Aggregate buffers of 17% of outstanding mortgage balance or 2.5 years scheduled payments • Of those with <1 month buffer, this includes • Investor mor
Slide 80: Further Information
F U R T H E R I N F O R M AT I O N 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 t
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