Transcript No Slide Title

Creating Superior
Performance and Value for
our Shareholders
Peter Marriott
Chief Financial Officer
18 July 2000
Creating superior performance and
value for our shareholders
Difference Affected By...
TSR = Price change + Dividend
Price = EVA x Multiplier (g, ke) + Capital
EVA = (ROE - ke) x Capital
ROE = ROA(or RORWA) x Leverage
ROA = PAT/Total Assets
Dividend policy
Growth
Size, Risk & Buybacks
Leverage
Earnings
Managing to achieve shareholder
value growth
Strategic
Operational
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EVA dominant performance measure
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Tailored metrics for each business
Active Business portfolio management
from the centre
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Regular business unit valuations
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Exit of low value creation potential
businesses or where we are not the
natural owner
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Growth plays
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Top down target setting
Identification of new value creating
businesses
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Resource allocation
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Bonuses linked to EVA and KPIs
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Lower risk
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–
Internal
External
Dividend policy
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Board Policy - payout has been around 60%
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Franking credits - no value to company => will be paid out
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Aware Banks are ‘yield’ stocks
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Implications of Ralph
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serious reduction in value of unfranked dividends vis-à-vis buybacks
marginal reduction in value of franked dividends vis-à-vis buybacks
reduction in value of off-market vis-à-vis on-market buybacks
Significant business risk reduction
achieved
Historic view - of ANZ
Current Position
• skewed business mix
• Personal half of Group earnings
• higher portfolio risk
• Grindlays sold
– significant presence in
developing countries
– larger corporate book
– higher trading activity
• lower efficiency
• and more surprises
• quality of corporate book improved
• x-border lending reduced
• exited emerging market bond trading
• substantially improved cost income
ratio
• more open disclosure
Capital management
Capital
10.1
Capital Management Philosophy:
7.5
6.5
Mar-00
1.4
1.2
7.0
•
6.0
•
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–
Target
2 Year Beta
ANZ
WBC
NAB
1.0
CBA
0.8
Mar-98
Mar-99
Capital scarce resource to be managed
effectively and efficiently
Maintain capital consistent with ANZ’s
AA status and peer group ratings
May-00
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Tier 1 (6.5 - 7.0%)
Inner Tier 1 (6.0% - 6.5%) aligned to
Economic Capital
$500m buyback completed 27/3/00
$1B buyback 24% completed
Performance update
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Comfortably positioned to achieve analyst expectations for fy2000,
based on 1 August timing of Grindlays sale - still the objective
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Margins stabilising, underlying non interest income growing
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Costs flat
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Provisioning - ELP stable, specific provisions lower, some residual
Personal loan provisioning
Reaffirmation of financial goals:
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Earnings per share growth above peer average
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ROE above 20%
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Cost income ratio comfortably below 50%
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Inner Tier 1 capital approaching 6%
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Maintaining rating in AA category
Group strategic direction built on
specialisation, eTransformation and
growth
Proposition
Strategy
Integrated financial services firms will
lose to specialists over time
Reconceive and develop ANZ as a
portfolio of specialist businesses
The rise of specialists and new
technologies will offer superior
customer value and will erode margins
Become an “eBank with a human
face”
For ANZ more value will be created
through focus and leverage of
intangible assets than traditional
concentration plays
Create a portfolio of high growth
business which leverage capabilities
and brands
Copy of Presentation
available on
www.anz.com