Perform Grow and Breakout Investor Presentation - PowerPoint PPT Presentation

Loading...

PPT – Perform Grow and Breakout Investor Presentation PowerPoint presentation | free to download - id: cf5c3-ZDc1Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Perform Grow and Breakout Investor Presentation

Description:

Perform Grow and Breakout Investor Presentation – PowerPoint PPT presentation

Number of Views:57
Avg rating:3.0/5.0
Slides: 42
Provided by: stephen264
Learn more at: http://www.anz.com
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Perform Grow and Breakout Investor Presentation


1
Perform Grow and BreakoutInvestor Presentation
  • Australia and New Zealand Banking Group Limited
    May 2001
  • John McFarlane
  • Chief Executive Officer

2
ANZ - who we are
  • One of the Big Four Australian banks.
  • Provider of full range of financial services in
    Australia (since 1835) and New Zealand (since
    1840)
  • Leadership in Corporate Banking, Credit Cards and
    Mortgage origination, a strong eCommerce position
    and an offshore network in Asia and Pacific.
  • Assets A181b (US 95b)
  • Market Cap A20.5b (US 11b)
  • Profit (half year) A895m (US 470m)
  • Staff 22,815
  • Credit Ratings AA-/Aa3

ANZ Headquarters 100 Queen Street Melbourne
3
ANZ is different..
Lending assets by asset type
Total assets by geography
Ab
Ab
  • We were
  • Reliant on market trading earnings
  • Higher risk asset base, particularly emerging
    markets
  • Prone to adverse surprises
  • Today
  • Developing specialist businesses from distinctive
    capabilities
  • Australasian, with regional interests
  • Strong consumer growth engine balancing leading
    position in Corporate

as at 31 March 2001
4
Building for the future - a distinctive strategy
  • Proposition
  • Entrepreneurial specialists create more value
  • Corporations must embrace new technologies
  • Value depends on performance, growth and breaking
    out
  • Strategy
  • Reconfigure ANZ as a portfolio of 16 specialist
    businesses
  • An e-Bank with a human face
  • Drive results, invest in growth businesses and
    create new paradigms
  • Implications
  • Specialist approach to customer and product
    businesses
  • Transform the way we do business with IP
    technology
  • Meet expectations, fund growth by cost reduction,
    transform

Specialise
e-Transform
Perform Grow Break out
5
Implementation of our strategy is progressing well
  • Specialisation
  • 16 Business Units within 3 portfolios, plus
    corporate centre
  • Separate financial reporting for each Business
    Unit
  • eTransformation - the eBank with a human face
  • Leading internet banking penetration
  • Highest profit per employee
  • Perform Grow and Breakout
  • Perform ? exceed market expectations
  • Grow ? higher than system revenue growth,
    position in high growth sectors
  • Breakout ? bold transforming moves

6
Evolution of Perform Grow and Breakout
  • Create a breakout mentality
  • Create a strong performance culture
  • Out execute in a different game
  • Earned the support of the market
  • Identify growth opportunities
  • Invest to grow
  • Build the foundation
  • Deliver on the fundamentals

7
Transforming ANZ through Perform, Grow and
Breakout
  • Focus long term destiny
  • Benchmark global industry/players
  • Looking for transforming moves
  • Horizon 5-10 years
  • Success dramatic market cap increase

Break out
  • Focus specialisation and out-growing the
    market
  • Benchmark competitors in each business
  • Looking for breakout moves in key
  • businesses (eg QTV, Origin)
  • Horizon 3-4 years
  • Success 4-5 moves taking share and
  • worth AUD1bn market cap each

Grow
  • Focus performance
  • Benchmark market expectations
  • Looking for six monthly delivery
  • Horizon 1-2 years
  • Success meet/exceed expectations
  • consistently

Perform
8
We are performing well - interim results
  • NPAT from continuing operations 907m - up 18
  • EPS up 13 to 55.8 cents
  • ROE of 19.1, up from 17.8
  • Costs flat - cost income ratio down to 49.4
  • Credit quality sound
  • ELP charge down to 35 bps
  • Total non-accruals down
  • Specific provisions flat
  • Profit on sale of holding in St George 99m (65m
    after tax), offset by write downs in investments
    (84m)
  • Improved disclosure - financial information
    provided for each business unit

Note Comparisons are against half year ended
March 2000 (including Grindlays)
9
...and building a strong track record
NPAT/ROE
Cost to Income
NPAT m
ROE
Source JP Morgan Roy Morgan Research
10
Revenue growth driving earnings per share

Non Interest Income 15
Mar 00 v Mar 01
Acquisitions -1
Average interest earning assets 27
Tax -11
Expenses -6
Provisions -1
Discontinued Operations -8
Margin Compression -5
contribution to EPS growth
18
Capital Management 4
13
Pref Shares -1
9
EPS Growth
NPAT Continuing Operations
Earnings - Ordinary Shareholders
11
Good profit growth across a diversified
portfolio Mar 00 v Mar 01
m
Personal
Corporate
International and subsidiaries
12
80 of businesses delivered revenue growth
greater than expense growth
revenue growth
ROE
Mortgages
50
top third
45
middle third
40
35
bottom third
Cards
30
Institutional
25
GCM
GSF
20
Asia
15
GFX
Pacific
GTS
10
General Banking
Corporate
expense growth
Small Business
5
Wealth
5
-10
-15
-20
-25
-5
10
15
20
25
30
Asset Finance
-5
Investment Management
-10
-15
based on pcp
13
We are developing a track record for building
growth businesses


Share of credit card spend
Mortgage market share
95
00
96
97
99
98
01
95
00
96
97
99
98
01
m

m
Personal customers - Australia
FM inflows (LHS)
Deposit market share (RHS)
14
Most businesses expected to grow above market
over next 2-3 years
Market Growth
Wealth Management
Personal
High
Corporate
Investment Management
Cards
Int. Subsidiaries
GTS
Asia
Mortgages
GCM
Medium
GSF
Small Business
GFX
Institutional
Metro Banking
Corporate
Regional Banking
Low
Pacific
Asset Finance
Note Size of bubble approximates relative
profit contribution
BU Growth
Below Market
At Market
Above Market
15
Substantial growth opportunities in Personal
  • System Growth
  • Underlying credit growth 8-10 pa
  • Market Share
  • Product businesses growing customer numbers and
    mkt share
  • Customer s increasing by 1.0m - translates to
    650m in additional revenue pa
  • Increase Wallet
  • Customer businesses deepening wallet share
  • 650m revenue gain by matching our peers
  • Created customer businesses
  • Sales programs
  • CRM

Total potential revenue growth - 1.5b
Customer s (m)
Peer Average
Increased wallet on higher share 160m
10
Potential revenue 650m
7.3
5
4
Potential revenue 650m
Existing revenue 2.6b
0
40
50
Share of Customer Wallet
Average share of wallet for CBA, NAB, SGB, WBC
- source Roy Morgan Research
16
Our breakout approach is differentiating us
  • Specialised businesses
  • First class execution (no surprises)
  • Strategy
  • Staff
  • Customers
  • eTransformation
  • Risk
  • 91 of managers on individual contracts
  • 12 rise in staff satisfaction
  • Establishment of Customer Charter, Customer
    Advocate and distinctive customer and community
    initiatives
  • Leading cost income ratio
  • Highest internet banking penetration
  • Leading financial disclosure transparency
  • EVA embedded in culture

17
Developing a breakout performance culture
Mission /aspiration
where we are where we want to be
Distinctive (Top 10)
Targets/goals
Superior (Top 25)
Average
Organisational approach
BU Performance feedback
Consequencemanagement
Rewards recognition
Opport- unities
People
Financial
Operational
Values

Coordination and control
Motivation
Average
Superior
Distinctive
Benchmark - 33 Australasian companies
surveyed over 1999-2000
18
ANZs aspiration
  • A high performing company, exceeding expectations
  • Revenue growth
  • Cost leadership
  • Risk mitigation
  • EPS
  • ROE
  • Positioned in growth markets
  • Actively managed portfolio
  • Annual investment in growth ideas
  • Higher than peer revenue growth

Perform
Grow
AND
Breakout
  • More dynamic than competitors
  • High P/E rating
  • Performance culture
  • Lean and agile
  • The e-bank with a human face
  • A breakout mentality

19
We are on track to deliver on our 3 year
commitments
Measure EPS growth ROE Cost-income ratio Inner
Tier 1 Credit rating
3 Year Commitment gt 10 gt 20 mid
40s 6 maintain AA category
Achievement 13 19.1 49.4 6.2 maintained
  • We have also committed to improving customer
    satisfaction, and will publicly report our
    progress

20
Summary
  • We are performing well
  • Cost management momentum eTransformation has
    just begun
  • Risk reduction continues
  • Our new strategy is creating value and better
    positioning us for growth
  • We are differentiating ourselves through our
    Breakout program

We are on track to achieve our goals
21
The material in this presentation is general
background information about the Banks
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 e-mail
gentryp_at_anz.com
22
Supplementary Information
  • 2001 Interim Results and credit quality
    information

23
Strong income growth, with good progress across
the board
m
Profit on sale of St George 65
Write downs (84)
Non-Interest Income 76
Expenses (34)
Abnormal/ Discontinued Items 104
Provisioning (14)
Interest Income 84
Tax (12)
930
Discontinued (12)
907
895
Eftpos NZ acquisition and GST (26m)
826
2H 2000
2001 1H
2H 2000 Continuing
2001 1H Continuing
24
Unusual items St George profit offset by
write downs in investments
  • St George - 99m profit (65m after tax)
  • regulatory issues
  • - not critical to strategy
  • attractive price

Panin Share Price
IDR
  • Panin - 43m writedown
  • long term growth prospects remain positive
  • ETrade - 21m writedown
  • online broking service provides core customer
    offering
  • Other - 20m writedown
  • a number of small eCommerce related investments


ETrade Share Price
- no tax relief on these writedowns
25
Income drivers

Margins stabilised in first half
  • Benefit from differential between 90d BBSY and
    cash rate
  • Greater focus on improving margins

Other
Non-interest income continues to grow
Trading
FX
  • Driven by higher non-lending fee income
  • FX profits higher, reflecting AUD volatility

Other Fees
Lending Fees
For continuing businesses
26
Cost-income ratio on track to meet target of mid
40s
m
CTI
Sale of Grindlays
  • Reduction in Cost Income ratio driven by revenue
    growth and cost control
  • Approximately 65m of restructuring provision
    used
  • two year program, with benefits principally 2002
    and beyond
  • eTransformation will continue to drive costs down

27
Personal portfolio
  • Mortgages and Cards reinforce value of our
    specialisation strategy
  • Clear opportunities for customer businesses to
    replicate success of product businesses
  • Significant market share growth opportunities
    remain
  • creation of Metrobanking and Regionalbanking
  • a 1 increase in market share for customer
    businesses worth 100m revenue

m
28
Corporate portfolio fee income driving profit
growth
  • Five of six businesses delivered profit growth
    greater than 10
  • Non-traditional income for Corporate Banking
    grew 40 on annualised basis, largely by
    executing Wall St to Main St strategy

m
29
International Subsidiaries risk reducing,
profits up
  • Asset Finance reconfiguring back office platform
    to deliver substantial efficiencies
  • Negative profit growth for Investment Management
    due to tax changes and increased growth spend
  • Asia showing positive signs, on track to record
    significant profit growth for the full year

Asian Credit Quality
AAA to BBB
BBB to BBB-
BB-
BB to BB
B to CCC
Non-accrual
30
Capital management will continue
  • Capital Management
  • Philosophy
  • Maintain capital consistent with ANZs AA status
    and peer group ratings
  • Tier 1 (6.5 - 7.0)
  • Inner Tier 1 (6.0)

b

7.9
7.7
7.5
7.4
7.3
6.9
6.7
  • Progress
  • 413m in share buybacks in the half year
  • New framework for allocating capital for
    operating risk implemented
  • Capping of DRP/BOP

6.5
6.4
6.2
31
We continue to actively manage and reduce risk
Lending Profile by Asset Type
  • Exiting higher risk businesses
  • More emphasis on lower risk businesses
  • Corporate balance sheet deliberately constrained
    focus on fee income
  • Risk based approach embedded through EVA

business
consumer
CBA as at 31/12/00, NAB WBC as at 30/9/00
32
Total non-accrual loans continue to fall, but
increase in Australia
Historic
Geographic Gross Non-Accrual Loans
m
Gross Non-Accrual Loans (LHS)
m
Non-Accrual Loans/ Loans advances (RHS)
Net Non-Accrual Loans (LHS)
Aust
Inter
NZ
33
Arrears analysis indicates no systemic
deterioration
personal lending assets over 60 days in arrears


Personal Loans
Business FDAs
Credit Cards
Housing Loans
RILs
Overdrafts
  • Increase in credit card arrears reflects seasonal
    influences
  • Personal loan arrears continue to increase in
    terms due to reducing book
  • Small upturn in arrears in Jan-Feb largely
    reversed during March
  • Arrears broadly in line with same period last
    year


Residential Investment Loans
34
Corporate book holding up well, despite a few one
off issues
Corporate risk grade profile
  • Risk actively managed
  • Quarterly strategy reports prepared for all high
    risk accounts
  • June to October 2000 - all BB rated accounts
    within Corporate reviewed in expectation of
    downturn
  • New accounts gt 3m to be referred one level
    higher

AAA to BBB
BBB to BBB-
BB to BB
BB-
gt B
gtB B, B-, CCC non-accrual
35
Credit quality is sound in some of our larger
industry exposures - Australia
Lending Assets (AUDm)
of Portfolio (RHS scale)
in CCR 7D-8G (RHS scale)
in CCR 9-10 (RHS scale)
Manufacturing
Retail Trade
Real Estate Operators Dev.
Accomm. Cafes Restaurants
Construction
Agriculture
36
Group risk grade profile continues to improve
114.6bn
141.0bn
134.9bn
126.5bn
AAA to BBB
BBB to BBB-
BB to BB
BB-
5.4
3.9
gt B
7.2
3.8
45
43
38
35
ELP (bps)
gtB B, B-, CCC non-accrual
  • Risk grade profiles by division and geography in
    appendix

37
Provisioning levels remain strong
represents 3 years expected losses
m

GP/Lending Assets
ELP charge
241
FX impact
1460
27
1373
(181)
Net SP transfer
Surplus448
1012
1H 2001
2000
APRA Guidelines
ELP - Economic Loss Provision SP - Specific
Provision
includes acceptances
38
Current provisioning in line with expectations
  • ELP is a function of volume (on and off balance
    sheet), risk grade profile, and level of security
  • Specific Provisions tend to be less volatile in
    Personal businesses and track more closely to ELP

39
Economic Loss Provisioning
GP net lending assets
Actual Losses are funded from the General
Provision
ELP Charge Loan Amount x Probability loss x
Loss Given default Plus
General Provision balance
Actual SPs
PL Charge
An adjustment to ensure the GP balance is
sufficient to cover
  • Volatility around expected loss (using
    statistically quantified variance)
  • Remaining term of loan portfolio
  • Balance sheet growth
  • ELP charge will vary from year to year based on
  • changes in lending volumes
  • change in risk grade profile
  • security levels
  • product and geographic mix

40
Summary of forecasts - Australia
Calendar years
1999 2000 2001 2002
Real GDP growth 4.7 3.7
1¾ 3¾
Inflation 1.5 4.5 4.0

Unemployment (Dec) 6.7 6.2
7.0 6 ¾
Current account deficit (GDP) -5.8 -4.0
-2.3 -3.3
Housing starts (000) 157 147
123 135
90-day bill yield ( pa, Dec) 5.48 6.20
4.75 5.1
10-year bond yield ( pa, Dec) 6.64
5.50 5.9 6.2
A (US cents, Dec) 65.8 55.8
55.0 62.0
Sources ABS RBA Economics_at_ANZ.
41
Outlook
  • System credit growth forecasts
  • housing 12.4
  • personal 11.1
  • business 6.5
  • Personal to exceed system credit growth
  • Corporate credit growth - continuing higher
    quality focus
  • Margin compression will continue
  • Costs flat
  • Challenges ahead, however we are well placed to
    continue to perform well, and achieve our targets
    over the medium term

forecast for year ending 30 September
About PowerShow.com