Transcript No Slide Title

The Australian Banking Scene
- competing in a globalising world
Presentation to
XXXI World Congress of the International Association of
Financial Executives Institutes
John McFarlane
Chief Executive Officer
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10 October 2000
The four major banks account for a substantial
share of the traditional banking market
Retail Customers - MFI
Middle Market Corporates
5000
30%
000's
20%
2500
10%
0
ANZ
CBA
0%
NAB WBC Other
Loans & Acceptances
Deposits
150000
100000
100000
$000's
000's
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150000
50000
50000
0
0
ANZ
CBA
NAB
ANZ CBA NAB WBC Other
WBC Other
Source: Roy Morgan Research, Roberts Research, APRA
ANZ
CBA
NAB WBC Other
Superannuation is growing at the expense
of deposits, but asset growth continues
$
500000
400000
800000
300000
600000
200000
400000
100000
200000
0
0
Mar-96
Mar-97
Mar-98
Superannuation
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Bank Lending
$
Source: APRA
Mar-99
Mar-00
Bank Deposits
Mar-96
Housing
Mar-97
Mar-98
Personal
Mar-99
Business
Mar-00
Government
Deregulation of the banking industry has
transformed customer choice
Mortgage Products
1800
2000
1500
0
600
530
400
1000
500
Cheque Accounts
200
26
1980
1999
10
0
1980
Cash Access Points
ATMs
9387
10000
1999
290000
300000
200000
5000
0
-4-
100000
25
1980
Source: ABA/RBA
1999
0
18000
1980
1999
Australia has been an early adopter of
Internet Banking
Internet Banking Growth for ANZ
Internet Banking Penetration
400000
USA
300000
200000
Australia
0%
100000
ANZ
Scandinavia
10%
20%
30%
• Australia behind Scandinavian
countries, but compares well to
other countries
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Source: CSFB, ANZ
0
Oct-99
Feb-00
Jun-00
• ANZ is leading Australian
banks in terms of penetration
of customer base
Sep-00
Increasing need to balance broader
stakeholder objectives
Shareholders
Customers
Staff
Corporations
Governments
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Communities
Forces driving change
Globalisation
War for talent
Customer
experience
Technology/internet
Financial
services
Community
expectations
Need for growth
Competition costs/margins
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Imperative
to perform
Transitioning to the global new economy
Liberalisation
Old
economy
Mobility of capital
Global
new
economy
Digital world
Revolution in
Interaction
Costs
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Technology transforms what customers
expect
Time required to find a high
rate certificate of deposit
Cost of a 3-minute telephone call from
New York to London
1996, $
Telephone
25 min
300
250
www
www with
agent
10 min
1 min
200
150
100
50
0
1930
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1940
1950
1960
1970
1980
1990
2000
We have no choice but to transform our economics
%FUM
2
1.8
Operating Costs
Ratio Schwab to ANZ Retail
6
Retail
Branch
1.2
4
1
Other
Operating
Costs
0.6
2
Other
Salaries
0
0
%NIM
Internet Bank
Halifax
4
Lloyds/TSB
1
Supermarkets
0
-1
Egg
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96
97
98
Staff
15
~30% margin
compression
10
5
0
91
93
95
-2
95
Branches
20
Egg
Launched
3
2
Sales
Example: Entry of US Monolines into UK
Credit Card Market
%NIM
UK Interest Margins
5
Customers
Internet Bank (at
s cale)
Net interest
margin
Headline Net Interest
Margin
Traditional Retail
Bank
99
MBNA, Capital One
97
99
Specialists are targeting segments of the value
chain
EDS
IBM
Product
Manufacturing
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Yodlee
Quicken
Distribution Channels Sales &
& Processing
Marketing
Customer
Need
Countrywide
AHL
House
Purchase
MBNA
NextCard
Credit
Card
Egg
ING
Cash
Deposit
Fidelity
Schwab
Wealth
Mgmt
Specialists have been more successful than
integrators
Schwab
MBNA
Lloyds TSB
Specialists
Amex
Santander
Macquarie
Market/Book
Ratio
4
CBA
WBC
ANZ
StGeorge
NAB
Geographic
incumbents
Global Mega Players
Citigroup
Bank of America
Geographic
integrators
1
20
Book Equity
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50
Many Australian institutions focused on
consolidation stage
Fragmentation . . . to
consolidation
USA
EUROPE
AUSTRALIA
ASIA
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. . . and
specialisation
Leading
leading
toto
globalisation
globalisation
Improving performance requires a good balance
between EPS growth and increasing expectations
PE Ratio
Aspiration
Improved EPS
growth and
higher PE ratio
30
Sacrifice earnings
to build growth
25
20
Deliver earnings but
sacrifice growth
PE growth
15
10
ANZ
historically
(1995-1999)
5
EPS growth
0
0
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2
4
6
8
10
12
14
16
18
20
EPS growth %
The basis of success is changing
Incumbents’ historic advantages
. . . Neutralised in some/most cases
Privileged access to customers,
technology, labour, and capital –
hard for others to compete
Access available to everyone –
easier for new competitors to enter
and for customers to compare and
switch
Familiarity with local
ways of doing business
needed
Regional/global standards and
protocols become common – local
familiarity becoming less important
Vertical integration the
best model
No real need for integration within
the company – can be accomplished
with external parties
Protection from
capital market
pressure
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Capital market rewards the strong
and punishes the weak
ANZ’s response
Specialisation
e-Transformation
Growth
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Proposition
Strategy
Implications
• Specialists will win
over integrated
firms
• Reconceive ANZ as
a portfolio of
specialists
• Concentrate
resources in
targeted businesses
• New technologies
will deliver
superior customer
value and erode
margins
• Become an “eBank with a human
face”
• Use technology to
reduce costs and
improve service
proposition
• Value creation
requires a balance
of earnings growth
• Create portfolio of
growth businesses
which leverage
capabilities
• Manage short term
earnings growth to
ensure realisation of
longer term growth
opportunities
Talent is a critical determinant of future
performance
•
Increasing job mobility
•
More complexity
–
–
–
–
multi-cultural/lingual
technology literacy
global acumen
entrepreneurial skills
•
Competing with start-ups
•
Demand exceeds supply
•
Importance of intangible assets
–
–
–
–
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know how
know how
relationships
intellectual property
War
for
talent
•
Freedom to create
•
Building wealth
•
Modern values
•
Learning
•
Meritocracy
ANZ in the medium term
ANZ in 1 - 3 years
ANZ in 4 - 7 years
•
•
Substantial portfolio shifts
•
Narrower, more focused
portfolio with leading
positions
•
Increased investment in
high growth business
•
Modern performance
culture
•
Higher stock rating
•
•
Change of emphasis in
portfolio
Substantial e-transformation
reducing costs and focused
service
Performance optimised
–
–
•
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Eps, ROE, investment
capital management
Transformational cultural
change
Copy of presentation available on
www.anz.com
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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
Philip Gentry
Head of Investor Relations
ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]
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