Anz Group Holdings Limited · ASX:ANZ
Anz — H1 2003 Earnings Presentation
69 slides from Anz's earnings presentation, Apr 24, 2003
Slide 1: = == = as z = ee
= = = =e =e = == = as z = ee = _ _— = = . -— - : _— = : se = > = 7 — = i -_— . — -_ = . — -_ = a FF | = = Z | a SOs : oS = = _ = _ = _ 2 _ : oo _ 5 _ = _ . _ = — _ - _ . _ = |. = 7 _ = / — _ _— = | — - = : ~~” . = = ree . _— = 2 - 2 a ree . = = 2 ree = = =n = a a _ : 2 =) 7 _ ae _ = _ aS _ = = S a =
Slide 2: Agenda
Slide 3: SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan
SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan MM | ea Nes: Ls — . a i / . il le i ni i | ) ! / Daas hae i \ 1 Bs Maes ae “Len > ge EES fi ; lee TT Wy ji igs ko 1 i ! I l Ly . ot “ ' : ee Ge ET a if Le il ' i } i ; ye bu aru ‘ Lai eee ee. oC a oe ae Hopi ee Le aa : ‘ 7 te ok ne : : on i os ee sag
Slide 4: 2003 Interim Results
Slide 5: Specific provisions down 29%
» Specific provisions down 29% » New non-accruals down 50% _ \ es Net non-accruals down 28% ‘Significant historical tax issue settled — - at half normally cyclically lower tha n 2nd | ‘for 8% full year W Tre Excluding significant transaction
Slide 6: SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan
SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan MM | ea Nes: Ls — . a i o i) a i en ) ‘ a ) | | as as ( L ae As nee Ve lL i i oe ) Wy y es Le : i : ‘il i ce ee Ce Ti acaanianl a ral ! 1 ) | a mM “ ale as be i sil i oe 0 os yo ee LL Le oe : iy i i a aoa eae ee ois acca “ fo sini Bae oe ee ooh eo : E
Slide 7: we eu
we eu . her
Slide 8: Interest’ Non Interest
Interest’ Non Interest Income Income ie 6D) ini Cony Provisioning Jax & OEI . — ¢ Ff
Slide 9: Institutional Segments. includes Pane ret
Institutional Segments. 2 includes Pane ret __ debent |
Slide 10: Non-interest income
poled bu jis ao) income — ) Underlying Higher loyalty costs’ = Card (16) repricing _ Hy 8 Personal Ez ts L fee — ] i eee E*Trade _ writedown | “e pigher loyalty costs reflects : ‘does include hiek:
Slide 11: Expenses
WV impact — o ‘ cose growth of 1. 4% | e Includes $10m increase in software amortisation 7 . * Restructuring cost: ; — $32m taken, in lir
Slide 12: Provisioning reflects conservative management
Provisioning hess reflects COnSEM ative management — ELP charge | Oo _ e » ELP oe 5 oun 3bp>_ ma ELP sdiictacnt | 7 ~ reflecting strong ~~ mom ELP $ | _ mortgage growth & ELP BP's 0 __ improved risk profile e ELP Portfolio adjustment continued » accruing higher _ level of ELP, reflecting ongoing glo
Slide 13: Outline
Slide 14: A diversified portfolio performing well
Slide 15: Consumer Finance - challenges, but good underlying performance
Consumer Finance — challenges, Bu good underlying poroemence | Improved underlying | | performance (NPBT)* / 30% Growth in Acquiring share Acquiring {spend __ Outstandings 1HOO 2HOO 1HO1 2HO1 1HO2 2HO2 1HO3 1HOO 2HOO 1HO1 2HO1 1HO2 2HO2 1HOS ~ Diversifying revenue* y ty 9 B Issues 7 | oe Loyalty sch
Slide 16: Mortgages - well placed to benefit from shift to mortgage brokers
Mortgages -— well placed to benefit | from shift to mortgage brokers" — "Growing presence | _ Broker penetration of mortgage market Australia UK US 80% a broker originated customers new to ANZ 92% purchase additional ANZ products (89% network originated customers) _ ‘And we are well placed to. _ Par
Slide 17: Institutional & Investment Banking - a leading franchise
Institutional & Investment Banking -a leading franchise $m Consistently strong : More focused single ay) NPAT growth : customer limits Maximum - 60% of equivalent domestic limits Maximun secured lending {80% of 60%) Maximur unsecure; lending (25% of 60%) Mar-01 oot Mar-02 oe Mar-03 Domestic& Offshor
Slide 18: Corporate and SME - well positioned for upswing in business lending
Corporate and SME - well positioned for upswing in business lending
Slide 19: Personal banking - squeeze on deposits and fee changes
Personal banking - ir squeeze on n deposits and fee changes — $m Volumes 8 Deposit / Sales lil i Deposit is Margins r ___ Software structure & Aiortisation honour fee (6) _ impact (9) Other™ # Includes tax impact . Oueal 16 bp necine in margins due to . Lower interest rates over the half Increased f
Slide 20: JV performance - good insurance and expense performance
JV perrormance — good insurance and — _ expense performance, offset by ie) ; ING Australia NPAT* Life tearenee bone _ performing well due to / improved service, ‘eHicicacy, and claims management Subdued equity market conditions continue to impaci Funds Management business Improved capital investment
Slide 21: UeS
UeS er iss
Slide 22: Cards issue
ement in cards . je d, NI
Slide 23: Domestic corporates well placed
Domestic corporates well placed e remain wly geared Gearing ratio _ (Debt to Equity)?
Slide 24: US energy portfolio remains containable
US energy portrolio — seme ae remains containable Total Limits Total Limits Total Limits bc oaG Excl O&G Committed — S240n §3.0bn 2.0bn Limits $1.9bn | $913min projects z Total Outstandings Corporate lending BB+ to BB BB- >BB- (AUD) « Sep-02 ~— Sep-02 _ F - | Mar-03. ~=—s Neofcust ; | _ : ’ ] Total
Slide 25: 1st half specific provisions by size
— 4st half Specific ~~ lmpocttom Provisions by size single customers Grindlays " cede indemnity , -M
Slide 26: New non-accruals by source
oe 50% on March loans by source a To Asset Finance. ) : Other Off
Slide 27: Existing and future problem loans well provided for
Existing and future Problem loans well Provided for 2 — %GP/RWA T A Dec NAB Sep WBC
Slide 28: LIS,
R Ly LIS,
Slide 29: Dividend payout ratio moving upwards
Dividend payout ratio ome af end upwards Interim Dividend bee a doubled j in six years A progressive lift in the payout ratio likely over next three years towards high 60’s e Expect to maintain i | r 100% franking ee Aa | 1997 1998 1999 2000, 2001 2002 2003 em Interim Div (LHS) - Feyeut Ratio (RHS)
Slide 30: ANZ's capital position remains strong
ANZ's earl) Hee remains strong _ Drivers of ACE ratio. Peer Comparison Earnings Dividend 7 y | ACE/RWA / 077 (0.47) “ RWA Other growth (0.04) (0.29) / Sep-02 7) y yy Mores ) Lo M , ) i /) ] (Dec: a Fon | : o2) a, / ? ‘Buybacks likely if ACE ratio above target range ) _ )
Slide 31: Outlook for second half
Outlook for second half Auctratian & NZ economies to perform relatively well, despite weakness in offshore markets Mortgage growth to be more subdued, moving towards 8-12% pa growth rate, offset by moderate rebound in business lending » Specific provisions below ELP » Cost growth rate to increase, b
Slide 32: Summary
Summary A respectable result, with good underlying momentum ~ Strong interest income driven by asset growth ~ Non-interest income impacted by one-offs ~ Expenses well controlled ~ Majority of portfolio performing well Credit quality strong in Australia, offshore issues containable Remain well provis
Slide 33: SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan
SHS aR ES aurea A FT Te ee GAM FEE TR aac aa aan MM | ea Nes: Ls — . a i / . il le i ni i | ) ! / Daas hae i \ 1 Bs Maes ae “Len > ge EES fi ; lee TT Wy ji igs ko 1 i ! I l Ly . ot “ ' : ee Ge ET a if Le il ' i } i ; ye bu aru ‘ Lai eee ee. oC a oe ae Hopi ee Le aa : ‘ 7 te ok ne : : on i os ee sag
Slide 34: Distinctive strategy and track record - clear themes going forward
Distinctive strategy and track record | 4 clear themes going forward Core themes a ANZ relative TSR jos hata, $1,200 Leverage real capabilities to build ,, | sustainable strategic position Grow value by creating a rich me portfolio of specialised businesses s600, (ANZ @ Peers* Become one of the most
Slide 35: Leverage real capabilities to build sustainable strategic position
Leverage real capabilities to build» ustainable aielc position Leverage specialisation as distinctive strategy _ Leverage leading product capability to increase share Leverage superior cost position © : « Jo give customers the best deal « lo give shareholders sustainable ene growing peturne Leverage
Slide 36: A rich portfolio of specialised businesses
SU SSae Fe : 3 3 Arich portfolio of specialised businesses - material improvement in last 2 years Current ANZ Position + More sustainable portfolio foundation e Each business ha clear differentiated approach ¢ Systematically building capabilities to establish future - growth Le
Slide 37: Grow value by creating a rich and diversified portfolio of specialised businesses
: : be : Grow value by creating a rich and diversified portfolio of specialised businesses ANZ Target Position Sirong Optimise portfolio for sustainability, growth and return * Raise revenue productivity in Persor Banking Lift performance and productivity in Wealth Management Develop sustainable pos
Slide 38: Asian strategy is emerging
ctly v Asian ‘strategy is emerging _ | | 77 | "Grow Portfo Develop Portfolio 2006 onwards _ 2004. 2006 _ Develop Options | Geographic proximi 1Bee 2003 Growing political and» economic linkages | ie Acquires is bevelon Pa borcnuetly Represents : portfolio of low linkages ; Participate i cost, low ris
Slide 39: Aim to make ANZ one of the best managed and most efficient banks
Aim to make ANZ one of the best managed and most efficient banks i in the wend * Make execution a distinctive capability ; Ly . Accelerate revenue and productivity momentum in businesses . Rebalance higher risk segments — | . ‘Simplify operations and technology lnfeastructure / CTI (%) 2 Year _ Worl
Slide 40: Bold and different, leveraging a unique performance culture
Bold and different, leveraging a unique performance culture and business approach Distinctive {Top decile) Superior ; ie (Top quartile) : : Systematic ) improvement Aim to be i anhaontas ae Australian * financial * * values Build on preferred — employer status » Gain shareholder _ and community reco
Slide 41: A reasonable result
reasonable result Headline earnings up 8. 7% Cash EPS pre-significant items up 8.7% Interim dividend up 12.8% Good underlying business performance offset by $27m Cards issue Major progress in resolving risk i issues ° Specific provisions down 29% : . Tax settlement achieved excluding On track for 8%
Slide 42: z exug
z exug II = ye eo ee So oo = | | : re a = = i inion TO Fete ead cedaltii - | | ! ) / ) a ee - yy ji hee Ly, y yi yy ie Hi ie ee Ee eee ey y : i apa a toes es co 0 i ) TE . — — 7 ) ! ! BS SS rr—*”t—‘“SSC*” SSS os a ) . i i : ) ih ieee ines a ys fe y i i iy t SS LLANE : oo jon A HE oe ai ty Lye a Uae
Slide 43: Additional information on businesses & strategy
Slide 44: ag Hii MOAI a: cere MVNA: SITMTUIIITTATI assis ANIM He a ie
ag Hii MOAI a: cere MVNA: SITMTUIIITTATI assis ANIM He a ie is a EEE EE oo i : i y ‘ Tt i CCC CCC CC CCC i ee ee Te tet eo rrt—“—~—CSCSSC CO 7) a a CCC CC o_O IEE a ee a i SO ele i ana ca via i" ee eee hava i il iii er CO cele) ual auiies LU cera eich APA UMN a po US Li i ; ie OO Le ee an are nen Le
Slide 45: Slide 45
Slide 46: Asset Finance - a leading position
Asset Finance a eading position, y Significant reductions i in unit “ processing costs achieved 7 delivering strong Compentive | position $0005 NPAT / bre
Slide 47: Greater investment required
New acd te teks nea eurenon and a Greater investment required — «Increased training, and _ greater number of sales | ‘specialists: Strengthen brand and — increase community involvement e Upgrade branch network, 7 ee es new branches in /
Slide 48: Personal Banking - strong account and deposit growth
‘Personal Banking - strong account and _ deposit growth CO. 9005 Access Accounts > i Deposits ($b) (80 7. ee 60 - | 40 4 20 4 L00 7 80 + 2HOO 1HO1 2HOL 1H 02 2H 02 1H 03 ( 2Opened (LHS) mmm Closed (LHS) =» Net (RHS) 1HO2 2HO2 1HO3 New accounts ~ up 14% New deposit strategy launched in Aug O01 Closed
Slide 49: Personal Banking
"Personal Banking erweight position RCE rolled out to Victoria & NSW, to roll out to other states ¢ Strong product capability | * More traction required on proving customer propositi Personal — significant opportun : clear challenges remai - Rural Beoke completed roll out of local market model _« Go
Slide 50: Leading Australian/NZ bank in Asia
» Leading Australian/NZ bank | | * Focus to expand Trade Finance: business * Excess iquidity driving mergin oy to _ dangerously low levels » 60 ie Relat ye 82% Inv Gr HANOL & HO CH MN, VIET es OFFICE, ; SINGAPORE ” > 38 ‘Lending Rel ations ips, 83% pv Gr oe TAIWAN, _ + Only Australian/NZ bank a High
Slide 51: Major Local Corporates
Major Local Corporates - € Market Corporates ings Ip fresh, agoteee cence | oe of USD200m. Potential for on
Slide 52: Over 10,000 oft our -
Over 10,000 oft our - _ people have experienced Breakout regent )
Slide 53: Slide 53
Slide 54: Australia & NZ
RILS Australia a NZ 0/0 Australia & NZ TPMI Australia _
Slide 55: Mortgages - low representation in inner city Sydney and Melbourne
* 35% | 30% q 25% | 20% | 15% | 10% | 5% | 0% Market Share by location Range of major peers o 2 11% jy ANZ share no 6% limited a Sydney Inner City Melbourne Inner 7 City* sample size Mortgages — low representation in | inner city Sydney and Melbourne | e Tightened assessment criteria for inner city
Slide 56: Global energy portfolio
+ to CCC Total ‘Total. Limits — Limits bel $9.6bn O8G 3 $8.2bn on Accrual _ BB RISK oo se): les - Global aeay port cles Ly Lo -$3.4bn in oe _ projects limits Tos $8.3bn Committed out Limits - _Qutstandings (includes utilised guarantees and market related products) $5.2bn =e $1.8bn in Corporate lendi
Slide 57: Slide 57
Slide 58: Outstandings
-Outstandings _ $2.3bn_
Slide 59: Top 10 exposures reduced
795 ay eos es — reduced» < ‘Top 1 D Spesuiee as % of ACE Position of top 10 exposures asatSep 02 ~=C net of credit derivatives
Slide 60: Non-accrual loans continue to fall
Non-accrual loans continue to fall, reflecting overall health of portfolio Historic Geographic Gross Non-Accrual $m Gross Non-Accrual Loans Loans (LHS) 1000 1002 a. Non-Accrual Loans/ Loans| moos & advances (RHS ay et) (2001 1391 i —y fe 2002 Z Uy) Mar-03 1998 1999 2000 2001 2002 Mar-03
Slide 61: Total investment grade
_Total investment grade as at Mar-03: . $107.7bn or 68.0% _ ofthe portfolio ~—w
Slide 62: Institutional & Corporate Risk Grade Profiles
Institutional & Corporate Risk Grade Profiles Institutional Banking (Outstandings) Corporate Banking Aust. (Outstandings BB- >BB- Sep-01 / Sep-01 Mar-02 Sep-02 + to CCC 27% 14% 6.4% 41% on Accrual 1.6% 1.7% 17% 13%
Slide 63: Additional credit quality information
Slide 64: Deterioration in global electricity sector has stabilised
Slide 65: Specific provisions in most businesses lower than expected losses
Slide 66: Offshore SCCLs now in place
Commercial -
Slide 67: Offshore lending assets decreasing as a proportion of total lending assets
Industry exposures — Australia & NZ
Slide 68: Industry exposures - Australia & NZ
Slide 69: Industry exposures - Australia & NZ
Australia and New Zealand Banking Group Limited (ANZ) — H1 2003 Earnings Presentation on 6ix