Anz Group Holdings Limited · ASX:ANZ
Anz — 1H14 Earnings Presentation
104 slides from Anz's earnings presentation, May 1, 2014
Slide 1: Results Presentation & Investor Discussion Pack
For personal use only 1 May 2014 Results Presentation & Investor Discussion Pack
Slide 2: Index
Index Half Year Result Overview For personal use only CEO Presentation 3 CFO Presentation 11 ANZ Overview 22 Strategy & Performance Strengthening Core Markets 31 Profitable Asian Growth 39 Enterprise Approach 45 Case Study: ANZ Greater China 47 Group Treasury 50 Risk Management 59 Divisional Perform
Slide 3: Mike Smith, Chief Executive Officer
For personal use only 1 May 2014 Mike Smith Chief Executive Officer
Slide 4: Delivering for shareholders and customers
Delivering for shareholders and customers For personal use only 1H14 1H13 Growth 1H14 Result $m $m % Cash Profit 3,515 3,179 Up 11% Statutory Profit 3,381 2,937 Up 15% Cash Earnings per Share (cents) 128.7 116.9 Up 10% Dividend per share (cents) 83 73 Up 14% Cash Return on Equity 15.5% 15.5% Flat •
Slide 5: Super Regional Strategy
SUPER REGIONAL STRATEGY For personal use only STRONG PROFITABLE ENTERPRISE CORE ASIAN APPROACH MARKETS GROWTH STRONG LIQUIDITY AND CAPITAL MANAGEMENT DISCIPLINED AND EXPERIENCED MANAGEMENT CEO PRIORITIES FY14-16 Improving Diversifying Improving Improving customer revenue productivity returns experie
Slide 6: Strong Core Markets
STRONG Strengthen our position in core markets of Australia CORE and New Zealand to drive Group earnings and returns MARKETS For personal use only #1 Mortgage growth Aust/NZ1 • Improved sales capability in small business, wealth and home loans Growth in core 1.1x Australia retail deposit growth1 • S
Slide 7: Profitable Asian Growth
PROFITABLE Asian expansion focused on connecting customers to ASIAN faster growing regional capital, trade and wealth flows GROWTH For personal use only International and Institutional 9% Banking • Global Markets Asia +34%; FX Asia +27% IIB has delivered 17% IIB Asia1 • Global Markets Asia Sales +
Slide 8: Asian businesses now a diversified network delivering growth, scale and returns
PROFITABLE Asian businesses now established as a diversified ASIAN network delivering growth, scale & returns GROWTH For personal use only Customer driven growth …with strong business, …leading to double in core segments and cost and risk digit growth and markets… disciplines… improved returns. IIB
Slide 9: Enterprise Approach: common infrastructure
Built on common infrastructure and enterprise focus ENTERPRISE for greater responsiveness, efficiency and control APPROACH For personal use only 1. Standardisation of processes & Enterprise ~10% Operations productivity systems approach to • Global wholesale credit decisioning and operations and col
Slide 10: CEO Priorities FY14-16
Building a Building a For personal use only better bank better bank for customers for shareholders CEO PRIORITIES FY14-16 Improving Diversifying Improving Improving customer revenue productivity returns experience FY16 FINANCIAL OUTCOMES Above peer growth CTI <43% ROE of 16%+ 10
Slide 11: Shayne Elliott, Chief Financial Officer
For personal use only 1 May 2014 Shayne Elliott Chief Financial Officer
Slide 12: 1H14 Financial Performance
1H14 Financial Performance Cash Profit Movement 1H14 v 1H13 For personal use only $m 528 48 71 3,515 3,179 242 69 Up 8% Up 2% Income Up 6% Up 6% Down 12% Up 5% Up 11% 1H13 Net Interest Other Expenses Provisions Tax & OEI 1H14 Cash Profit Income Operating Cash Profit Income 1H14 1 Year 3 Year Earning
Slide 13: Impact of FX movements
Impact of FX movements Key Currency Movements For personal use only AUD/USD Average AUD/USD 1.10 1H13 2H13 1H14 1.05 9% 1.00 12% 0.95 0.90 0.85 Sep 2012 Mar 2013 Sep 2013 Mar 2014 13
Slide 14: Impact of FX movements
Impact of FX movements Raw ex. Actual For personal use only FX Adjusted Currency Hedging (as reported) Revenue +7.5% +6.3% +3.6% Operating Expenses +6.0% +6.0% +1.7% Provisions -11.8% -11.8% -14.0% Cash Profit +13.0% +10.6% +8.6% Return on Equity +20bps Flat +50bps 14 Note: All figures PCP unless ot
Slide 15: 1H14 result drivers
1H14 result drivers Growth 1H14 v 1H13 For personal use only Adjusted for FX Key Business Lines Income Expenses JAWS Institutional APEA +15.7% +3.0% +12.7% Global Wealth +6.0% +4.1% +1.9% Global Markets +5.3% -4.9% +10.2% Retail Asia Pacific +4.0% +2.5% +1.5% Australia Division +3.8% +1.7% +2.1% New
Slide 16: Strengthening Australia
STRONG Strengthening Australia CORE MARKETS For personal use only Home loan share to Cost to Income Ratio 9 Australia Division bps 15.0%1 Down 80bps 12 Household deposit share to 38.1% bps 15.2%1 37.3% 32 Business lending share to bps 17.3%1 1H13 1H14 Average Funds Under Management 61 Business d
Slide 17: Strengthening New Zealand
STRONG Strengthening New Zealand CORE MARKETS For personal use only 22 Mortgage share to Cost to Income Ratio bps 30.7%1 NZ Division NZ Geography Down Down 19 Total deposits share to 45.2% 370bps 550bps bps 28.6%2 43.6% 41.5% 38.1% 20 Commercial lending share to bps 29.8%3 8 1H13 1H14 1H13 1H14 R
Slide 18: Profitable in Asia
PROFITABLE Profitable in Asia ASIAN GROWTH For personal use only International & Institutional Banking (IIB) Revenue growth1 Asia Return on Equity Indexed Return on Equity2 Index 1H12 = 100 27% FX Asia 132 105 105 104 100 5% Trade and Supply Chain Asia 1H12 2H12 1H13 2H13 1H14 Payments and Cash 1
Slide 19: Enterprise Approach
ENTERPRISE Enterprise Approach APPROACH For personal use only # Countries Operations Volume Growth Implemented Platforms 1H14 v 1H13 Global Wholesale Credit 8% 9% 8% ALL Decisioning & Trade 7% Processing 25 Global Customer Registry Australia New IIB Global Zealand Wealth 18 Collateral Management Ope
Slide 20: Credit Quality
Credit Quality For personal use only Gross Impaired Assets 23% Gross Impaired Assets $m Avg. $434m decline HoH 6,221 5,343 New Impaired Assets 4,685 2% 3,620 12% Total Provision Charge Mar 11 Mar 12 Mar 13 Mar 14 Provision Charge 93bps Collective Provision Coverage1 IP Charge $m CP Charge Total P
Slide 21: Capital
Capital For personal use only APRA Common Equity Tier 1 (Mar 2014 v Sep 2013) Movement in bps 104 8.48 27 18 8.33 74 Sep 13 Cash RWA Non RWA Dividends Mar 14 1 2 NPAT Usage Business Usage 3 1. Cash earnings net of pref share dividends; 2. Includes impact of expected loss versus eligible provision sh
Slide 22: ANZ Overview
For personal use only 1 May 2014 ANZ Overview
Slide 23: Distinctive geographic footprint and business mix
ANZ offers a distinctive geographic footprint and business mix that provides earnings diversification Corporate Profile An established regional network across 33 For personal use only markets supporting faster growing trade, • Founded in 1835, ANZ is a super regional bank that capital and wealth flo
Slide 24: ANZ Operating Structure
ANZ Operating Structure Operating Divisions Operating Income Mix by Division For personal use only Australia Division • Retail Banking • Corporate & Commercial Banking Transaction Retail Asia Banking Pacific Global Asia Partnerships Loans 8% 4% New Zealand Division 9% 3% New Zealand 6% Retail • Reta
Slide 25: Contribution by Geography
Contribution by Geography Operating Income Operating Income 1H14 For personal use only Australia New Zealand APEA $m 1H14 APEA Network 20,000 17,848 18,391 Revenue1 represented 16,222 24% of Group Operating Income and 15,000 12,295 Australia 25% of Group Profit 9,668 62% APEA 9,299 10,000 20% 5,000
Slide 26: Customer loans and deposits by Geography
Customer loans and deposits by Geography Customer Lending1 Customer Deposits For personal use only APEA APEA Commercial Retail & Wealth & Institutional Australia APEA Institutional APEA Commercial Retail & Wealth & Institutional 2% 22% 11% 13% 4% New Zealand APEA Retail & APEA Australia Australia Ne
Slide 27: Total Credit Exposure (EAD) by Geography
Total Credit Exposure (EAD) by Geography Exposure at Default by Exposure at Default by Geography For personal use only Line of Business2 Total Exposure at Default (Mar 14) - $762b1 Retail Institutional Commercial Australia New Zealand APEA 1% $467.5b $136.2b $158.7b 17% 29% 29% New Zealand UK & Euro
Slide 28: Customer loans and deposits by client segment
Customer loans and deposits by client segment Customer Lending1 Customer Deposits For personal use only Australia New Zealand Institutional Australia Commercial New Zealand Commercial Commercial 11% APEA 16% 13% Australia Commercial 5% Institutional 11% 2% New Zealand Commercial Australia APEA Retai
Slide 29: Strategy & Performance
For personal use only 1 May 2014 Strategy & Performance
Slide 30: Executing a focused strategy across Asia Pacific
ANZ is executing a focused strategy to build the best connected, most respected bank across the Asia Pacific For personal use only SUPER REGIONAL STRATEGY STRONG PROFITABLE ENTERPRISE CORE ASIAN APPROACH MARKETS GROWTH STRONG LIQUIDITY AND CAPITAL MANAGEMENT DISCIPLINED AND EXPERIENCED MANAGEMENT 30
Slide 31: Banking on Australia is transforming the business
Banking on Australia is transforming the business STRONG CORE MARKETS Transforming our distribution channels Building our lead in mobile & digital For personal use only 400+ Smart ATMs >53% Customers that are digital users 85 New look sales focused branches 1.1m ANZ goMoneyTM active users Over the C
Slide 32: Driving growth in our core markets
And driving growth in our core markets STRONG CORE MARKETS Australia Division 1H14 NPAT up 5% to $1.48 billion For personal use only Retail Corporate & Commercial Banking Strongest growth of the major #1 domestic banks in Home loans 16% Small Business lending growing at 1.2x system1 Consecutive qua
Slide 33: Improving productivity and returns in Australia Division
As well as improving productivity and returns across all areas of Australia Division STRONG CORE MARKETS Continued cost discipline Improving Branch productivity For personal use only Cost to Income Ratio Customer Branch Traffic and Sales Productivity Index Sept 11 = 100 80bps Sales per FTE 38.1% 120
Slide 34: Winning in New Zealand with geographic CTI below 40%
Winning in New Zealand with geographic CTI below 40% for the first time STRONG CORE MARKETS NZ Division 1H14 NPAT up 21% to NZD 598 million For personal use only NZ Division ROE accretive to ANZ Group: up 235bps to 15.8% 1 Efficiency Market Share Brand CTI 41.5% for NZ Brand consideration Both total
Slide 35: New Zealand Division – Returns now accretive to Group
New Zealand Division – Returns now accretive to Group STRONG CORE MARKETS Net Profit after Tax Return on Average Assets Cost to Income For personal use only NZDm 21% 16bps 370bps 598 1.21% 1.24% 45.2% 569 1.08% 494 41.9% 41.5% 1H13 2H13 1H14 1H13 2H13 1H14 1H13 2H13 1H14 Branch Coverage1 Revenue per
Slide 36: New Zealand: scale and technology improve customer experience
New Zealand Division - Using scale and technology to improve customer experience STRONG CORE MARKETS Leading to increased product 1 Providing easy ways to bank … 4 penetration and cross sell … For personal use only goMoneyTM rated #1 Growth in Retail customers Cross-sell of Institutional #1 banking
Slide 37: Global Wealth delivering value to ANZ's strategy
Global Wealth delivering value to ANZ’s strategy STRONG CORE MARKETS Customer economics1 Important source of liquidity For personal use only Customer attrition Revenue per customer Mar 13 Mar 14 $b $b $14b $18b -46% +60% Net Liquidity +22% Net Liquidity 24 28 10 13 10 10 14 6 15 6 4 4 Without With W
Slide 38: Growing the Wealth business through ANZ channels
Growing the Wealth business through ANZ channels STRONG CORE MARKETS Growth in Wealth solutions held by ANZ Increasing productivity of ANZ Financial For personal use only Customers1 Planning # Inflows Retail Life Sales 10% $m $m 48% 13% 818 826 18 17 558 15 1H13 1H14 1H13 2H13 1H14 1H13 2H13 1H14 Fo
Slide 39: Leveraging a profitable franchise in Asia
Leveraging a profitable franchise in Asia PROFITABLE ASIAN GROWTH International & Institutional A Top 4 Corporate Bank in Asia For personal use only Banking Asia • AA rated bank with an established regional network and Net Profit after Tax (USDm)1 growing client base Return on RWA (Basel 3 basis) •
Slide 40: ANZ recognised as a leading regional bank in Asia Pacific
ANZ recognised as a leading regional bank in the PROFITABLE ASIAN GROWTH Asia Pacific APEA growing contribution to A top 4 Corporate Bank in Asia2 For personal use only Group Operating Income by Market Penetration APEA % of Group Operating Income Greenwich Associates Large Corporate Study 24% Asian
Slide 41: Value of our networked International & Institutional business
The value of our networked International & PROFITABLE ASIAN GROWTH Institutional business is driving improved returns IIB Operating Income IIB Operating Income Growth For personal use only Income by Segment Income Mix By Type 1H14 v 2H13 1H14 v 1H13 27% Retail / Partnerships / Other Net Interest Inc
Slide 42: Trade & Supply Chain supporting super regional strategy
Trade & Supply Chain supporting super regional PROFITABLE ASIAN GROWTH strategy and profitable Asian growth TSC a key driver of non-interest income ANZ a leading Trade & Supply Chain Bank For personal use only both directly and via cross-sell • Trade and Supply Chain (TSC) delivers cross TSC Direct
Slide 43: Increased scale driving greater efficiency and returns
Increased scale driving greater efficiency and returns PROFITABLE ASIAN GROWTH Operations productivity gains being IIB Asia Cost to Income Ratio (%) For personal use only achieved through increased volume Operations Expense per Transaction $/Trans. 66% 67% 16.5 61% 55% 13.5 10.5 7.5 FY11 FY12 FY13 1
Slide 44: Lower risk balance sheet through shorter duration
Delivering a lower risk balance sheet through shorter PROFITABLE ASIAN GROWTH duration and better asset quality Institutional Asia Tenor Institutional Asia Risk Grade Profile For personal use only by Exposure at Default by Exposure at Default 70% < 1 Year Tenor 73% Investment Grade Exposures 1 USDb
Slide 45: Building common infrastructure
Building common infrastructure for greater responsiveness, productivity and control ENTERPRISE APPROACH Core processes in multiple locations on We have created a regional delivery For personal use only common systems mitigates disruption network to consolidate and standardise risk & allows greater f
Slide 46: Improved productivity and better customer experience
Delivering improved productivity and a better customer experience, some examples include: ENTERPRISE APPROACH Operations Volume Growth Transaction Quality, Manual Payments For personal use only 1H14 v 1H13 Defects Per Million 9% 8% 8% 8% 865 7% 670 495 400 180 151 Total Australia New IIB Global 1H11
Slide 47: Case Study: Greater China
For personal use only 1 May 2014 Case Study: Greater China
Slide 48: Greater China franchise supporting trade and capital flows
Our Greater China franchise is focused on supporting large and growing trade and capital flows Trade and capital flows between Greater For personal use only Trade and capital flows within Greater China and the rest of world continue to China also present significant opportunities grow strongly. Grea
Slide 49: Strategic focus resulting in strong customer franchise
ANZ’s well defined strategic focus has resulted in a strong customer franchise and growing business Strategic Focus Corporate Profile For personal use only ANZ Greater China strategy is focused on: Presence Staff Branches since 1. Being the bank of choice for Greater China corporates and affluent in
Slide 50: Group Treasury
For personal use only 1 May 2014 Group Treasury
Slide 51: ANZ is well capitalised
ANZ is well capitalised Capital Update Basel 3 Common Equity Tier 1 (CET1) For personal use only 10.8% 10.5% • Capital levels will grow organically in the lead up 10.0% to the introduction of the higher loss absorbing 8.5% 8.3% 8.0% capital requirements for D-SIB‟s in 2016 • $1.6b ANZ Capital Notes
Slide 52: Strength of ANZ's capital levels on a global comparison
The strength of ANZ’s capital levels (CET1) is more apparent on a global comparison Australia Canada UK For personal use only >11.5% >11.0% CCB & D-SIB 10.5% effective 1 Jan 2016 9.3% 9.6% 8.0% 8.3% 1.0% D-SIB 2.5% CCB 4.5% CET1 APRA ANZ ANZ ANZ Canadian Peer ANZ UK Peer Average 2 Minimum APRA (Inte
Slide 53: Stable Balance Sheet composition
Stable Balance Sheet composition Stabilised funding mix Tenor of Assets has shortened For personal use only 29% 18% 18% 16% 25% 25% 7% 15% 15% 13% 13% 22% 8% 3% 3% 1% 8% 8% 12% 12% 4% 4% 7% 14% 80% 62% 62% 72% 72% 50% 7% 8% 8% 4% 3% 3% 1 Sep 08 Sep 13 Mar 14 Sep 08 Sep 13 Mar 14 SHE & Hybrid Debt Cu
Slide 54: Well diversified term wholesale funding portfolio
A well diversified term wholesale funding portfolio Term Wholesale Funding Portfolio1 For personal use only $b Issuance Maturities 26 24 24 21 Annual indicative 19 18 issuance volume 16 14 13 12 7 1 2 3 FY10 FY11 FY12 FY13 FY14 FY14 FY15 FY16 FY17 FY18 FY19 FY20+ Senior Unsecured Covered Bonds Tier
Slide 55: Structural funding gap
Structural funding gap Australian household credit growth not Peer Funding Comparison For personal use only expected to return to previous levels % Change ANZ requires Household Sector Growth (YoY) ~$45b less Average (Mar 99 - Mar 08) wholesale funding 25 Average (Mar 08 - Mar 14) 183 to meet this g
Slide 56: Liquidity Portfolio – well placed for introduction of LCR
Liquidity Portfolio – well placed for introduction of LCR Liquid Assets1 Liquidity Update For personal use only $b • Reduction in internal RMBS in Australia 122 117 during the first half of FY14 is due to higher prescribed haircuts from the RBA2 39 35 • The final APS210 (Basel 3) liquidity standard
Slide 57: Foreign currency hedging
Foreign currency hedging 1H14 Earnings Composition Earnings per Share FX Impact For personal use only (by Currency) 1.9% AUD 1.1% 55% IDR Other 21% NZD 1H14 v 1H13 1H14 v 2H13 24% Translation Rates (inclusive of hedges) • A key objective of hedging is to manage short term 1.35 1.04 EPS volatility ar
Slide 58: Capital and replicating portfolio: low interest rate impact
Capital and replicating portfolio: Impact from a low interest rate environment on Group NIM is reducing Australia New Zealand For personal use only 1H14: ~$180m portfolio earnings benefit 1H14: ~A$60m portfolio earnings benefit relative to the average RBA cash rate relative to the average RBNZ cash
Slide 59: Risk Management
For personal use only 1 May 2014 Risk Management
Slide 60: Credit Quality – ongoing improvement
Credit Quality – ongoing improvement Credit Quality Trends Provision Charge For personal use only 1H14 v 2H13 Individual Provision (IP) Charge (LHS) $m Collective Provision (CP) Charge (LHS) Collective Provision Total Provision Charge as % Avg. Net Advances 93bps Coverage1 1,000 750 500 250 0.36% 0.
Slide 61: Collective Provision
Collective Provision Significant “de-risking” across portfolios is CP Coverage Reflective of Portfolio Risk For personal use only evident from the CP movement $b • ANZ remains prudently provided for with a Credit Risk Weighted Assets Collective Provision as a % of CRWA collective provision coverage
Slide 62: Individual Provisions
Individual Provisions Individual Provision Charge by Segment Individual Provision Charge Composition For personal use only $m Institutional Commercial Consumer $m New Increased Writebacks & Recoveries 1,000 1,500 915 915 1,250 609 722 594 595 572 602 900 1,000 750 500 800 250 722 0 700 -250 609 -500
Slide 63: Watch and Control List
Watch and Control List Group Sub-Investment Grade1 Exposures Control List For personal use only as % Exposure at Default Control List by Limits Control List by No of Groups <BB- BB- BB+ to BB Index Sep 09 = 100 27.6% 27.8% 120 100 25.1% 80 23.4% 60 22.1% 21.6% 40 12.6% 12.5% 20 11.7% Mar 10 Mar 11 M
Slide 64: Gross Impaired Assets
Gross Impaired Assets Gross Impaired Assets by Type Gross Impaired Assets by Size of Exposure For personal use only Impaired Loans NPCCD1 Restructured > $100m $10-$99m < $10m $m $m 7,000 7,000 6,221 6,221 6,000 6,000 5,581 5,581 5,343 5,343 5,196 5,196 5,000 5,000 4,685 4,685 4,264 4,264 4,000 4,000
Slide 65: Net Impaired Assets
Net Impaired Assets Impaired Assets Concentration New Impaired Assets by Division For personal use only by number of Customers1 Australia New Zealand IIB Other $10-50m $51-100m $101-200m >$200m $m 3,000 2% 2% 3% 2% 3% 3% 5% 3% 3% 3% 3% 3% 5% 2,437 2,356 11% 9% 8% 2,500 17% 19% 16% 11% 2,000 1,842 1,
Slide 66: Loss Rates Comparison
Loss Rates Comparison Loss rates continue to decline… For personal use only Group Regulatory Expected Loss bps of • Regulatory Expected Loss is a one-year downturn loss EAD measure as prescribed by APRA and reported in the 27bps Results Announcement • Includes conservative overlays that are not refl
Slide 67: Risk Weighted Assets
Risk Weighted Assets Total Risk Weighted Assets Total Risk Weighted Assets For personal use only Movement Mar 2014 v Sep 2013 $b $b Markets & Operational Risk Weighted Assets 3 361 Credit Risk Weighted Assets 18 1 361 339 339 55 324 Up 6% 51 300 50 Sep 13 Credit Market & Operational Mar 14 280 Risk
Slide 68: Credit Risk Weighted Assets
Credit Risk Weighted Assets Group Exposure at Default Credit Risk Weighted Assets For personal use only and Credit Risk Weighted Assets Movement Mar 2014 v Sep 2013 Exposure at Default ($b) $b Credit Risk Weighted Assets ($b) 3.4 305.3 3.4 CRWA / EAD (%) 12.2 779 741 287.7 692 658 1.4 615 630 564 Se
Slide 69: Traded Market Risk & IRRBB Risk Weighted Assets
Traded Market Risk & IRRBB Risk Weighted Assets Decisions driving Risk Weighted Asset and Market Risk Weighted Asset Trends For personal use only VaR outcomes • RWA for Interest Rate Risk in the Banking Book (IRRBB) $b IRRBB RWAs $m was lower primarily due to a reduction in the 25 Traded Market Risk
Slide 70: Total Credit Exposure (EAD) by Industry
Total Credit Exposure (EAD) by Industry Exposure at Default (EAD) % in Non Category EAD For personal use only as a % of group total Performing ANZ Group Mar 13 Sep 13 Mar 14 Mar 13 Sep 13 Mar 14 Total EAD (Mar 14) Consumer Lending 40.4% 40.8% 40.3% 0.2% 0.2% 0.2% $762b Finance, Investment & 16.8% 15
Slide 71: Asia and Trade Finance
Asia and Trade Finance Strong quality Asia Exposure Trade Finance Investment Grade Exposure For personal use only • Strong growth in Trade Finance portfolio focussed $b Investment Grade Sub-Investment Grade on shorter duration exposures to investment grade counterparties 60 • The Trade Finance portf
Slide 72: Resources
Resources Resources Exposure by Sector (% EAD) Resources Exposure by Geography (EAD) For personal use only Resources Total EAD (Mar 14) As a % of Group EAD 19% Australia $17.2b 2.3% Asia 6% 48% New Zealand 16% 6% 27% Europe, America, Pacific & Other 23% (includes Resources Exposure by Geography (EAD
Slide 73: Agriculture
Agriculture New Zealand Agri Exposure and Average Agriculture Exposure by Sector (% EAD) For personal use only Probability of Default NZD Total Credit Exposure (LHS) Agriculture NZDb Average PD (Non-Defaulted Customers) (RHS) Total EAD (Mar 14) As a % of Group EAD 25 2.5% $32.1b 4.2% 20 2.0% 15 1.5%
Slide 74: Commercial Property Lending
Commercial Property Lending Commercial Property Outstandings by Commercial Property Outstandings by For personal use only Region Sector APEA (LHS) New Zealand (LHS) Australia (LHS) % of Group GLA's (RHS) 27% Offices $b Retail 35 8.0% Residential 30% 21% Industrial 30 4.1 4.5 Tourism 3.5 4.0 7.5% 3.1
Slide 75: Australia Division Credit Quality
Australia Division Credit Quality Australia Home Loans 90+ day Australia Division Credit Exposure (EAD) For personal use only delinquencies by state1 Mar 11 Mar 12 Mar 13 Mar 14 2 Home Loans 1.2% Corporate & 24% 1.0% Commercial 0.8% Consumer Cards 0.6% 6% 1% 0.4% Personal Loans 68% 1% 0.2% Other 0.0
Slide 76: Australia Division - Home Loan Portfolio
Australia Division - Home Loan Portfolio1 1H14 Portfolio Statistics Dynamic Loan to Value Ratio For personal use only % of Portfolio Total Number of Home Loan Accounts 903k 60% Total Home Loans FUM $202b 50% 40% % of Total Australia Geography Lending 59% LVR >90% = 2.3% 30% (Mar 14) % of Total Group
Slide 77: Lenders Mortgage Insurance
Lenders Mortgage Insurance Background ANZLMI maintains industry low loss ratios 1 For personal use only • ANZ‟s Captive Mortgage insurance business Industry ANZ LMI (ANZLMI) provides Lenders Mortgage Insurance Insurer 1 Insurer 2 for residential mortgages originated through ANZ Insurer 3 LMI 17.5% c
Slide 78: New Zealand - Home Loan Portfolio
New Zealand - Home Loan Portfolio 1H14 Portfolio Statistics Dynamic Loan to Valuation Ratio For personal use only Total Number of Home Loan Accounts 484k 0-60% Total Home Loan FUM (NZD) $61b 8% 61-70% 10% % of Total New Zealand Lending 59% 47% 71-80% 18% % of Total Group Lending 11% 81-90% Owner Occ
Slide 79: New Zealand – Credit Quality
New Zealand – Credit Quality New Zealand Geography New Zealand Geography For personal use only Net Impaired Assets Total Provision Charge NZDm NZDm Net Impaired Assets NIA as % GLA IP Charge CP Charge 1,685 200 105 85 103 150 99 100 44 22 50 -39 1,307 0 -50 1,169 -100 1H11 2H11 1H12 2H12 1H13 2H13 1
Slide 80: Divisional Performance
For personal use only 1 May 2014 Divisional Performance
Slide 81: Australia Division 1H14 Profit & Loss Performance
Australia Division 1H14 Profit & Loss Performance AUSTRALIA DIVISION Financial Highlights – 1H14 Cost to Income Ratio For personal use only $m 1H14 v 1H13 v 2H13 39.8% Operating Income 4,017 4% 1% Operating Expenses (1,500) 2% 1% 38.8% 38.1% Profit before Provisions 2,517 5% 1% 37.4% 37.3% Provision
Slide 82: Australia Division 1H14 Balance Sheet Performance
Australia Division 1H14 Balance Sheet Performance AUSTRALIA DIVISION Australia Division Balance Sheet For personal use only Mar v Sep v Mar Customer Deposits Customer Lending $b 2014 2013 2013 Offset Balances Asset Finance Customer Deposits 156.3 3% 7% 6% Retail Deposits 109.4 2% 7% Transaction 11%
Slide 83: Retail – continuing to perform strongly
Retail – continuing to perform strongly AUSTRALIA DIVISION Strongest Home Loan growth of the … supported by growth in Retail Deposits1 For personal use only majors1… Household Lending Market Share Growth (%) Household Deposits Market Share Growth (%) Index Sep-12 = 100 Index Sep-12 = 100 ANZ Peer 1
Slide 84: Retail – increasing staff capability and sales capacity
Retail – we are increasing staff capability and freeing up sales capacity which is improving staff productivity AUSTRALIA DIVISION … leading to strong growth in frontline Increased sales capability and capacity… For personal use only sales productivity… Branch sales staff accredited to sell home Aus
Slide 85: C&CB – increasing sales capability and capacity
C&CB – increasing sales capability and capacity to drive outperformance AUSTRALIA DIVISION Improved sales capability… … and investments in improving capacity … For personal use only Training hours completed with specific 35k focus on credit, sales & Super Regional 1 Increase in the amount of time fr
Slide 86: C&CB strong lending sales despite subdued demand
And C&CB is seeing strong lending sales despite subdued demand for credit AUSTRALIA DIVISION … however this is yet to Despite this we have Business confidence has For personal use only translate into demand for increased our customer improved recently… business credit. numbers… Business Confidence1
Slide 87: C&CB – credit metrics continue to strengthen
C&CB – credit metrics continue to strengthen: diversified portfolio, increasing quality, reducing impaired assets AUSTRALIA DIVISION Diversified by customers… … by industry sector… For personal use only Net Lending Assets Exposure at Default by industry sector (%) (as at Mar 14) Corporate Banking AN
Slide 88: Strategy to target less balance sheet intensive business
Strategy to target less balance sheet intensive business delivering improved returns Maintained return on capital despite 1H14 Highlights IIB DIVISION For personal use only margin headwinds Return on RWA2 NIM Ex-Markets NIM incl-Markets 15% Fees and Other Operating Income1 3.35% 2.95% Network incom
Slide 89: IIB Division 1H14 Profit & Loss Performance
IIB Division 1H14 Profit & Loss Performance Financial Highlights – 1H14 IIB DIVISION For personal use only FX Adjusted FX Adjusted $m 1H14 v 1H13 v 2H13 v 1H13 v 2H13 Operating Income 3,592 9% 8% 4% 7% Operating Expenses (1,598) 10% 4% 3% 3% Profit before Provisions 1,994 9% 12% 4% 11% Provisions (c
Slide 90: IIB Division 1H14 Balance Sheet Performance
IIB Division 1H14 Balance Sheet Performance IIB Customer Deposits IIB Customer Lending IIB DIVISION For personal use only Movement Mar 2014 v Mar 2013 Movement Mar 2014 v Mar 2013 $b $b 0.2 0.4 172.0 17.2 151.8 2.4 4.0 136.3 114.5 4.5 11.1 2.2 +22% +27% flat +19% +38% +17% +16% +31% 1H13 Retail Paym
Slide 91: Global Markets - delivering on growth agenda
Global Markets - delivering on growth agenda Growth being driven by customer sales and higher return priority products IIB DIVISION For personal use only Global Markets Operating Income – CAGR 1H10 to 1H14 22% 19% 16% 6% 7% 5% Total Markets Trading & Balance Sales Foreign Exchange APEA Asia Sheet Co
Slide 92: Global Markets a more diverse, lower risk business
Global Markets a more diverse, lower risk business Improved risk profile through focus on Greater spread of income by geography IIB DIVISION For personal use only client driven income Global Markets Operating Income Mix by Geography $m Operating Income / Value at Risk1 Australia NZ Asia Other APEA G
Slide 93: Transaction Banking – driving our regional expansion
Transaction Banking – driving our regional expansion Transaction Banking Operating Income Growing trade finance directly with Asian IIB DIVISION For personal use only Movement 1H14 v 1H13 corporates Funded Trade Portfolio $m 37 815 45 $b Asia Ex-Asia Financial Institutions 733 Other Corporates 40 30
Slide 94: Productivity focus while investing in targeted growth areas
Productivity focus maintained whilst continuing to invest in targeted growth areas IIB Operating Expense Focusing investment towards faster IIB DIVISION For personal use only Movement 1H14 v 1H13 growing markets % IIB Operating Expenses outside Australia / New Zealand Asia & Europe 60% Frontline FTE
Slide 95: New Zealand Division 1H14 Profit & Loss Performance
New Zealand Division 1H14 Profit & Loss Performance NEW ZEALAND DIVISION Financial Highlights – 1H14 NIM For personal use only NZDm 1H14 v 1H13 v 2H13 Average Interest Earning Assets NIM Operating Income 1,357 3% -1%1 2.50% 2.49% 2.48% Operating Expenses (563) -6% -1% 10 0,00 0 98 ,000 Profit before
Slide 96: New Zealand Division 1H14 Balance Sheet Performance
New Zealand Division 1H14 Balance Sheet Performance NEW ZEALAND DIVISION New Zealand Division Balance Sheet For personal use only NZDb Mar 2014 Sep 2013 Mar 2013 v Sep 2013 v Mar 2013 Customer Lending1 94.9 92.5 90.5 3% 5% Retail 37.0 36.5 36.0 1% 3% Small Business Banking (SBB) 21.9 20.5 19.3 7% 13
Slide 97: Retail – Using our distribution network to drive more sales
Retail – Using our distribution network to drive more sales NEW ZEALAND DIVISION 1H14 Performance: NPAT up 25% to NZD 222m For personal use only Strong momentum in mortgage 7% Branch coverage since Sep 11 FUM share4 31% 30.7% Time spent on sales by frontline 31% 10% staff 29.9% 30% 30% 47% Increa
Slide 98: Retail – Grew mortgage share within RBNZ caps
Retail – Grew mortgage share while remaining well within RBNZ caps NEW ZEALAND DIVISION Share of new mortgage sales in all Now #1 in Auckland and Christchurch as #1 For personal use only major NZ cities1 well Share of new mortgage Share of new mortgage 22bps Mortgage market share YTD2 sales in Auck
Slide 99: Commercial – Return to growth after remediation
Commercial – Return to growth after period of remediation NEW ZEALAND DIVISION 1H14 Performance: NPAT up 14% to NZD 377m For personal use only Commercial lending share1 - Commercial lending growth above system3 20bps growth in all regions YTD Commercial lending Commercial deposits Cross-sell revenu
Slide 100: Global Wealth Division 1H14 Profit & Loss Performance
Global Wealth Division 1H14 Profit & Loss Performance GLOBAL WEALTH DIVISION Financial Highlights – 1H14 Embedded Value2 For personal use only $m $m 1H14 v 1H13 v 2H13 41 3,963 253 3 Operating Income 806 8% 3% Operating Expenses (494) 7% 1% 3,765 198 Profit before Provisions 312 11% 7% 3,666 Provisi
Slide 101: Insurance
Insurance GLOBAL WEALTH DIVISION Retail and Direct Life Insurance Inforce For personal use only Increase in Retail and Direct Life 13% Inforce $m Australia New Zealand 13% Lower lapse rates driven by 120bps retention activity in Australia and 1,067 1,132 1,006 New Zealand 147 175 137 Cash Profit i
Slide 102: Funds Management
Funds Management GLOBAL WEALTH DIVISION Strong Netflows driven by an Funds Management Netflows For personal use only $1.1b increase in ANZ Financial Planning productivity $m $1.1b 686 Average FUM driven by investment 14% market gains and improvement in Netflows 34 17% Cash Net Profit after Tax (4
Slide 103: Embedded Value – Insurance and Investments
Embedded Value – Insurance and Investments GLOBAL WEALTH DIVISION Embedded Value1 For personal use only $m 41 3,963 174 3 3,765 79 198 3,666 Up 8% Sep 13 Value of Expected Experience Risk Subtotal Net Mar 14 New Business Return Deviations Discount Transfers & FX • Strong business performance and imp
Slide 104: For personal use only
For personal use only 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 p
Australia and New Zealand Banking Group Limited (ANZ) — 1H14 Earnings Presentation on 6ix