Transaction Banking Pacific Growth Story

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Transaction Banking
Pacific Growth Story
Presentation to Joint
NEW ZEALAND FIJI BUSINESS COUNCIL
FIJI NEW ZEALAND BUSINESS COUNCIL
Annual Conference
13 June 2013
Iain Leech
Head of Transaction Banking Pacific
ANZ is a major commercial bank in the Pacific
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A presence in 12 markets
across the Pacific for over 130
years
Regional connectivity is playing to
our unique position in the Pacific
Pacific-Asia
Trade: US$6.9b
U$4
PNG
bn
SI
U$
300
U$
TL 342
Denotes two way
merchandise trade flow
(2011)
— 2,200 staff in 12 countries & 55 branches
— 17,500 commercial/corporate customers
— 420,000 retail customers
Vanua U$
368
tu
Fiji
US$
2bn
Aus-NZ-Pacific
Trade: US$7.3b
Denotes inward FI flow
(2010)
Trade flows between Asia and the Pacific have
grown 25% p.a. for each of the past 5 years
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1. ANZ estimates of underlying earnings based on published financial information as at 31 March 2012
Well positioned to support strong Trade Growth in Pacific….
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> Since 1977, Pacific has averaged an annual total trade expansion of 15.8% y/y to reach
$19.8bn in 2011.
> In 2011, Export Growth was 20%, Import Growth 22.5%.
Weakened Commodity prices - adverse impact Pacific
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> Tapis oil prices fell by 14.0% over the past three months, due to global growth concerns.
Of particular focus for markets was the slower than expected Q1 growth in China.
> Gold fell by 13.0% over the past three months, following the panic selling of early April.
There has also been heavy selling by long term investors and exchange traded funds
(EFTs) due to the lack of global inflation expectations, which reduce the demand for gold
as an inflation shield.
> Copper prices fell by 10.2% from three months ago, as copper is particularly sensitive
to demand from China. Rising inventory levels have also increased the influence of supply
conditions lately.
Commodity price index (average 2010=100)
Soft Commodities also impacted
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> Palm oil prices remained at low levels in recent months, but are now finding a bit of
support from slower output growth in Malaysia (largest producer) which should cap
inventories there.
> Sugar prices have fallen over the past three months, but are now largely range-bound.
The weather outlook is supportive for strong cane-crushing volumes and should cap any
upside. Lower taxes in Brazil on ethanol for producers and distributors, on the other hand,
will limit the downside.
> Arabica coffee prices have been rallying recently, on concern that a chill in Brazil may
cut output in the world’s largest exporter.
Commodity price index (average 2010=100)
Fiji Country Update
Expect steady growth of 2% this year
> Consumption and investment look fairly robust. However, the dampening effects of
Cyclone Evan on activity and the negative income shock from rising food prices create
downside risks to growth.
> Preliminary trade data was released for the full year 2012.
— Exports rose 14.3% (sugar to UK and biscuits to NZ)
— Imports increased by 3.1%.
— Trade deficit dipped to USD1.8bn in 2012, from USD2.0bn in 2011.
> Investment indicators also performed well. Domestic cement sales rose 50.3% ytd y/y in
February, while new lending for investment more than doubled in March on a ytd y/y
basis.
> Inflation rose to 3.3% y/y in March, from 2.4% in February, driven by food prices. This is
likely due to the effects of Cyclone Evan, but we expect more inflationary pressure to
come in the following months from the drought in New Zealand.
> Private domestic credit maintained its robust growth, at 9.6% y/y in March
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NZ/Australia dominates trade flows with Fiji, but Asia is emerging
Fiji Merchandise Export USD 860m
(%, 2011)
Fiji Merchandise Imports USD 2,300m
(%, 2011)
Not Specified, 1.2
United States, 3.6
China, 6.1
Not Specified, 17
Australia, 20.7
Singapore, 33
New Zealand, 16
EU, 5.5
New Zealand, 5.8
United States, 11.4
Japan, 7.6
Australia, 20.4
> The role of Asia is changing in Pacific
ƒ Trade flows between Asia and the Pacific has grown by 25% per year for the past five
years. This now represents $6.9bn (35% total trade) in 2011 (NZ/Aust $7.3bn)
ƒ Trade between China and the Pacific grew by more than 30% every year between
2001 and 2011 (from $180 million in 2001 to more than $2.1 billion in 2011.
> In Fiji, we’ve seen imports from China to Fiji grow five-fold in the past decade. Together
with selective investment there is also an emerging tourism market with China.
Source: WTO Country Profiles
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In Fiji as with many other Pacific nations, export receipts from
service sectors such as Tourism and Travel are also significant
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Fiji Merchandise Export USD 860m
(%, 2011)
Fiji Merchandise Services USD 802m
(%, 2011)
Commercial
Services, 4.3
USD34m
Manufactures, 18.6
Transportation, 30.5
USD 160m
USD 245m
USD 393m
Agri Products, 45.7
USD 226m
Fuels and Mining,
26.3
Source: WTO Country Profiles
USD 523m
Travel, 65.2
Fiji – NZ Trade relationships continue to strengthen
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> Fiji is an important export market destination for New Zealand; dominated by
— raw materials
— finished consumer goods
— foodstuffs
— manufactured products
> Fiji Exports to New Zealand recorded an increase of $3.8 million to reach $80.1million and
the major contributor was biscuits. Increase of 4.9 per cent.
> Agriculture and Seafood sectors represent sustainable opportunities for Fiji exports to
New Zealand.
> Fiji continue to strengthen its Trade relationships with emerging Asia (eg China, South
Korea, Japan), markets that are focused on securing sustainable food sources.
> Food, Beverage, Agricultural and Seafood based sectors represent comparative
advantage and a significant opportunity for Pacific nations such as Fiji.
—New Zealand is leading the way into the Asia Pacific Basin;
—Australia is thinking hard as its Resource Boom plateaus;
—Fiji is taking its high quality sugar to Europe and Water as a premium product to
America and the World.
New Zealand - World Leader in the Business of Food Production
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“New Zealand must become a world leader in the
business of food production to maximise the
enormous opportunities in the decades ahead…..
The business of agriculture no longer ended at
farm gate; it ended on the dinner tables on the
other side of the World”
“New Zealand needed to be the All Blacks of
primary production”
Graham Turley – ANZ Managing Director Commercial and Agribusiness
Management of Cash and the efficient facilitation of offshore
payments and receipts is critical to business success
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ANZ’s insights and solutions help clients efficiently manage their cash
flows across working capital cycles and financial supply chain practices
Provides clients with
the ability to receive
and understand
incoming
remittances
COLLECTIONS
EXPORTS
Provides exporters
with confidence that
a bank is facilitating
an export
transaction for
goods and services
Electronic Banking
TRANSACTION
BANKING
SOLUTIONS
Working Capital
Management and
Trade Finance
Provides clients
with the ability to
streamline
processing of
payments for
creditors and
payroll
Provides importers
simple mechanisms
to effect payments
for imported goods
and services
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PAYABLES
IMPORTS
Case Study: Regional Supply Chain for food production
supporting Fiji, New Zealand and Australia
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Financial Intermediation can support the import of raw materials
(Wheat from Australia, Dairy from New Zealand), through local Fiji
Production to export of Biscuit product back to New Zealand and
Australia.
Wheat
Dairy
(Milk/Butter)
Biscuit Exports
Case Study: Fiji Sugar Pre-Export Trade Finance Facility
FJD 120m pre-export structured trade loan to finance the operational expenditures
and the purchase of sugarcane from growers
Key Deal Highlights:
> Provides working capital to fund the
purchase of sugar and operating costs in
advance of shipment and payment from
sales under FSC’s supply contract with
major buyer in Europe
> Cost effective funding for each sugar
season against export sales
> Repayment of loan from cash flows from
sales under the export contract paid into
an ANZ operated account
> Strong reinforcement of ANZ’s
commitment to Fiji and support of its
primary industry sectors
> Reinforces ANZ’s specialist Trade and
Supply chain model supporting Pacific
region.
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Transaction Banking Pacific Deal Success
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Transaction Banking
Australia and Pacific
Transaction Banking
Pacific
Clearing Mandate Pacific
Transactional Banking
Requirements
2012
2012
2012
2012
Performance Bond
requirements
Performance Bond
requirements
Performance Bond
requirements
Export Trade Finance
Facility
2012
2012
2012
2012
Trade Finance LC
USD 172m
Betano Power Plant
2012
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Structured Trade
Facility
Mandated Lead Arranger
syndicated STFL facility
USD100M
Structured Trade Facility
Oil Imports
Export Finance
2012
2012
2012
2012
Contacts
Iain Leech
Rakesh Ram
Head of Transaction Banking Pacific
Head of Corporate and Institutional Bank
L8B 833 Collins Street
Level 3 ANZ House
Docklands, Melbourne
25 Victoria Parade, Suva
Australia
Fiji
T. +61 3 865 40173
T. +679 321 3313
E. [email protected]
E. [email protected]
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