Anz Group Holdings Limited · ASX:ANZ
Anz — Australia and New Zealand Banking Group — Debt Investor Presentation (May 2018)
96 slides from Anz's debt investor presentation, May 2018
Slide 1: 2018 First Half Results Debt Investor Update
2018 FIRST HALF RESULTS DEBT INVESTOR UPDATE AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Financial information within this Results Presentation & Investor Discussion Pack is on a Cash Profit (Continuing Operations) basis (as defined in the Half Year 31 March 2018 Consolidated Financial Report,
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 Confidential background information The material in this document is general background information about activities of the Australia and New Zealand Banking Group (the “Bank”), the date of the document. It is information given in summary f
Slide 3: Contents
CONTENTS 2018 FIRST HALF RESULTS CEO 1H18 Presentation 4 1H18 Group Financial Performance 14 Group Treasury 38 Risk Management 46 Housing Portfolio 63 Economics 76 Appendices 92 All figures within this investor discussion pack are presented on Cash Profit (Continuing operations) basis in Australian
Slide 4: Overview: Delivered on our promise to simplify ANZ
OVERVIEW DELIVERED ON OUR PROMISE TO SIMPLIFY ANZ • Focusing where we can win • Divesting non-core assets • Reducing complexity • Reducing fees and interest rates for many core services • Decommissioning redundant technology applications • Progressing customer and process remediation • Re-shaping ou
Slide 5: Financial Snapshot
FINANCIAL SNAPSHOT STRENGTHENED THE BUSINESS, MANAGED COSTS, IMPROVED RETURNS 1H18 Change $m vs 1H17 Statutory Profit 3,323 +14% Cash Profit (continuing operations) Cash Profit After Tax 3,493 +4% Earnings Per Share (cents) 119.4 +4% Return on Equity 11.9% +32bp Dividend Per Share (cents) 80 Stable
Slide 6: Four Priorities
FOUR PRIORITIES 1. Creating a simpler, better balanced 2. Focusing on areas where we can win bank 3. Building a superior everyday 4. Driving a purpose and experience to compete in the digital age values led transformation ASSUMPTIONS UNDERLYING THE STRATEGY 1. Constrained sector growth (High househo
Slide 7: A Better Balanced Bank
A BETTER BALANCED BANK CAPITAL ALLOCATION SEPTEMBER 2015 Pro forma MARCH 20181 (%) Institutional Retail & Commercial Wealth Above allocation based on Regulatory Capital. Institutional shown under 2015 IIB Structure, including Global Institutional and Asia Retail & Pacific. 1. Pro forma incorporates
Slide 8: Strategic Progress
S T R AT E G I C P R O G R E S S 1H18 • Finalised sale of retail and wealth business in Asia along with ANZ’s stake in Shanghai Rural Commercial Bank (SRCB) and half our stake in Metrobank Card 1. Creating a simpler, better Corporation (MCC). balanced bank • Announced sale of the Australian Pensions
Slide 9: Competing in a Digital Age
C O M P E T I N G I N A D I G I TA L A G E BUILDING A SUPERIOR EVERYDAY EXPERIENCE • #1 ranked banking app in the Australian App store1 • ~25,000 users joining each day2 • Delivered by our first team to adopt New Ways of Working • Dedicated team focused on maintaining leadership App Rating3 # of Rat
Slide 10: Competing in a Digital Age: Digital Payments
C O M P E T I N G I N A D I G I TA L A G E LEADERSHIP POSITION WITHIN THE DIGITAL PAYMENTS MARKET DIGITAL WALLETS CARDS AVAILABLE WITHIN DIGITAL WALLETS DIGITAL WALLET # TRANSACTIONS DIGITAL WALLET $ TRANSACTIONS Index: Feb 16 = 100 Index: Feb 16 = 100 Index: Feb 16 = 100 000’s 000’s 000’s 20 30 35
Slide 11: Purpose & Values Led Transformation
P U R P O S E & VA L U E S L E D T R A N S F O R M AT I O N • Clear Purpose, Values, Expectations • Long term focus on engaging our people • Rebalancing performance scorecards • Changing what we expect from leaders • Critical driver of long term shareholder value PERFORMANCE SCORECARD1 Highest weigh
Slide 12: Outlook
OUTLOOK • Australia, NZ & regional economies continue to grow • Household debt has increased, at a slowing rate • Credit conditions remain benign across the region • Credit standards tightening • Credit growth in the regulated sector is slowing • Reinforces our strategy and the actions we’ve taken a
Slide 13: Corporate Sustainability
C O R P O R AT E S U S TA I N A B I L I T Y OUR SUSTAINABILITY AGENDA PROGESS ON FY18 SUSTAINABILITY TARGETS As part of our strategic priority to drive a purpose and Funded and facilitated $8.3 billion in low carbon and values-led transformation of the bank, we are prioritising sustainable solutions
Slide 14: Financial Update
2018 FIRST HALF RESULTS FINANCIAL UPDATE AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 15: 1H18 Overview
1H18 OVERVIEW WORKED HARD TO BE A BETTER BALANCED, BETTER CAPITALISED & SIMPLER BANK CASH EARNINGS PER SHARE1 cents • Strengthened capital: CET1 11.0% 3.3 119.4 117.9 0.2 0.2 • $1.5bn share buyback underway -2.2 • 4th consecutive half of absolute cost reduction 2H17 Divested Change in Major business
Slide 16: Financial Performance
FINANCIAL PERFORMANCE CASH PROFIT (CONTINUING OPERATIONS) • $m 1H18 Change Change (ex divested assets)1 $m vs 1H17 vs 2H17 vs 1H17 vs 2H17 Cash Profit (continuing) 3,493 4.1% 1.1% (2.6)% 1.0% Operating Income 9,808 (1.7)% (0.3)% (3.8)% (0.3)% Operating Expenses 4,411 (1.7)% (1.5)% 0.2% (0.2)% Profit
Slide 17: Discontinued & Large / Notable Items
D I S C O N T I N U E D & L A R G E / N O TA B L E I T E M S FIRST HALF 2018 ($m) GAIN/LOSS ON SALE DIVESTMENT IMPACT 617 3,493 86 0 0 0 3,331 2,876 -121 -85 -18 -24 1H18 Cash Discontinued 1H18 MCC SRCB Asia Retail UDC MCC SRCB Asia Retail Other1 1H18 ex Profit Continuing L/N items SECOND HALF 2017
Slide 18: Expenses
EXPENSES DRIVERS & PRODUCTIVITY EXPENSES ASIA RETAIL LEGACY COST REDUCTION PROFILE $m $m 4,480 16 350 52 On track to meet 275 FY18 reduction -75 4,411 -85 ~140 -62 -75 ~-50 Sep-16 FY17 Sep-17 FY18 FY19 Residual indirect costs (Post FY19) FULL TIME EQUIVALENT STAFF (FTE) # 46,046 44,896 42,873 -2,023
Slide 19: Expenses
EXPENSES EXPENSES BY CATEGORY EXPENSES BY DIVISION FTE BY DIVISION Continuing Operations Continuing Operations Full time equivalent staff # $m $m 4,487 4,480 4,411 4,487 4,480 4,411 50,152 Continuing operations basis1 48,896 126 136 123 2,821 2,622 46,554 701 334 280 146 816 721 2,562 44,015 371 5,5
Slide 20: Investment Spend
INVESTMENT SPEND INVESTMENT SPEND COMPOSITION ($m) BY DIVISION ($m) 482 482 469 469 437 437 31% 35% 368 368 31% 270 273 1% 10% 38% 306 9% 198 18% 21% 2% 22% 16% 81 102 76 49 46% 38% 38% 44% 115 110 82 94 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 Business Initiatives Infrastructure / Other Risk & Compl
Slide 21: Investment Spend
INVESTMENT SPEND INVESTMENT SPEND CAPITALISED SOFTWARE BALANCE EXPENSED / CAPITALISED ($m) $b 482 3.0 469 437 28% 368 2.5 Average 58% 66% amortisation period 4.9 years Average amortisation 57% period 3.3 years 2.0 72% 1.5 42% 43% 34% 1.0 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 Capitalised investment
Slide 22: Net Interest Margin
NET INTEREST MARGIN GROUP NET INTEREST MARGIN (NIM) bp NIM dilutive but ROE accretive 198 1 2 2 197 Divested NLAs $3.3b, -1 Deposits $3.6b 2H18 impact on NIM expected to be ~1bp -3 -2 -3 193 -1 -1bp 2H17 Funding & Funding costs Major Deposits Assets Treasury 1H18 ex Markets Asia Retail 1H18 Asset mi
Slide 23: Risk Adjusted Margins & Returns
RISK ADJUSTED MARGINS & RETURNS NII / AVERAGE CREDIT RWA1 MOVEMENT DIVISIONAL NET INTEREST INCOME / AVG CRWA % % Australia2 New Zealand Institutional1 6.14 6.03 6.02 5.11 0.15 4.57 4.78 4.87 4.52 -0.04 -0.06 2.21 2.07 2.13 2H17 Impact of Impact of Portfolio 1H18 1H17 2H17 1H18 1H17 2H17 1H18 1H17 2H
Slide 24: Credit Impairment Charges
C R E D I T I M PA I R M E N T C H A R G E S TOTAL PROVISION CHARGE INDIVIDUAL PROVISION CHARGE $m $m 1,038 -312 1,047 1,500 892 787 554 1,000 430 918 26 500 447 720 0 357 -500 225 Loss rate 1H16 2H16 1H17 2H17 1H18 14bp 479 New Increased Writebacks & Recoveries 216 203 186 196 408 28 COLLECTIVE PRO
Slide 25: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE Actions taken to improve risk profile: • Sold Asia Retail & Wealth businesses (IEL 151bp)1 • Sold Esanda Dealer Finance business (IEL 100bp)2 • Largely exited Emerging Corporate portfolio in Asia (IEL 41bp)1 • Restricted growth in commercial property & unsecured pers
Slide 26: Balance Sheet Rebalancing
BALANCE SHEET REBALANCING TOTAL RISK WEIGHTED ASSETS1 INSTITUTIONAL RISK WEIGHTED ASSETS1 $b $b 409 192 397 391 396 169 166 388 23 21 15 11 79 20 66 65 60 58 57 56 55 113 103 101 Mar-16 Mar-17 Mar-18 121 147 International Aus, NZ & PNG 150 161 161 AUSTRALIA & NEW ZEALAND DIVISIONS2 Net Loans & Advan
Slide 27: Balance Sheet
BALANCE SHEET NET LOANS AND ADVANCES (BY DIVISION) $b $b 576 580 592 13 6 4 600 584 596 108 111 574 580 580 105 562 566 132 132 138 550 500 468 468 473 326 334 339 445 447 450 450 436 1H17 2H17 1H18 400 Australia Institutional NZ Other 350 300 CUSTOMER DEPOSITS (BY DIVISION) 250 $b 200 468 468 473 1
Slide 28: IFRS 9 - Estimated Impact
I F R S 9 - E S T I M AT E D I M PA C T COLLECTIVE PROVISION BALANCE & COVERAGE (ESTIMATED IMPACT) IAS 39 IFRS 9 Based on September 2017 Sep 17 ($m) Equivalent ‘estimate’ ($m) Collective Provision 2,662 ~2,900 to ~3,200 Estimated ~$235m to $535m increase in Collective CP balance / CRWA 0.79% ~0.86%
Slide 29: Australia Divisional Performance
AUSTRALIA DIVISIONAL PERFORMANCE FINANCIAL SUMMARY REVENUE DRIVERS $m 1H18 Change Retail Business & Private $m vs 1H17 vs 2H17 68 51 2 4,863 168 4,651 -47 -30 Revenue 4,863 4.6% 1.7% Operating Expenses1 1,812 8.6% 5.8% 1H17 Volume Margin Other Volume Margin Other 1H18 Income Income Profit Before Pro
Slide 30: Australia Division Strategic Focus
AUSTRALIA DIVISION PRIORITIES MOVEMENTS PRIORITIES ACTIONS METRICS FY15 FY16 FY17 1H18 Simplified products # Products decommissioned <10 <10 47 63 Optimised branch footprint # Branches 751 724 684 658 Create a simpler, better More digital branches # Digital branches 5 40 81 99 capitalised, better ba
Slide 31: Australia Division Digital
AUSTRALIA DIVISION DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES PEOPLE AND CUSTOMERS 3.6m Industry leading mobile payment services ANZ continues to lead the banking sector with its mobile payment 3.4m 3.3m services delivering more options for customers than any o
Slide 32: Institutional: Creating a Platform for Profitable Growth
INSTITUTIONAL CREATING A PLATFORM FOR PROFITABLE GROWTH $49bn (24%) RWA reduction and ~5,000 client exits SIMPLIFY AND in FY16-17 RIGHT SIZE THE BUSINESS Rebalanced portfolio toward home markets (from 56% to 62% in FY16-17)1 and higher returning products DRIVE PROFITABLE Leading market positio
Slide 33: Institutional Financial Performance
INSTITUTIONAL PROFITABLE CUSTOMER REVENUE GROWTH AND CONTINUED ABSOLUTE COST REDUCTION, DESPITE MAJOR BANK LEVY AND ASIA RETAIL HEADWINDS REVENUE1 EXPENSES1 TOTAL PROVISION CHARGES $m $m $m -17% -1% -4% -2% 3,055 2,575 2,544 1,422 129 1,392 1,371 2,146 54% 54% 49 2,009 2,038 47% -32 -77 1H17 2H17 1H
Slide 34: Institutional: Leading Market Positions
INSTITUTIONAL MAINTAINED OUR LEADING MARKET POSITIONS ACROSS OUR KEY GEOGRAPHIES AUSTRALIA NEW ZEALAND ASIA #1 Lead Bank Penetration1 #1 Lead Bank Penetration1 Top 4 Corporate Bank2 31% 46% 58% #1 Overall 26% Quality 47% 24% 24% 45% 28% = #4 33% 25% 9% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank
Slide 35: New Zealand Financial Performance
NEW ZEALAND FINANCIAL PERFORMANCE1 REVENUE EXPENSES TOTAL PROVISIONS NZDm NZDm NZDm 676 83 1,765 639 636 635 642 1,648 1,672 1,670 1,711 511 517 529 554 495 38.8% 40.4% 38.1% 46 37.1% 36.4% 44 39 22 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 1H16 2H16 1H17 2H17 1H18 Revenue Revenue/Avg FTE ($
Slide 36: New Zealand Division Strategic Focus
NEW ZEALAND DIVISION PRIORITIES PRIORITIES ACTIONS METRICS MAR 16 MAR 17 MAR 18 Brand Consideration1 45.8% 51.6% 52.1% Grow customer Migrant Banking Brand Consideration1 65.3% 72.3% 72.3% #1 in service satisfaction and brand consideration Retail Net Promoter Score2 0.1 9.9 15.9 KiwiSaver Provider3 2
Slide 37: New Zealand Digital
NEW ZEALAND DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR TRANSLATING INTO BUSINESS OUTCOMES PEOPLE AND CUSTOMERS +187k 1.4m 1.4m Delivering more customer functionality more often with 1.3m automated weekly no outage releases digitally active customers1 1.2m 1H16 1H17 1H18 Enhancing the home loan c
Slide 38: Group Treasury
2018 FIRST HALF RESULTS GROUP TREASURY AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 39: 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 APRA CET1 ratio of 11.0% is in excess of APRA’s ‘unquestionably % strong’ benchmark1 and well ahead of 2020 implementation. Net Organic Capital Generation +72bps Internationally Comparable2 CET1 ratio
Slide 40: 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 First half Organic Capital Generation COMMON EQUITY TIER 1 average 1H18 GENERATION (bp) Net organic capital generation of +72bps is +15bps stronger 1H12 – 1H17 relative to the average of 1H12 to 1H15 (prior to Institutional Cash Profit1 97 86 portf
Slide 41: 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) – 31 March 2018 11.0% Corporate undrawn EAD and Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many 1.5% unsecured LGD adjustment
Slide 42: 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 DBS Svenska Handelsbanken Intesa Sanpaolo Nordea UOB SEB Danske Bank OCBC ABN Amro BBVA Morgan Stanley RBS ANZ Standard Chartered RBS Erste Bank Rabobank APRA Top Groupe BPCE ANZ q
Slide 43: Balance Sheet Structure
BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET SOURCES AND USES OF FUNDS Sep 17 to Mar 18 $814b $814b $b Term Funding<12mth, 2% Short Term Assets1 7% Short Term Program Debt SOURCES USES 8% 9.5 Short Term Funding Liquids 23% (inc. FI / Bank Deposits and Repo Funding), 19% 3.2 3.4 0.0 -11.4 Fixed Asset
Slide 44: Funding & Liquidity Metrics
FUNDING & LIQUIDITY METRICS NSFR COMPOSITION NSFR MOVEMENT Mar 2018 Sep 17 v Mar 18 $492b Wholesale $428b % Funding Liquids 0.8% 0.2% 114.9% & Other1 and 0.4% Non Financial Other Assets2 1.0% Corporates 113.9% Other Loans3 -0.2% Retail/SME -1.3% 0.0% Residential Mortgages4 <35% Capital Available Req
Slide 45: Term Wholesale Funding Portfolio
TERM WHOLESALE FUNDING PORTFOLIO1 ISSUANCE MATURITIES $b 32 24 24 23 22 22 22 19 17 13 13 8 8 FY13 FY14 FY15 FY16 FY17 1H18 2H18 FY19 FY20 FY21 FY22 FY23 FY24+ Senior Unsecured Covered Bonds Tier 2 RMBS PORTFOLIO BY TYPE PORTFOLIO BY CURRENCY 8% 6% 1% 15% 22% 32% Senior Unsecured Domestic (AUD, NZD)
Slide 46: Risk Management
2018 FIRST HALF RESULTS RISK MANAGEMENT AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 47: Total & Collective Provision Charge
RISK MANAGEMENT TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE CP BALANCE BY DIVISION $m % $m 1,500 3,000 2,662 0.6 2,579 1,038 1,000 918 Mar18 vs Sep17 $m 720 695 0.4 2,000 510 479 Divisional mvt -102 500 408 0.2 FX impact +19 1,000 0 0.0 -500 -0.2 0 1H15 2H15 1H16 2H16 1H17 2H17 1
Slide 48: Individual Provision Charge
RISK MANAGEMENT INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL LOSS RATES EXPECTED LOSS bp Median IP Loss 300 % Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Rate = 32 bps 200 Australia Div. 0.35 0.33 0.33 0.33 0.31 New Zealand Div. 0.25 0.26 0.26 0.22 0.21 100 Institutional Div. 0.37 0.36 0.35 0.30 0.32 0 Ot
Slide 49: Impaired Assets
RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 4,000 3,173 2,940 2,708 2,719 2,883 3,000 100 2,384 2,034 2,000 50 1,000 0 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Mar- Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 09 10 11 12 13 14 15 16 17 1
Slide 50: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b 409 6.0 0.1 402 1.2 395.8 397 391 396 388 39 391.1 -2.6 38 39 37 38 37 14 18 17 17 16 16 Sep 17 Credit RWA Op RWA IRRBB RWA Mkt. RWA Mar 18 CRWA MOVEMENT 350 352 342 337 343 334 $b 3.5 342.8 3.1 336.8 -0.1 -0.5
Slide 51: Risk Weighted Assets
RISK MANAGEMENT RISK WEIGHTED ASSETS GROUP EAD1 & CRWAs GROUP EAD1 MOVEMENT $b MAR 18 v SEP 17 ($b) 930 903 889 894 899 903 21.0 930.2 903.1 10.1 -4.0 Sep 17 FX Impact Lending Mvmt. Data/Meth. Mar 18 Review GROUP EAD1 & CRWA GROWTH2 MOVEMENT 38.7% 39.4% 38.0% MAR 18 v SEP 17 ($b) 37.6% 37.3% 36.9% 1
Slide 52: Improving Portfolio Risk Profile
IMPROVING PORTFOLIO RISK PROFILE INTERNAL EXPECTED LOSS (IEL) (as a % of Gross Lending Assets) Actions taken to improve risk profile: GROUP TOTAL (%) INSTITUTIONAL (%) 0.37 0.37 • Sold Asia Retail & Wealth businesses (IEL 151bp)1 0.35 0.35 0.32 0.30 • Sold Esanda Dealer Finance business (IEL 100bp)2
Slide 53: Portfolio Composition
RISK MANAGEMENT PORTFOLIO COMPOSITION Portfolio % of Portfolio in Category % of Group EAD Balance in Non Non Performing Performing EXPOSURE AT DEFAULT (EAD) AS A % Sep 17 Mar 18 Sep 17 Mar 18 Mar 18 OF GROUP TOTAL Consumer Lending 41.5% 40.5% 0.1% 0.1% $425m Finance, Investment & Insurance 17.2% 18.
Slide 54: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSUMER LENDING RETAIL TRADE WHOLESALE TRADE $b % $b $b % % 400 3.5 80 3.5 80 3.5 3.0 3.0 3.0 300 2.5 60 2.5 60 2.5 2.0 2.0 2.0 200 40 40 1.5 1.5 1.5 100 1.0 20 1.0 20 1.0 0.5 0.5 0.5 0 0.0 0 0.0 0 0.0 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-
Slide 55: Portfolio Trend
PORTFOLIO TREND PERCENTAGE OF PORTFOLIO IN NON PERFORMING CONSTRUCTION MANUFACTURING AGRI, FORESTRY, FISHING $b % $b % $b % 80 3.5 80 3.5 80 3.5 3.0 3.0 3.0 60 2.5 60 2.5 60 2.5 2.0 2.0 2.0 40 40 40 1.5 1.5 1.5 20 1.0 20 1.0 20 1.0 0.5 0.5 0.5 0 0.0 0 0.0 0 0.0 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar
Slide 56: Group Resources Portfolio
RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR (%) Total EAD (Mar 18): $15.1b 9.4 As a % of Group EAD (Mar 18): 1.6% 8.3 7.2 7.6 4.5 4.6 4.4 3.7 2.6 3.0 2.4 1.8 1.4 1.4 1.0 1.1 1.1 0.9 0.9 1.2 Coal Mining Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining M
Slide 57: Commercial Property Portfolio
RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY COMMERCIAL PROPERTY OUSTANDINGS BY REGION1 SECTOR1 $b % % 100 38.4 37.9 37.7 37.6 37.4 37.5 37.5 8.0 80 3.9 3.6 2.7 2.4 3.0 4.5 4.7 60 7.5 40 8.8 9.5 9.5 9.7 9.7 8.3 8.4 20 7.0 Mar 17 Sep 17 Mar 18 Offices Retail Indus
Slide 58: Residential Development
RESIDENTIAL DEVELOPMENT COMMERCIAL PROPERTY EXPOSURE OVERVIEW PROFILE (Mar 18) Total Residential Limits: $9.7b • Overall Apartment Development limits have increased modestly by $0.06bn (2%) in the first half of 2018. 30% • Growth has been subdued as appetite tightening strategies have taken Apartmen
Slide 59: Group Agriculture Portfolio
RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) NEW ZEALAND1 DAIRY CREDIT QUALITY NZ$b FY17 PD decrease reflects subsequent impact of Total EAD (Mar 18) As a % of Group EAD milk price recovery which is continuing into 1H18. A$930b 3.8% 12.4 12.4 12.1 12.7 12.0 11.6
Slide 60: New Zealand Risk Management
RISK MANAGEMENT NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED NEW ZEALAND GEOGRAPHY TOTAL PROVISION ASSETS CHARGE1 NZ$m NZ$m % 1,451 200 105 2.5 103 99 150 955 2.0 97 70 100 44 30 40 708 1.5 22 31 46 50 19 50 419 491 1.0 368 360 0 0.5 -50 0.0 -100 -39 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Mar
Slide 61: ANZ Institutional Portfolio
RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD2) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Mar 18): A$393b2 400 Finance (Banks and Central Banks) Government Admin. 27% 31% Property Services3 350 Services to Fin. & Ins. Basic Mat
Slide 62: ANZ Asian Institutional Portfolio
RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION1) COUNTRY OF INCORPORATION1 ANZ ASIA INDUSTRY COMPOSITION EAD (Mar 18): A$92b2 EAD (Mar 18): A$92b2 Finance (Banks & Central Banks) 7% 20% Basic Material Wholesaling 3% Machinery & Equip Mnfg 3% Petroleum,Coal,Chem & Assoc P
Slide 63: Housing Portfolio
2018 FIRST HALF RESULTS HOUSING PORTFOLIO AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 64: Australia Home Loans: Portfolio Overview
AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio1 Flow2 Portfolio1 1H16 1H17 1H18 1H18 1H16 1H17 1H18 Number of Home Loan Average LVR at 976k 992k 1,017k 79k3 71% 70% 68% accounts Origination8,9,10 Total FUM1 $243b $256b $270b $31b Average Dynamic LVR9,10,11 51% 51% 51% Average Loan Size $249k $258
Slide 65: Australia Home Loans: Portfolio Growth
AUSTRALIA HOME LOANS PORTFOLIO GROWTH LOAN BALANCE & LENDING FLOWS1 HOME LOAN COMPOSITION $b $b Payment Owner Investor Equity Loan Total +6% Type Occupied 15 50 4 P&I Loan 146.2 44.0 - 190.2 270 255 -54 Interest Only 28.3 43.2 - 71.5 Equity Loan - - 8.7 8.7 Total 174.5 87.2 8.7 270.4 Mar 17 New Sale
Slide 66: Australia Division Portfolio Dynamics
AUSTRALIA DIVISION PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE1,2 71% of accounts ahead of repayments % composition of accounts (March 18) Investment:5 Interest payments may receive negative gearing/tax benefits New Accounts: Less than 1 year old 26
Slide 67: 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 Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Sep Sep Sep Sep Sep Mar 12 12 13 13 14 14 15 15 16 16 17 17 18 12 13 14 15 16 17 18 Home Loans Person
Slide 68: Australia Home Loans: Areas of Interest
AUSTRALIA HOME LOANS AREAS OF INTEREST • Greater focus on Acquisition & Collection management strategies WA OUTSTANDING BALANCE have been applied $b • Exposure to WA has decreased since Mar-16 driven by the 40 economic environment and credit policy tightening (mining town lending, etc) 35 • Currentl
Slide 69: Australia Home Loans: Interest Only
AUSTRALIA HOME LOANS INTEREST ONLY (IO) INTEREST ONLY FLOW COMPOSITION1 • Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan % • 81% of IO customers have net income >$100k pa. (portfolio APRA’s 30% limit introduced March 2
Slide 70: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Pre – application2 Income & Expenses • Effective hardship & collections processes • Full recourse lending Application Know Your Custo
Slide 71: Underwriting Practices and Policy Changes
AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES1 ANZ Policy changes Jun'15 LVR cap reduced to 70% in high risk mining towns Jul'15 LVR cap reduced to 90% for investment loans Aug’15 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Apr’16 Introductio
Slide 72: Stress Testing the Australian Mortgage Portfolio
AUSTRALIAN HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO ANZ conducts regular stress tests of its loan portfolios to Assumptions Current Year 1 Year 2 Year 3 meet risk management objectives and satisfy regulatory requirements. Unemployment 5.5% 9.0% 10.5% 11.5% rate Stress tests ar
Slide 73: Lenders Mortgage Insurance
LENDERS MORTGAGE INSURANCE ANZLMI HAS MAINTAINED STABLE LOSS RATIOS MARCH HALF YEAR 2018 RESULTS LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 31 Mar 2018 (% New Business FUM Oct-17 to Mar-18) Gross Written Premium ($m) $81.4m LVR<80% Not Net Claims Paid
Slide 74: New Zealand Mortgages: Portfolio Overview
NEW ZEALAND MORTGAGES PORTFOLIO OVERVIEW 1 Portfolio Growth Portfolio Growth 1H18 v 1H17 1H18 1H18 v 1H17 1H17 1H18 1H17 Number of Home Loan accounts 515k 523k 1.6% Average LVR at Origination2 59% 58% -126bps Total FUM NZ$75b NZ$79b 4.7% Average Loan Size at Origination2 NZ$295k NZ$274k -6.9% Averag
Slide 75: New Zealand Home Lending
NEW ZEALAND HOME LENDING1 FLOW2 PORTFOLIO PORTFOLIO 11% 10% 6% 5% 22% 20% 21% 21% 38% 41% 11% 11% 7% 7% 10% 10% 78% 80% 51% 49% 45% 46% 1H17 1H18 1H17 1H18 1H17 1H18 Branch Broker Mobile mortgage managers Fixed Variable Auckland Christchurch Other Nth Is. Wellington Other Sth Is. Other³ MARKET SHARE
Slide 76: Economics
2018 FIRST HALF RESULTS ECONOMICS AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 77: Australian Economy
AUSTRALIAN ECONOMY GDP GROWTH1 CONSUMER PRICE INFLATION*1 CREDIT GROWTH BY SECTOR1 AUSTRALIAN GOVERNMENT BUDGET BALANCE*1 (year ended) Per cent of nominal GDP 77 Sources: 1. RBA Chart Pack Apr 2018 Not for distribution into the United States
Slide 78: 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 2.5% 2.0% Australia 1.5% 1.0% G7 weighted average 0.5% 0.0% 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 POPULATION GROWTH – M
Slide 79: Australian Labour Market
AUSTRALIAN LABOUR MARKET UNEMPLOYMENT AND UNDEREMPLOYMENT1 JOB VACANCIES AND ADVERTISEMENTS WAGE PRICE INDEX GROWTH1 LABOUR COSTS AND INFLATION3 8 5.0 7 4.5 6 4.0 5 3.5 % change y/y % change y/y 4 3.0 3 2.5 2 2.0 1 1.5 0 1.0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 NAB labour c
Slide 80: 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 80 1. RBA Chart Pack April 2018 Not for distribution into the United States
Slide 81: 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 2017 POPULATION GROWTH1 MAJOR INFRASTRUCTURE PROJECTS3 000’s % yoy 22 Metronet (WA) 3 Snowy Hydro Expansion (NSW) Sydney
Slide 82: Australian Economy – Stateometer
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 82 Sources: 1. ANZ Economics. 2. RBA Chart Pack April 2018, ABS. Not for distribution into the United States
Slide 83: 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 WA AND QLD GDP HAS IMPROVED1 6 MONTHS OF JOB GROWTH IN WA AND QLD1 16 30 14 26 12 22 10 18 8 14 y/y % change (trend) y/y % change (trend) 6 10 4 6 2 2 0 -2 -2 -6 -4 WA & QLD -6 improved -10 -8 -14 -10 -18 04 06 08 10 12 14 16 04 06 08 10 12 14 16 NS
Slide 84: Australian Economy – Service Exports
AUSTRALIAN ECONOMY – SERVICE EXPORTS SERVICE EXPORTS AND AUD1 INTERNATIONAL TOURIST VISA’S GRANTED2 5 28% growth 4 3 2013 2014 2015 2016 Sep 30 Visa's granted ('Millions) INTERNATIONAL STUDENT VISAS2 NUMBER OF INTERNATIONAL CITIES WITH CONNECTING FLIGHTS3 19.9% 59 growth Dec-14 Dec-15 Dec-16 Dec-17
Slide 85: Australian Housing Dynamics
AUSTRALIAN HOUSING DYNAMICS MEDIAN HOUSE PRICES1 HOUSE PRICE GROWTH2 1,200 ‘000 All March 2018 Houses Units dwellings 1,000 All Capitals Perth City yoy % yoy % yoy % Melbourne Brisbane Sydney -2.1 -3.8 1.9 800 Melbourne Sydney Adelaide 5.4 5.0 6.6 Brisbane 1.3 1.8 -1.4 600 Adelaide 1.7 2.0 0.0 Perth
Slide 86: Australian Housing Dynamics
AUSTRALIAN HOUSING DYNAMICS ESTIMATED APARTMENT COMPLETIONS1 RENTAL VACANCY RATES1 HOUSING LOAN APPROVALS2 HOUSING BALANCE3 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 - Actual Housing Balance - Unchange
Slide 87: 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 Completions per million population (LHS) 2,500 Long run average (LHS) 0.0% 2,300 Population growth yoy % - inverted (RHS) 2,100 0.5% 1,900 1,700 1.0% 1,500 1,
Slide 88: Australian Housing: Household Debt and Income
AUSTRALIAN HOUSING HOUSEHOLD DEBT AND INCOME Household Debt and Deposits1 Household Debt-to-income Ratios2 % of annual household disposable income Housing Price-to-income Ratio*2 Household Mortgage Debt Indicators2 Sources: 1. ABS, RBA. Housing Debt refers to ratio of housing debt to annualised hous
Slide 89: Australian Housing: Household Debt and Income
AUSTRALIAN HOUSING HOUSEHOLD DEBT AND INCOME Household Debt-to-income1 Household Wealth and Liabilities2 Income quintile, median* % of annual household disposable income Sources: 1. RBA Household Debt, Housing Prices and Resilience, May 2017. 2. RBA Chart Pack Apr 2018 Not for distribution into the
Slide 90: Australian Housing: Interest Only Lending
AUSTRALIAN HOUSING I N T E R E S T O N LY L E N D I N G Components of Household Mortgage Payments1 Indexed Loan-to-Valuation Ratio1 Share of household disposable income* Share of outstanding interest only securitised mortgages; Dec 2017* Additional Mortgage Payments1 Share of household disposable in
Slide 91: 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 92: Appendices
2018 FIRST HALF RESULTS APPENDICES AUSTRALIA AND NEW Z EAL AND BANKING GROUP LIMITED Not for distribution into the United States
Slide 93: Divestment Impacts
D I V E S T M E N T I M PA C T S SALE OF WEALTH AUSTRALIA BUSINESSES (DISCONTINUED OPERATIONS) – IMPACT ON CASH PROFIT & CAPITAL PROFIT & LOSS SUMMARY 1H17 2H17 1H18 $m OnePath Life & OnePath Pensions & Investments classified as ‘discontinued ‘Discontinued operations’ 561 731 (617)2 operations’ & sh
Slide 94: Other Divestment Impacts
O T H E R D I V E S T M E N T I M PA C T S FY18 CHANGE IN CONTRIBUTION FROM DIVESTED BUSINESSES (FY18 vs FY17) FY18 change in $m Asia Retail SRCB MCC UDC contribution Divested business results Previous Updated Previous Updated Previous Updated Previous Updated Previous Updated FY18 vs FY17 Cash Prof
Slide 95: Other Divestment Impacts
O T H E R D I V E S T M E N T I M PA C T S 1H17 & 1H18 CONTRIBUTION FROM DIVESTED BUSINESSES $m Asia Retail SRCB MCC UDC TOTAL Divested business results 1H17 1H18 1H17 1H18 1H17 1H18 Announced 1H17 1H18 divestment not Revenue 370 91 58 - 15 - proceeding 443 91 Expenses – Direct* 120 35 120 35 Provis
Slide 96: Further Information
F U R T H E R I N F O R M AT I O N Key contacts Rick Moscati Scott Gifford Mostyn Kau Simon Reid Group Treasurer Head of Debt Investor Relations Head of Global Funding Director Group Funding +61 3 8654 5404 +61 3 8655 5683 +61 8655 3860 +61 3 8655 0287 +61 412 809 814 +61 434 076 876 +61 478 406 607
Australia and New Zealand Banking Group — Debt Investor Presentation (May 2018) on 6ix