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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

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Anz delivering for shareholders

ANZ

Delivering for Shareholders

Presentation to CLSA Investors’ Forum 2000

John McFarlane, Chief Executive Officer

16 May 2000


Anz delivering for shareholders

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

  • Staff28,940

  • Credit RatingAA-/Aa3

ANZ Headquarters

100 Queen Street

Melbourne


Anz delivering for shareholders

ANZ Delivers on Financial Commitments

March 2000 Results

  • Double-digit earnings growth14%. 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 delivering for shareholders

Financial Performance

EPS

Tier 1 Ratio

¢

%

%

ROE

Lending Mix

%

Cost Income Ratio

%

Mortgages

Emerging Markets

WBC

CBA

NAB

ANZ


Business unit performance

Business Unit Performance

Other 8%

Personal 45%

International 9%

A$

Corporate 38%


Anz delivering for shareholders

Change in Profit

Sale of

Strategic

Investments

33

Other Income

17

$m

Property

Revaluation

30

Other Fee

Growth

30

Doubtful

Debts

(4)

850

Lending Fee

20

Costs

(9)

Net Interest

Income

34

817

Restatement of

Deferred Tax Balance

(64)

Tax

(34)

800

764

750

Significant one off items

(1)

700

650

600

Second Half

1999

First Half

2000


Anz delivering for shareholders

Improving Asset Quality

General Provision

Non Accrual Loans

$m

$m

Foreign Exchange Impact

(18)

2000

762

1436

1395

1500

Surplus

886

Net Transfer to Specific Provision

(197)

871

ELP Charge

256

944

1000

444

900

500

657

554

428

0

Sep 99

Mar 00

APRA Guidelines Minimum

1997

1998

1999

1H00

Net Non Accrual Loans

Specific Provisions


Anz delivering for shareholders

Capital Management a Priority

%

Ratios

  • 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

Inner Tier 1

Hybrid Tier 1

Net Tier 2


Anz delivering for shareholders

Outcomes

Mortgage & cards share upPersonal 45% of group profit FM challenging, new team

Leadership position enhanced

ROA 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

Good Progress on Business Strategies

Business Strategy

  • Accelerate growth in Personal

  • Build on strength in Corporate

  • Simplify and focus International

  • Build leadership in e-Commerce


Anz delivering for shareholders

Momentum in Personal

Share of Credit Card Spend

Share of Housing Lending

%

%

Internet Banking Users

as % of Main Relationships

Internet Banking Registrations

1998

1999

2000

Source: Ord Minnett and Roy Morgan Research


Anz delivering for shareholders

Leadership in Corporate

Business Banking Relationships AustralianMarket Share 1999 (%)

  • 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

Customer Perception of Service Delivery 1999 (out of 10)


Sale of grindlays

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 delivering for shareholders

ANZ Profile

GroupGrowthGrindlays

  • Assets$167b$14b$10b

  • Profit$817m$53m$79m

  • Staff28,940-12315400

  • Representation3914

ANZ Headquarters

100 Queen Street

Melbourne


Anz delivering for shareholders

Delivering via the Web

B2B

E-Procurement

FX On-line(ANZ On-Line)

Identrus

Transformation

Directors on line

ERP

operations.com

Sales & Service Platform

Enterprise Resource Planning

Employee PCs

B2C


Anz delivering for shareholders

Strategic Imperatives

Accelerate the growth program across 3 horizons

Radical transformation of the business

Improve sustainability of core franchises


Anz delivering for shareholders

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


Anz delivering for shareholders

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


Anz delivering for shareholders

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

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


Anz delivering for shareholders

Copy of Presentation available on

www.anz.com


Anz delivering for shareholders

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]


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