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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 $167b
Market Cap $17.5b
Profit (first half 00) $817m
Staff 28,940
Credit Rating AA-/Aa3
ANZ Headquarters100 Queen StreetMelbourne
March 2000 Results
Double-digit earnings growth 14%. EPS 10%
Increase ROE towards 20% 17.8% (17.3%)
53% cost income ratio 51.4% Costs flat
Reduce risk Matches peers ex Grindlays
Achieve an optimal capital structure $500m buyback completed $1bn buyback announced
ANZ Delivers on Financial Commitments
Financial Performance
60
80
100
120
1997 1998 1999 Mar-00
0
2
4
6
8
10
1997 1998 1999 Mar-00
EPS Tier 1 Ratio
5
10
15
20
1997 1998 1999 Mar-00
ROE
0
5
10
15
20
25
30
35
40
1998 1999 Mar-00 ProForma
Lending Mix
50
55
60
65
70
1997 1998 1999 Mar-00
Cost Income Ratio%
WBC
CBAANZNAB
%
Emerging Markets
Mortgages
¢
%
%
Business Unit Performance
0
50
100
150
200
250
300
350
400
Personal Corporate International Other
1H99 2H99 1H00
A$ Personal 45%
Corporate 38%
International 9%Other 8%
Change in Profit
600
700
750
800
850
$m
650
Second Half1999
First Half2000
Net InterestIncome
34
Lending Fee20
Other Fee Growth
30
Other Income
17
Doubtful Debts
(4)Costs
(9)Tax(34)
PropertyRevaluation
30
Sale ofStrategic
Investments33
Restatement ofDeferred Tax
Balance(64)
764
817
Significant one off items(1)
Improving Asset Quality
General Provision
0
500
1000
1500
2000 Foreign Exchange
Impact
(18)
Surplus
$m
Non Accrual Loans
Sep 99 Mar 00 APRA Guidelines Minimum
Specific ProvisionsNet Non Accrual Loans
1997 1998 1999 1H00
428
444
900
762
657
886
554
871
$m
Net Transfer to
Specific Provision
(197)
ELP Charge
256
1395 1436
944
0
2
4
6
8
10
12
1997 1998 1999 1H00 Target
Capital management objective Increase ROE Maintain AA status
Targets Tier 1 6.5 - 7.0% Inner Tier 1 6.0% - 6.5%
Reducing excess $500m buyback completed $1bn buyback in process
Capital Management a Priority
Ratios
Hybrid Tier 1Inner Tier 1 Net Tier 2
%
Outcomes
Mortgage & cards share upPersonal 45% of group profit FM challenging, new team
Leadership position enhancedROA 0.9% (0.7%) Non accruals 0.4% (0.9%)
Grindlays sale Latin America Offices closed Asia-Pacific e-Commerce focus
Approaching leadership B2C Strong portfolio B2B Web enabled internal processes Numerous venture investments
Business Strategy
Accelerate growth in Personal
Build on strength in Corporate
Simplify and focus International
Build leadership in e-Commerce
Good Progress on Business Strategies
14.3
11 10.3 10.2
4.9
ANZ WBC St George NAB CBA
Share of Credit Card Spend
10
11
12
13
14
Jun-94 May-96 Apr-98 Mar-00
Share of Housing Lending% %
15
20
25
30
Jun-94 May-96 Apr-98 Mar-00
Momentum in Personal
Internet Banking Usersas % of Main Relationships
Source: Ord Minnett and Roy Morgan Research
0
80000
160000
240000
Oct Jan Apr Jul Oct Jan Apr
Internet Banking Registrations
1999 20001998
Leadership in Corporate
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
Business Banking Relationships AustralianMarket Share 1999 (%)
26 26
1619
ANZ NAB CBA WBC
7.5
7.2 7.2
7
ANZ NAB CBA WBC
Customer Perception of Service Delivery 1999 (out of 10)
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
Group Growth Grindlays
Assets $167b $14b $10b
Profit $817m $53m $79m
Staff 28,940 -1231 5400
Representation 39 14
ANZ Headquarters100 Queen StreetMelbourne
Delivering via the Web B2C
B2B
IdentrusFX On-line(ANZ On-Line)
FX On-line(ANZ On-Line)
E-ProcurementE-Procurement
Employee PCsEmployee PCs
operations.com
Sales & Sales & Service Service
PlatformPlatform
Directors on lineDirectors on line
ERPERPTransformation
Enterprise Resource Planning
Improve sustainability of core franchisesImprove sustainability of core franchises
Strategic Imperatives
Accelerate the growth program across 3 horizonsAccelerate the growth program across 3 horizons
Radical transformation of the businessRadical transformation of the business
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 horizonsAccelerate the growth program across 3 horizons
Radical transformation of the businessRadical transformation of the business
Strategic Imperatives
Accelerate the growth program across 3 horizonsAccelerate the growth program across 3 horizons
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
Improve sustainability of core franchisesImprove sustainability of core franchises
Strategic Imperatives
Accelerate the growth program across 3 horizonsAccelerate the growth program across 3 horizons
Radical transformation of the businessRadical transformation of the business
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 WardGeneral Manager Office of the Chief Executive
ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]