Cards and ePayments
Brian HartzerManaging Director
Australia and New Zealand Banking Group Limited24 August 2001
Page 2
Building the leading cards business in Australasia
• Strong financial performance
• Growing market share
• Leveraging our core capabilities into new areas
• Attractive growth opportunities and goals
Page 3
Cards and ePayments – An overview
Merchant acquiringUnsecured personal
lending
Australia
• Customer acquisition• Portfolio
management• Commercial cards• Loyalty management• Alliances
COMMON TECHNOLOGY & OPERATIONS PLATFORM
Card issuing
NZ Offshore Australia Australia NZ
• Credit and debit transaction processing
• e-Acquiring• Terminal sales & rentals• Chip development and
value added services
• Branch sales
• Direct sales
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239
304
276
150
200
250
300
350
Mar-00 Sep-00 Mar-01
Operating Income
34
46
55
20
30
40
50
60
70Profit After Tax
Mar-00 Sep-00 Mar-01
869
777
590
400
500
600
700
800
900
1000
48.7
47.1
51.0
45
46
47
48
49
50
51
52
53
Delivering substantial growth
Mar-00 Sep-00 Mar-01 Mar-00 Sep-00 Mar-01
FTE Cost Income
$m $m
%
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Co-branded cards drive customer numbers and scale
Proprietary Cards Co-Brand Acquiring
Revenue Costs NPBT
Relative profitability of Australian issuing & acquiring*
Note: Co-brand accounts increased 70% between Sep-98 and Mar-01
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Growing share in both issuing and acquiring
15%
16%
17%
18%
19%
Mar-99 Sep-99 Mar-00 Sep-00 Mar-01
Share of Issuing - Outstandings
19%
20%
21%
22%
Mar-00 Sep-00 Mar-01
Share of Acquiring*
* Excludes $1 billion+ p.a. in Coles Myer volume, commenced this month
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0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Sep-99 Mar-00 Sep-00 Mar-01
0
2
4
6
8
10
12
14
16
18
1996 1997 1998 1999 2000 2001
… with a strong risk management focus
Credit losses - credit cards
Fraud losses – credit cards
• Application and behavioural scorecards in use
• Vision Plus and Triad to further enhance capabilities (3/02)
• Falcon and Eagle systems installed (neural networking tools)
• 24 hour analysis and detection team
Industry average (7 bp)
Rolling 12 mth loss rate
90/210 days delinquent
Bp of turnover
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Proprietary Card Cross-sell(Recent Case Study)
100
167
ControlGroup
Propensity toBuy Model
Cross-sell is delivering promising results
Index
Capabilities
• Full account and customer EVA
• Segmentation markers and profiles
• Propensity-to-buy scores
• Application/behavioural scores
• Multiple campaign management
• Attrition scores by customer
• Recovery scores
• Automated, event-based campaigns
• Automated prospect list delivery (“My Sales”)
• “Optimal” strategy selection by customer (longer term)
In Pilot/Develop-
ment
In Pilot/Develop-
ment
In PlaceIn Place
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Despite 27% share of card spend, we still have significant potential for profitable growth
Share of total Personal Consumer Expenditure
Share of Consumer Non-Mortgage Debt*
Total Personal Consumer Expenditure = $360bn
Total Consumer Non-Mortgage Debt = $50.6bn
* includes personal loans
ANZ cards 6.5%
Other banks cards ~17.5%
ANZ cards 7.9%
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The merchant business offers significant growth:
• MultiPOS terminal will
lead market in
functionality and price
• Chip capabilities open up
new opportunities for
merchants
• Offshore banks are
expressing interest in our
capabilities
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Leveraging our distinctive capabilities internationally
First Place:
Qantas Telstra Visa Card
“Best Frequent Traveller Credit or Charge Card
(International)”*
* source: InsideFlyer Magazine, 2001
• Target: Hong Kong platinum market
• Niche product with unique features to attract profitable segment
• Proof of concept for marketing and operational capabilities in the region
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• Specialisation and “monoline” focus
• High quality people and dynamic culture
• Strong team experience in
– Loyalty management: QTV, Westfield
– Terminal/chip: Eftpos New Zealand
– International markets: India, Asia
• Investment in technology:
– Platform of the future: Vision Plus,
Falcon/Eagle, Triad
– CRM
– Chip
Execution will be key to our success
59%
67%
75%
40%
50%
60%
70%
80%
1999 2000 2001
Staff Satisfaction
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Summary
• Focus & specialisation has driven strong financial performance
• We will continue to grow market share
• We are leveraging our distinctive capabilities into new growth opportunities
• Cultural change has been significant, and will continue
Goals
• 20%+ pa earnings growth to 2005
• Consolidate position as the leading cards business in Australasia
• Become a meaningful player in Asia