Transcript No Slide Title
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
Market Cap
Profit (first half 00)
Staff
Credit Rating $167b $17.5b
$817m 28,940 AA-/Aa3 ANZ Headquarters 100 Queen Street Melbourne
ANZ Delivers on Financial Commitments
Double-digit earnings growth
Increase ROE towards 20%
53% cost income ratio
Reduce risk
Achieve an optimal capital structure March 2000 Results 14%. EPS 10% 17.8% (17.3%) 51.4% Costs flat Matches peers ex Grindlays $500m buyback completed $1bn buyback announced
120 ¢ 100 80 EPS
Financial Performance
20 % 15 ROE 10 % 8 6 4 2 0 1997 Tier 1 Ratio 1998 1999 Mar-00 60 1997 40 % 35 30 25 20 15 10 5 0 1998 10 1998 1999 Mar-00 Lending Mix 5 1997 1999 Mortgages Emerging Markets Mar-00 ProForma 1998 1999 Mar-00 70 % 65 60 55 50 1997 Cost Income Ratio 1998 NAB 1999 WBC CBA ANZ Mar-00
400 350 300 250 200 150 100 50 0 A$ Personal
Business Unit Performance
International 9% Other 8% Corporate 38% Corporate 1H99 2H99 International 1H00 Other Personal 45%
$m 850 800 750 700 650
Change in Profit
764 Net Interest Income 34 Lending Fee 20 Other Fee Growth 30 Other Income 17 Doubtful Debts (4) Costs (9) Tax (34) Property Revaluation 30 Sale of Strategic Investments 33 Restatement of Deferred Tax Balance (64) Significant one off items (1) 817 600 Second Half 1999 First Half 2000
Improving Asset Quality
Non Accrual Loans General Provision $m 444 762 886 871 $m 2000 1500 1000 1395 ELP Charge 256 Net Transfer to Specific Provision (197) Foreign Exchange Impact (18) 1436 Surplus 944 900 500 428 657 554 1997 1998 Net Non Accrual Loans 1999 1H00 Specific Provisions 0 Sep 99 Mar 00 APRA Guidelines Minimum
Capital Management a Priority
12 % 10 8 Ratios 6 4 2 0 1997 Inner Tier 1 1998 1999 1H00 Target Hybrid Tier 1 Net Tier 2
Capital management objective
Targets
Tier 1 6.5 - 7.0%
Increase ROE Maintain AA status 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 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%)
Simplify and focus International
Build leadership in e-Commerce Grindlays sale Latin America Offices closed Asia-Pacific e-Commerce focus Approaching leadership B2C Strong portfolio B2B Web enabled internal processes Numerous venture investments
14 % Share of Housing Lending 13 12 11 10 Jun-94 May-96 Apr-98 Mar-00 240000 160000
Momentum in Personal
Internet Banking Registrations 30 % Share of Credit Card Spend 25 20 15 Jun-94 May-96 Apr-98 Mar-00 14.3
Internet Banking Users as % of Main Relationships 11 10.3
10.2
4.9
80000 0 Oct Jan 1998 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 26 19 16 ANZ 7.5
NAB CBA WBC Customer Perception of Service Delivery 1999 (out of 10) 7.2
7.2
7
Pre-eminent Corporate Bank in Australia and New Zealand in terms of relationships and customer satisfaction Leader in Treasury Products (FX, Risk Management) Esanda/UDC No1 Finance Company in Australia and New Zealand Leading Structured Finance Specialist in Asia No 1 in Trade in Australia 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
Assets
Profit
Staff
Representation Group Growth Grindlays $167b $14b $10b $817m $53m 28,940 -1231 39 $79m 5400 14 ANZ Headquarters 100 Queen Street Melbourne
Delivering via the Web
B2C B2B E-Procurement Transformation operations.com
Employee PCs Directors on line 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]