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Perform Grow and Breakout

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Perform Grow and Breakout Powered By Docstoc
					             Perform Grow and
                     Breakout
Australia and New Zealand Banking Group Limited
                                      May 2002
Outline
 Perform
    – Interim result highlights

 Grow
    – Organic out-performance
    – Portfolio reshaping
    – Transformational moves

 Breakout
    – Cultural change




                           Page 2
         Repositioning, then new momentum
   $m
8000                                                             1200
               Revenue (LHS)
7000           Expenses (LHS)




                                                                        Value of $100 invested in 1992
               Provisions (LHS)                                  1000
6000           Profit (LHS)
               TSR (RHS)

5000                                                             800


4000
                                                                 600
3000


2000                                                             400


1000
                                                                 200
   0
        1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Mar-
-1000                                                     02*    0

           * Mar-02 annualised
                                    Page 3
       We are building a track record of
       delivering strong financial performance
  $m                     NPAT*                                                                   ROE
                                                                    %
1100                                      $1,050                    24
                                                                                                            21.6%
1000                                                CAGR            22
 900                                                                20
                                                    16%
 800
                                                                    18
 700
                                                                    16
 600
 500                                                                14
 400                                                                12
       Mar-99     Mar-00      Mar-01       Mar-02                        Mar-99     Mar-00         Mar-01   Mar-02


                Cost Income Ratio                                                 EPS & Dividends
  56                                                                                                        66.3
                                                                    65
  54
  52                                                                55
  50                                                                45
                                             46.5%                                                             39.0
  48
                                                                    35
  46
  44                                                                25
  42                                                                15
       Mar-99      Mar-00        Mar-01       Mar-02                     Mar-99         Mar-00     Mar-01   Mar-02
                                                                                  EPS            DPS
   *Sep 00 – adjusted for discontinued businesses          Page 4
  Most businesses recorded good profit
  growth on prior March half
                         Mar-02 Mar-01 Change        NPAT $m

Personal Banking Australia 129   131       -1%
Mortgages                  115   108        6%
Institutional Banking      113    95       20%
Wealth Management           80    58       38%
Consumer Finance            79    40       98%
Transaction Services        75    66       14%
Corporate Banking           68    61       11%
Small Medium Business       68    55       22%
Treasury                    63    26      142%
Asset Finance               49    45       10%
Personal Banking NZ         46    46        1%
Pacific/Asia Consumer       43    28       51%                 NPAT increase
Foreign Exchange            41    42       -2%                 NPAT decrease
Corp Financing & Advisory 41      38        8%
Structured Finance          41    39        6%
Capital Markets             31    24       32%
                                                 0     50         100          150




                                 Page 5                2nd half NPAT
       Specific provisions impacted by a
       single corporate collapse
                     Provisions
$m                                       Single         $bn       Mar-02 Specific
400                                    customers         400     Provisions by size
350                                                      350
                                                                 < $5m
300                                                      300
                                                                                            1
                                                                                         customer
250                                                      250

200                                                      200
                                                                         4
150                                                      150         customers
                                                                  $5m -          3
100                                                      100      $10m       customers          >$100
                                                                          $10m -                  m
50                                                       50                $20m

 0                                                       0
                                                               • Only 4 customers with
      Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-
       98 98 99 99 00 00 01 01 02
                                                                 specific provisions
                                                                 greater than $10m
           Net specific provisions - $m (LHS)
           Average net lending assets - $b (RHS)               • Excluding Enron, specific
           ELP charge - $m (LHS)                                 provisions declined 42%
                                               Page 6
Consumer portfolio healthy, corporate
portfolio impacted by fallen angels
  %      Consumer Arrears > 60 days                     March 2001 ratings for First
3.00
                                                        Half 2002 new corporate non
                         Small Business                         accrual loans
                         Mortgages
2.50                     Cards & Personal Loans
                         Personal - Overall

                                                            B + to B
2.00                                                          4%       B - to CCC
                                                       BB + to BB         10%
                                                          2%

1.50
                                                              BBB to BBB
                                                                   -
                                                                 12%
                                                                                    > BBB
1.00                                                                                 73%



0.50




0.00
    Mar-01   Jun-01   Sep-01   Dec-01     Mar-02
                                              Page 7
       Overall credit quality position is sound

                    Historic                                                      GP/RWA’s
$m             Gross Non-Accrual
                                                                    %

1800
               Loans (LHS)                                          1.20           GP after special
       1662                                                                        provision
                      Non-Accrual Loans/                            1.15   1.14
                      Loans & advances (RHS)
               1543
1500                                                      1.5%      1.10                 GP before special
                           1391                                                          provision         1.05
                                                 1357
                                                                    1.05
                                         1260
1200                                                                1.00
                                                                                  0.96     0.96
                                                                    0.95
                                                          1.0%
         900
900                                                 833             0.90                          0.88
                                           770
                                   699                              0.85
                    657
600                                                                 0.80
                                                          0.5%
                Net Non-Accrual                                     0.75
                Loans (LHS)
300                                                                 0.70
                                                                           ANZ    ANZ      CBA     NAB    WBC
                                                                           Mar-   Mar-     Dec-    Sep-   Sep-
  0                                                       0.0%              02     02       01      01     01
       1998      1999       2000          2001   Mar-02



                                                           Page 8
ANZ’s adjusted common equity to RWA
in line with peer average
     8.0%                                                                  Peer Average
     7.0%
     6.0%
     5.0%
     4.0%
     3.0%
     2.0%
     1.0%
     0.0%


                                     A




                                                        CO
                                                  B




                                                                                 C
                               B




                                                                          BC
                                          BC




                                                                    y


                                                                    s
                                   CB




                                                SG




                                                                               RB
                             NA




                                                                  be


                                                                 lay
                        2)
                        1)




                                         W




                                                                        HS
                                                      BS
                        )




                                                               Ab
                      JV
                      -0
                     -0




                                                               rc
                    ar




                                                             Ba
                   ep




                   +
                (M
                (S




                 2
              -0
              Z
      Z




            ar
           AN
    AN




          (M
        Z
      AN




Notes

•    Excludes mortgage servicing rights.

•    Calculation excludes the fact that the Australian banks’ GP/RWAs is approx. 40bp
     higher than the average of the UK and Canadian banks.


                                           Page 9
Our Growth Agenda
   Our growth agenda – three drivers for
   sustainable growth
                   • Extend specialisation
                   • Grow customer
    Organic          numbers                   Our targets
out-performance    • Increase share of
                     wallet                  • Revenue growth
                   • Drive productivity        materially higher
                                               than expense
                   • Invest in high growth     growth
                     areas                   • Take business
    Portfolio
                   • Build specialist          units to sustainable
   reshaping         capabilities              leadership
                   • Exit weak positions       positions
                   • Risk reduction
                                             • Build a range of
                                               strategic options
                   • Step changes in
Transformational     positioning
     moves         • Creating new growth
                     options
                   • Proactively shaping
                     industry

                         Page 11
         Taking specialisation deeper into
         the portfolio
         Further specialisation will unleash substantial energy

  • 200 businesses,                                                       ~100 local
    200+ terrific jobs                                                     markets

  • Strategic corporate                        Wealth
    centre                       ANZIB                     Personal
                                                           Banking
  • Flatter organisation,
    less bureaucracy
                               Asset         Group &
                                            Operational       Mortgages
                              Finance
   CEO                                      Leadership
              4 people
              between
               the CEO           Small                    Corporate
                                Business                  Businesses
               and the
                                            Consumer
  Sales
              front line                     Finance
consultant                                                                  Industry
                                                                           segments


                                  Page 12
       Transforming the personal customer
       experience

   Taking Specialisation
   Taking Specialisation
     to the Frontline                                  Provide     Transform
      to the Frontline                                                 into
                                                      Flawless,
• Approximately 100 local                           Front-to-Back Customer-Led
 • Approximately 100 local                             Service    Organisations
  market-based businesses
   market-based businesses
                                            Break into                       Have
• Local Market Managers --                    Break into a
 • Local Market Managers                    a portfolio       Restoring     Smart,
  Local CEOs                                   Portfolio of                  Well-
   Local CEOs                                    of
                                               Customer       Customer
                                             customer                       Located
                                              Businesses        Faith      Branches
                                            businesses
• Create autonomy to set
 • Create autonomy to set
  local strategies
   local strategies                                  Formulate a
                                                       Winning     Regain The
                                                       Deposit     Faith of Our
• An ownership culture
 • An ownership culture                                Strategy       People
  among staff – ‘Think like a
   among staff – ‘Think like a                        & Product
  customer, act like an owner’
   customer, act like an owner’




                                  Page 13
 Encouraging results from Restoring
 Customer Faith pilot %
            Customer Satisfaction                               Staff satisfaction
  9.0                                          100
            with Branch experience              90
  8.5                                           80
                                                70
  8.0
                                                60
  7.5                                           50
                                                40
  7.0                                           30
                                                20
  6.5
                                                10
  6.0                                            0
            Control          Pilot                        Victoria            Pilot
                                               Index
             Account Growth                    110                  FUM
2.0%                                           108                Victoria
              Pilot                                               Pilot
1.5%                                           106
              Victoria
                                               104
1.0%
                                               102
0.5%                                           100

0.0%                                            98
       Sep-01 Nov-01     Jan-02 Mar-02                 Sep-01        Nov-01      Jan-02
                                     Page 14
            Acquiring more customers…
        Initial product success has     Broadening sources of
         driven customer growth          customer acquisition
Customers
   (m)
  4.3                                   • Restoring Customer
                                          Faith delivering a
  4.1                                     distinctive
  3.9                                     experience for
                                          customers
  3.7                                         • Reduce churn
  3.5                                         • Attract customers    Target
  3.3
                                        • Leveraging ING JV
                                                                     1 million
                                          in Wealth                    new
  3.1
                                                                    customers
  2.9                                   • Whilst enhancing
  2.7                                     leadership in Cards
                                          and regaining
  2.5                                     momentum in
   Mar-98 Mar-99 Mar-00 Mar-01 Mar-02     Mortgages

        • Cards account for more than
          50% of new customers
                                        Page 15
     …and winning more business from
     each customer
     Personal Businesses                                         Corporate Businesses
          Leveraging CRM                                 Index    Wall Street to Main St*
                   Example                               170                Wall St to              158
                                                                             Main St       8
  Growth in FUM for WM customers,                        150
%
          Sep 01 to Feb 02                                                        21     Other
15                                                       130
                                                                          29
                                                         110      100
10
                                                          90            Traditional
                                                                          Income
 5
                                                          70

 0                                                        50
                                                                 Mar-00                        Mar-02
        Control Group          CRM Group

• Extend our NIACC expertise into our personal businesses and small
  business
• Leverage our JV with ING to grow sales of wealth products
• Increasing sales force numbers and effectiveness
     NIACC – Net Income After Capital Charge   Page 16             * NIACC indexed to base of 100
      Continuous productivity improvement
      provides capacity to reinvest in growth

             Cost leadership…                             …with more to come
CTI
 %
65                                         NAB             • Further expansion of
                                           CBA               straight through
                                           WBC
                                                             processing
                                           ANZ
60
                                                           • Re-engineering
                                                             processes from a
55                                                           customer
                                                             perspective

50                                                         • Outsourcing or
                                                             partnering with best
                                                             practice providers
45
                                                Target
                                               Mid 40’s
40
      1997    1998   1999   2000   2001    Mar-02

                                          Page 17
Our growth agenda – three drivers for
sustainable growth

        Organic
    out-performance


                              • Invest in high growth
                                areas
        Portfolio
                              • Build specialist
       reshaping                capabilities
                              • Exit weak positions
                              • Risk reduction



    Transformational
         moves



                    Page 18
      Historically, we had a number of weak
      positions

          High                                                                 • Earnings from volatile
                                                                                 country markets
                                                                               • Exposure to non-core
                                                                                 business with limited
                 Wealth
                             Mortgages                    GFX                    capability
                                              GCM
                                                    Cards     GTS              • Poor understanding of
                          Small
    Market                 Bus Consumer             GSF
                                                                                 risk positions
                                Banking
Attractiveness
                  Emerging
                                                                  C&IB         • Poor capabilities in
                              Principal
                    Mkts      Equities                                           some core domestic
                   trading    Trading                           Pacific
                                  Grindlays                                      markets
                    Stock
                   Broking
                                                                               • Strong corporate
                                                             Asset
                                                            Finance
                                                                                 business, resulting in
                                                                                 portfolio being skewed
          Low                                                                    toward corporate
                 Weak                                                 Strong
                                           Mid 90s                               assets
                                         ANZ Position



                                                    Page 19
        We are actively reshaping the business
        mix and investing for growth…
                                                        Acquisition of
                                                       Bank of Hawaii’s
                Acquisition                            Pacific Business             Annual
                 of Origin                                                         Growth
                                                                      Funds      Investments
  JV with                              Acquisition
                                                                   Management
Panin Bank                            of Eftpos NZ
                                                                   JV with ING

1998                  1999              2000                2001          2002     2003-




                  Closure of
                  Emerging               Disposal of
                Market Trading           Grindlays


                              Disposal of stock
         Cap on               broking business
       commercial
        property
                                                          Closure of
      Closure of                                      futures operation
  Principal Trading
                                                  Page 20
                   …to build an improved, more
                   sustainable portfolio
                        Source of profit - today
  High
                        5 - 10%                 15 - 20%


                                      Wealth
                                                                                          Source of profit ~2005
                                                                             High
                         Small                         Cards
                          Bus




                                                                             Attractiveness
                                                                                                 5 - 10%
Attractiveness




                                                                                 Market
    Market




                          Consumer
                           Banking             ANZIB                                                         ~80%
                                                       Corporate
                                   Mortgages
                                                                                                 < 10%


                                                    Asset                     Low
                                                   Finance
                                                                                              Weak      ANZ      Strong
                                                                                                      Position
                        25 - 35%                35 - 45%
  Low
                 Weak                                       Strong

                           Current ANZ Position




                                                                   Page 21
Our JV with ING creates a unique
strategic position in a high growth sector
 Bringing together complementary strengths

 ANZ
 •   Large distribution network         • Outstanding
 •   High value customer base             customer
 •   Untapped opportunity                 proposition
 •   Specialist approach
                                        • Top 4 position in
                                          retail FUM

 ING                                    • Top 5 position in life
                                          insurance
 • Global capabilities
 • Brand & investment                   • Strong platform for
   strength                               growth
 • Strong adviser networks
 • Bancassurance, JV
   expertise


                              Page 22
         Sources of FM revenue to JV partners

                                                                                           ING Investment
   ANZ                                        Joint Venture                                 Management

                     Equity owned                          Product manufacturing
    Bank                                                                                        Investment
                        adviser                               & administration
distribution                                                                                    management
                       networks                                  platforms


Up to 100 bps              Up to 15 bps                                60-120 bps           Typically 10-30 bps




  100%                                  49%                         51%                           100%


                Margin to ANZ                                                   Margin to ING
                 Note: principle of arms length/market based pricing for all commissions
                 Margins are indicative only and vary by product

                                                       Page 23
Our growth agenda - driving
sustainable growth on three fronts


     Organic
                              Our targets
 out-performance
                              • Revenue growth
                                materially higher
                                than expense growth
     Portfolio                • Take business units
    reshaping                   to sustainable
                                leadership positions
                              • Build a range of
                                strategic options
 Transformational
      moves




                    Page 24
A Breakout Culture
       Three critical enablers distinguish ANZ


                 Specialisation      Execution   Culture




Organic out-performance


  Portfolio reshaping


Transformational moves




                           Page 26
          Improvement on all fronts in 1 year

                                                                                  2000 base line
    Mission
  and aspiration                                                                  2001 position



                                                           Distinctive
                                                           (Top 10%)
 Stretch targets
                                                           Superior
                                                           (Top 25%)



  Organisational                                           Australian
                                                           average
    approach



  Performance
    feedback



                          People   Financial Operational                 Rewards & Oppor-
  Consequence                                                                                      Values
                                                                         recognition tunities
  management
                          Coordination and control                                 Motivation
Average
          Superior

            Distinctive
                              * Benchmark comprises 33 of Australia’s Top 50 companies
                                              Page 27
  Our culture is changing dramatically -
  improvement in ANZ Values



Accountability                                     Bureaucracy
Achievement         In                       Out   Hierarchy
Customer focus                                     Control
Continuous improvement                             Short-term focus


                           Maintained
                         Cost reduction
                         Shareholder value
                         Results driven
                         Profit
                         Low risk
                         Goals orientation



                             Page 28
Our people are engaged

                   Staff satisfaction survey

80                                                         1999     2000
                                                           2001     2002
70

60

50

40

30

20

10

0
     Overall satisfaction with ANZ      Recommend ANZ as a place to work



                              Page 29
      All stakeholders key to value creation
         Community
• Maintaining rural branches                      Shareholders
• Seniors and welfare banking                • EPS double-digit
• ANZ Community Fund                         • Cost-Income mid 40’s
                                             • ROE above 20%
                                             • Intangible value
                                             • Distinctive disclosure




                                                 Our People
                                             • Performance ethic
                                             • Breakout
           Customers                           transformation
  • Restoring customer faith                 • Freedom with
  • Simplified accounts and fees               accountability
  • Ten charter promises                     • Stretch incentives


                                   Page 30
      Results overview

• Strong result in challenging environment

• Clear growth agenda
   – Organic out-performance
   – Portfolio reshaping                     Targets affirmed
   – Transformational moves                  • EPS growth > 10%
• Distinctive strategy                       • ROE > 20%
   – Specialisation                          • CTI – mid 40’s
   – Superior execution                      • Maintain AA category
   – Breakout culture
• Positive second half outlook




                                 Page 31
www.anz.com

    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 int o 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    e-mail: gentryp@anz.com




                                        Page 33

				
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