Download - Investor Presentation February 2001
Investor Presentation
February 2001
Australia and New Zealand Banking Group Limited
Peter Marriott, Chief Financial OfficerRick Sawers, Group Treasurer
Bruce Mathrick, Executive Treasurer, Group FundingRoss Glasscock, Treasurer, Strategic Funding
Page 2
1. Group Overview
2. Business and Strategic Overview
3. Financial/Operating Performance Overview
4. Debt Funding Strategy
5. Summary
Page 3
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 Mortgage origination, a strong e-Commerce position and an offshore network in Asia and Pacific.
Assets A$172bn1 (US$96bn)
Market Cap A$22bn2 (US$12bn)
Profit (pre abnormals) A$1,703mm3 (US$954mm)
Tier 1 Capital Ratio 7.4%3
Employees 23,1341
Credit Ratings AA - (stable) S&P2
Aa3 (stable) Moody’s1. Company Annual 30 September 2000
2. As at 7 January 2001
3. SSB Research 27 October 2000
ANZ Group Overview
Page 4
Highlights
Earnings growth of 15.0% (13.3% compound since 1997)
Return on equity 18.3% (17.2% - 1999)
Cost income ratio 51.7% (54.5% - 1999)
Grindlays sold, realising net profit after tax of $404m after related provisions and lowering risk profile
Income up 6%, costs flat, Economic Loss Provision (ELP) down 4bp’s to 39bp’s
Restructuring charge (A$361m) to accelerate transformation program
Page 5
Leading market position
7th largest company in Australia by Market Capitalisation (A$22bn)
One of the 4 Major Banks in Australia, who represent over 66% of total Australian banking assets
Leading mortgage originator bank in Australia for the last 2 years
4 million retail customers - 3 million in Australia, 1 million in New Zealand
1,021 points of representation throughout Australia and New Zealand
Leading banker to Australian and New Zealand corporations (81,000 customers)
Page 6
Market Share
Growth has been strong, particularly in mortgages and cards
Consistently increased market share, without material acquisitions
15
17
19
21
23
25
27
29
Sep-95
May-96
J an-97
Sep-97
May-98
J an-99
Sep-99
May-00
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
Sep-95
May-96
J an-97
Sep-97
May-98
J an-99
Sep-99
May-00
Mortgages % outstandingCards % turnover
Australian market share - assets %
12
13
14
15
16
17
18
Sep-97
ANZ
CBA
NAB
WBC
Mar-98
Sep-98
Mar-99
Sep-99
Mar-00
Page 7
1. Group Overview
2. Business and Strategic Overview
3. Financial/Operating Performance Overview
4. Debt Funding Strategy
5. Summary
Page 8
Australian Financial Services Landscape
Financial services industry in Australia currently undergoing a
phase of consolidation and convergence
Banks seeking to diversify revenue streams away from
interest income into fee income
Increased focus on efficiency through application of web
based technology
Government “Four Pillars Policy” currently prohibits mergers
between the 4 major banks
Page 9
Building for the Future: Outline of ANZ Strategy
Specialise
Performand Grow
e-Transform
Proposition
Specialists will win over conglomerates
Corporations need to embrace new technologies
Value depends on performance and growth
Strategy
Reconfigure ANZ as a portfolio of specialist businesses
An e-Bank with a human face
Drive results whilst investing in growth businesses
Implications
Specialist approach to customer and product businesses
Transform the way we do business by using IP technology
Meet expectations, fund growth by cost reduction
Page 10
Mortgages Credit cards
Personal Wealth Management
Small Business General Banking
Corporate Foreign Exchange Capital Markets Structured Finance
Institutional Corporate
Asset Finance
GTS B2B eCommerce
Customer Segments
Products
Int’leCommerce
Asia Pacific
ePortfolio Asia Australia/NZ
ANZFM B2C eCommerce
Internal Utility Payments Group
Treasury
Technology
Our Portfolio of Specialist Businesses
Page 11
Financial Goals to 2003
EPS growth that exceeds peer group average
ROE over 20%
Maintain AA category credit rating
Active capital management:
Tier 1 of 6.5%-7.0%
Inner Tier 1 of 6.0%
Cost-income ratio comfortably in the 40s
Page 12
1. Group Overview
2. Business and Strategic Overview
3. Financial/Operating Performance Overview
4. Debt Funding Strategy
5. Summary
Page 13
Financial Summary
Sep 98 Sep 99 Sep 00
Market Capitalisation (A$bn) 13.9 16.0 20.0
Total Capital Adequacy Ratio 10.7% 10.7% 10.2%
Tier 1 Ratio 7.2% 7.9% 7.4%
Total Assets (A$bn) 153.2 152.8 172.5
Net Impaired Assets as % of RWA 0.8% 0.6% 0.6%
Net Profit After Tax (A$bn) 1.1 1.5 1.7
Cost to Income Ratio 60.9% 54.5% 51.7%
Return on Average Assets 0.7% 1.0% 1.1%
Return on Average Ordinary Equity 14.6% 17.2% 18.8%
Earnings growth of 15% in 2000 (CAGR 13.3% since 1997)
Income up 6% pa, costs flat
Grindlays sold realising NPAT of A$404m after related provisions but gain offset by restructuring and other provisions
Page 14
Superior Financial Performance Delivered
1171 1175
1480
1703
400
800
1200
1600
2000
1997 1998 1999 2000
NPAT
CAGR 13.3%
18.3
16.915.5
17.2
10
12
14
16
18
20
1997 1998 1999 2000
%ROE
51.7
54.5
60.963.1
45
50
55
60
65
1997 1998 1999 2000
Cost Income Ratio%
0
400
800
1200
1600
2000
1997 1998 1999 2000
0.0%
0.5%
1.0%
1.5%
2.0%
Historic Non-Accrual Loans
Net Non-Accrual Loans (LHS)
Gross Non-Accrual Loans (LHS)
Non-Accrual Loans/Loans & advances (RHS)
A$m
A$m
Excluding abnormals
Page 15
Good Progress in All Areas
1999 2000
A$1,200
A$1,300
A$1,400
A$1,500
A$1,600
A$1,700
A$1,800
A$1,900
1480
Net interest income
146
Lending fee 48
Other fee 111
Other income
47
Debt provisioning
8
Costs (14)
Tax and outside equityinterests
(123)
Profit before abnormals
1703
Abnormals44
Net profit after abnormals
1747
2000
Page 16
Continued improvement in Cost to Income Ratio
45
50
55
60
65
70
1997 1998 1999 2000
NABCBAWBCANZUK BANKS
Target - comfortably in the 40’s
51.7
63.1
Operating expenses have remained flat despite revenue growth1. UK Banks are a weighted average of Abbey National, Alliance and Leicester, Bank of Scotland,
Barclays, Halifax, HSBC, Lloyds TSB, Northern Rock, Royal Bank of Scotland and Standard Chartered
%
Page 17
With Diversified and Improving Credit Risk
302
772
547
647
251
149
1997 2000
NPAT Distribution of Gross Loans & Advances
41,577
65,264
46,861
45,6847,966
5,930
1997 2000
27%
50%
23%
49%
41%
10%
56%
39%
5%
43%
49%
8%
Personal Financial Services Corporate Financial Services International
Page 18
Composition and Quality of the book continued to improve
18 16
1615
49 53
14 13
3 30%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000
AAA to BBB+
BBB to BBB-
BB + to BB
BB-
> B
Australian Lending Asset Profile
28.4 31.7 36.2 40.6
41.843.6
45.548.4
0
10
20
30
40
50
60
70
80
90
100
Mar-99 Sep-99 Mar-00 Sep-00
Other
Mortgages
A$b
Australian Loans & Advances
Investment grade 66% of book
Diversified portfolio
Minimal exposure to media/telcos
ANZ risk gradings correlated to S&P
Mortgages now represent 46% of book, up from 40% in March 1999
Page 19
We Have Diversified Credit Risk
Americas4%
UK / Europe5%
New Zealand12%
Australia74%
Asia Pacific5%
Total Assets: Geographic Distribution
Net Loans and Advances: Industry DiversificationLease Finance
3%
Other7%
Manufacturing8%
Agriculture, Forestry, Fishing,
Mining6%Business Service
2%
Entertainment, Leisure and
Tourism2%
Government and Official I nstitutions
1%
Financial, I nvestment and
I nsurance6%
Real Estate - Construction
2%
Personal10%
Real Estate - Mortgage
47%
Retail and Wholesale Trade
6%
Page 20
Percentage of Grindlays Exposure toCountries Rated below ‘Single A’
Major Risk Transformation via Sale of Grindlays
48
82
%
Comparable ROE and leverage yet much lower risk
Of GroupExposure<A
Of Total Grindlays Exposure
39
113
36
ELP (bps)
Continuing
Group 2000
Grindlays
Page 21
0
300
600
900
1200
1996 1997 1998 1999 2000
0
3
6
9
12
15
Other Countries
Australia
Net Impaired assets as % of Total Shareholder Equity (RHS)
Net Impaired Assets
Sound Asset Quality and Provisioning
Aggregate Provisions
0
500
1000
1500
2000
2500
1996 1997 1998 1999 2000
0
50
100
150
200
250
General Provision
Specific Provision
Provisions as % of Gross Impaired Assets
A$m
%A$m
times
* As at September 2000, ANZ had a provision surplus of A$406m relative to APRA guidelines
2.7
3.1
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
1999 2000
General ProvisionELP charge*
Page 22
Strong Capital Position
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
Mar-99 Sep-99 Mar-00 Sep-00100
105
110
115
120
125
130
135
140
Tier 1
Inner Tier 1
RWA's
% $b
7.77.9
7.5
7.4
6.76.9
6.56.4
Progress: A$1.1bn of buyback completed Remaining A$400mn buyback
will be completed in the first half
Capital ManagementPhilosophy: Valuable resource to be managed
effectively and efficiently Maintain capital consistent with
ANZ’s AA status and peer group ratings
– Tier 1 (6.5 - 7.0%)– Inner Tier 1 (6.0%)
Page 23
1. Group Overview
2. Business and Strategic Overview
3. Financial/Operating Performance Overview
4. Debt Funding Strategy
5. Summary
Page 24
Debt Funding Strategy
Ensure continued access to all international capital markets
Pursue diversification
- Investors
- Markets
- Structures (implications of FASB 133)
Ensure market recognition of ANZ credit credentials through debt investor presentations
Periodic Benchmark Issuance
Page 25
Review of Term Funding for 1999/2000
AUD13% CHF
2%
E20%
HKD10%
USD54%
JPY1%
Term lending > than 1 year funded to 15% by term wholesale debt > than 1 year
1999/2000 fiscal year
- Issued A$5.9 billion term wholesale debt
11% domestic market (Issuer of the year/Deal of the year)
80% euro market
9% US market
Page 26
Wholesale Funding Objectives
Between 10% and 15% of term lending greater than 1 year is to be funded by term wholesale funding greater than 1 year
2000/2001 fiscal year
- Funding requirement of A$6bn dependant on securitisation issuance
- Anticipate sourcing:
20% domestic market
80% offshore markets
Prudent liability management - spread of term maturities from 1 to 5 years, with a weighted average term of 3 years
Page 27
1. Group Overview
2. Business and Strategic Overview
3. Financial/Operating Performance Overview
4. Debt Funding Strategy
5. Summary
Page 28
Summary
Commitment to AA category credit rating
Responsible capital management philosophy
Defined strategy to re-configure ANZ into a portfolio of
specialist businesses
Sound asset quality with lowered risk
Cost to income very low by global standards, and continuing to
trend downward
Commitment to regular and disciplined wholesale debt issuance
Appendix
Page 30
Australia’s Strong Economic Fundamentals
0
1
2
3
Jun-
97
Dec
-97
Jun-
98
Dec
-98
Jun-
99
Dec
-99
Jun-
00
29
30
31
32
33
Quarterly GDP Growth (LHS)
LTM GDP Per Capita (RHS)
A$’000%
0
0.2
0.4
0.6
0.8
1
Jun-
97
Dec
-97
Jun-
98
Dec
-98
Jun-
99
Dec
-99
Jun-
00
0
1
2
3
Qtr on Qtr (LHS)
Yr on Yr (RHS)
%%
Inflation Gross Domestic Product
Page 31
0
2
4
6
8
10
Jun
-97
Dec
-97
Jun
-98
Dec
-98
Jun
-99
Dec
-99
Jun
-00
0
2
4
6
8
Current A/C Deficit (LHS)
CAD/GDP (RHS)
%%
A$bA$b
8.0
8.2
8.4
8.6
8.8
9.0
Jun
-97
Dec
-97
Jun
-98
Dec
-98
Jun
-99
Dec
-99
Jun
-00
5
6
7
8
9
Employed Persons (LHS)
Unemployment Rate (RHS)
%%‘‘000s000s
Australia’s Strong Economic Fundamentals
Current Account Employment
Page 32
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