Presentation to CLSA Investors` Forum 2000

Presentation to CLSA Investors` Forum 2000

ANZ
Delivering for Shareholders
Presentation to CLSA Investors’ Forum 2000
John McFarlane, Chief Executive Officer
16 May 2000
ANZ
One of the ‘Big Four” Australian banks. Provider of full
range of financial services in Australia (since 1835) and
New Zealand (since 1840) with leadership in Corporate
Banking, Credit Cards and Trade, an emerging strong
e-Commerce position and an offshore network in Asia
and Pacific (Grindlays sale announced 27 April).

Assets
$167b

Market Cap
$17.5b

Profit (first half 00)
$817m

Staff
28,940

Credit Rating
AA-/Aa3
ANZ Headquarters
100 Queen Street
Melbourne
ANZ Delivers on Financial Commitments
March 2000 Results

Double-digit earnings growth
14%. EPS 10%

Increase ROE towards 20%
17.8% (17.3%)

53% cost income ratio
51.4% Costs flat

Reduce risk
Matches peers ex Grindlays

Achieve an optimal capital structure
$500m buyback completed
$1bn buyback announced
Financial Performance
EPS
¢
Tier 1 Ratio
%
10
120
100
20
80
15
%
8
ROE
6
4
2
0
10
60
1997
1998
1999
1997
Mar-00
1998
1999
Mar-00
5
40
Lending Mix
%
1997
1998
1999
Mar-00
%
Cost Income Ratio
70
35
Mortgages
30
65
25
60
20
15
Emerging Markets
10
55
NAB
5
50
0
1998
1999
Mar-00
ProForma
1997
1998
1999
WBC
CBA
ANZ
Mar-00
Business Unit Performance
Other 8%
International 9%
A$
Personal 45%
400
350
Corporate 38%
300
250
200
150
100
50
0
Personal
International
Corporate
1H99
2H99
1H00
Other
Change in Profit
Other
Income
Other Fee
17
Growth
30
Doubtful
Lending Fee
Debts
20
Net Interest
(4)
Income
34
$m
850
800
764
750
Sale of
Strategic
Investments
33
Property
Revaluation
30
Costs
(9)
817
Tax
(34)
Restatement of
Deferred Tax
Balance
(64)
Significant one off items
(1)
700
650
600
Second Half
1999
First Half
2000
Improving Asset Quality
General Provision
Non Accrual Loans
$m
$m
Foreign
Exchange
Impact
2000
762
1500
886
(18)
1395
Net
ELP Transfer to
Charge Specific
Provision
256
871
1000
444
1436
Surplus
944
(197)
900
657
428
500
554
0
1997
1998
Net Non Accrual Loans
1999
1H00
Specific Provisions
Sep 99
Mar 00 APRA
Guidelines
Minimum
Capital Management a Priority
12
%
Ratios

10
8

6
4

2
0
1997
1998
Inner Tier 1
1999
1H00 Target
Hybrid Tier 1
Net Tier 2
Capital management objective
 Increase ROE
 Maintain AA status
Targets
 Tier 1 6.5 - 7.0%
 Inner Tier 1 6.0% - 6.5%
Reducing excess
 $500m buyback completed
 $1bn buyback in process
Good Progress on Business Strategies
Business Strategy

Accelerate growth in Personal

Build on strength in Corporate

Simplify and focus International

Build leadership in e-Commerce
Outcomes
Mortgage & cards share up
Personal 45% of group
profit FM challenging, new team
Leadership position enhanced
ROA 0.9% (0.7%)
Non accruals 0.4% (0.9%)
Grindlays sale
Latin America Offices closed
Asia-Pacific e-Commerce focus
Approaching leadership B2C
Strong portfolio B2B
Web enabled internal processes
Numerous venture investments
Momentum in Personal
14
Share of Housing Lending
%
%
Share of Credit Card Spend
30
13
25
12
11
20
10
Jun-94
15
Jun-94
May-96
Apr-98
Mar-00
Internet Banking Registrations
240000
14.3
May-96
Apr-98
Mar-00
Internet Banking Users
as % of Main Relationships
11
10.3
160000
10.2
4.9
80000
0
Oct
1998
Jan
Apr
Jul
1999
Oct
Jan
Apr
2000
ANZ
WBC
St George
NAB
CBA
Source: Ord Minnett and Roy Morgan Research
Leadership in Corporate
Business Banking Relationships Australian
Market Share 1999 (%)
26
7.5
NAB

Leader in Treasury Products (FX,
Risk Management)

Esanda/UDC No1 Finance Company
in Australia and New Zealand
CBA

Leading Structured Finance
Specialist in Asia

No 1 in Trade in Australia
19
WBC
Customer Perception of Service
Delivery 1999 (out of 10)
7.2
7.2
7
ANZ
Pre-eminent Corporate Bank in
Australia and New Zealand in terms
of relationships and customer
satisfaction
26
16
ANZ

NAB
CBA
WBC
Sale of Grindlays

Price US$1.3 (A$2.2)bn
–
–
Net Asset Value US$590 (A$990)m
Goodwill US$750 ($A1,250)m

Dividends $US0.5 (A$0.9) billion from Grindlays retained earnings

Price multiples (excluding dividend)
–
2.3 times net asset value, 14.2 times annualised first half 2000 earnings

Cooperation Agreement with SCB to service ANZ customers

Final consideration subject to Net Asset Value at completion

Customary representations and warranties

Indemnity regarding litigation matters including NHB

Completion expected 3Q subject to regulatory approval
ANZ Profile
Group
Growth Grindlays

Assets
$167b
$14b
$10b

Profit
$817m
$53m
$79m

Staff
28,940
-1231
5400

Representation
39
ANZ Headquarters
100 Queen Street
Melbourne
14
Delivering via the Web
B2C
B2B
FX On-line
(ANZ On-Line)
Identrus
Transformation
E-Procurement
Directors on line
operations.com
Employee PCs
Sales & Service
Platform
ERP
Enterprise Resource
Planning
Strategic Imperatives
Accelerate the growth program across 3 horizons
Radical transformation of the business
Improve sustainability of core franchises
Strategic Imperatives
Accelerate the growth program across 3 horizons

Reallocate investment towards current traditional
growth opportunities

Build substantial portfolio of e-products and
businesses

Build semi-global niche positions in trade, FX,
structured finance, cards and e-Commerce

Rapidly roll-out e-Commerce investments in Asia
Strategic Imperatives
Accelerate the growth program across 3 horizons
Radical transformation of the business

Revolutionise cost base to compete with new
economy competitors

Embrace web technology to achieve seamless
integration

Become a customer-centric company by
organising around different customer segments

Build culture and talent to compete in the new
economy
Strategic Imperatives
Accelerate the growth program across 3 horizons
Radical transformation of the business
Improve sustainability of core franchises

Continue to expand leadership in Corporate

Complete domestic Personal footprint
–
organically
–
infill acquisitions

Address retail funds management strategic position

Medium-term search for transformational moves

Improve capacity to participate in industry
consolidation on our terms
Financial Goals Going forward

Earnings per share growth that outperforms the
average of our peer banks

Increase Return on Equity: Target 20%

Cost income ratio comfortably below 50%

Inner Tier 1 ratio approaching 6%

Maintenance of credit rating in AA category
Copy of Presentation available
on
www.anz.com
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 potential investors and does not take into account the
investment objectives, financial situation or needs of any particular investor. These
should be considered, with or without professional advice when deciding if an
investment is appropriate.
For further information visit
www.anz.com
or contact
David Ward
General Manager Office of the Chief Executive
ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]