2000 annual results presentation to fixed interest investors
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2000 Annual Results Presentation to Fixed Interest Investors. Australia and New Zealand Banking Group Limited 1 November 2000 John McFarlane Chief Executive Officer. 2000 Annual Result. Strong result – better than expectations $1,703m up 15% $885m second half up 8.2% on first half

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2000 Annual Results Presentation to Fixed Interest Investors

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2000 annual results presentation to fixed interest investors

2000 Annual ResultsPresentation to Fixed Interest Investors

Australia and New Zealand Banking Group Limited 1 November 2000

John McFarlane

Chief Executive Officer


2000 annual result

2000 Annual Result

  • Strong result – better than expectations

    • $1,703m up 15%

    • $885m second half up 8.2% on first half

  • We delivered on all our commitments

    • Financial performance

    • Rebalancing the portfolio

    • Reducing risk

  • Restructuring program accelerates strategy

    • Sensible application of surplus capital

    • EPS accretive

    • Superior to buyback alternative


Our three year commitments to shareholders

Our three year commitments to shareholders

  • Achieve superior financial performance

    • Deliver double-digit earnings growth

    • Improve return on equity

    • Bring down our cost income ratio to 53%

  • Re-balance our portfolio

    • Increase proportion of Personal business

    • Enhance leadership position of Corporate

    • Simplify and focus our International business

    • Build momentum in eCommerce

  • Reduce risk


Financial parameters

Financial Parameters

  • Assets $172 billion

  • Shareholders equity* $9.8 billion

  • Return on average ordinary shareholders’ equity (excl. abnormals) 18.3%

  • Credit ratings:AA - (stable) S&P’s

    Aa3 (stable) Moody’s

*Includes $1.4b preference shares


Financial highlights

Financial Highlights

  • NPAT before abnormals $1,703 million versus $1,480 million

  • Income up 6%, cost flat

  • Cost income ratio 51.7% (54.5%)

  • ROA 1.03% (1.0%)

  • $361m restructuring charge to accelerate new strategy


We have delivered superior financial performance

We have delivered superior financial performance

%

ROE

$m

NPAT

CAGR 13.3%

Total Shareholder Return

Cost Income Ratio


2000 annual results presentation to fixed interest investors

Good progress across the board

Other income

47

Costs

(14)

Tax & outside interests

(123)

Other fee

111

Net profit after abnormals

1747

Debt provisioning

8

Lending fee

48

Profit before abnormals

1703

Net interest income

146

Abnormals

44

1480

2000

2000

1999


2000 annual results presentation to fixed interest investors

Cost-income ratio continues to decline

63.1

*

*

51.7

Target - comfortably in the 40’s

* estimate of market expectations for 2000


We didn t get everything right firm action taken

We didn’t get everything right – firm action taken

  • Personal loan portfolio

  • International provisioning from historical book

  • Panin writedown to market

  • Took action to put historical Grindlays issues behind us


We have re balanced our portfolio

We have re-balanced our portfolio

Loans & Advances

NPAT

10%

5%

8%

39%

41%

23%

49%

50%

56%

49%

43%

27%

PFS

CFS

International

  • Includes Grindlays

  • Excludes Group


2000 annual results presentation to fixed interest investors

Portfolio breakdown - indicative

$772m

$647m

$1,703m*

%

%

100

Small Business

Other

Institutional

Corporate

Corporate

General Banking

Personal

Transaction Services

Asset Finance

Wealth Mgmt

Capital Markets

International

Mortgages

Foreign Exchange

Funds Mgmt

ANZIB Financial Services

Cards

40m*

0

Personal

Corporate

Pacific

Asia

* Excluding Grindlays ($127m)

International

Customer

Businesses


We continue to reduce risk

We continue to reduce risk

ELP Factors

Market Risk (Av. VaR)

bp’s

A$m

23

23

5.4

4.4

  • Beta reducing towards 1.0, in line with peer average


Overall book continues to improve

Overall book continues to improve

Australian Loans & Advances

Australian Lending Asset Profile

$b

AAA to BBB+

BBB to BBB-

BB + to BB

BB-

> B

  • Mortgages now represent 46% of book, up from 40% in March 1999

  • Investment grade 66% of book

  • Diversified portfolio

  • Minimal exposure to media/telco’s


2000 annual results presentation to fixed interest investors

Geographic

$m

Aust.

NZ

Inter.

Non-accrual loans stable despite asset growth

Historic

$m

Gross Non-Accrual Loans (LHS)

Non-Accrual Loans/

Loans & advances (RHS)

Net Non-Accrual Loans (LHS)


Provisioning levels strengthen

Provisioning levels strengthen

General Provision

ELP charge*

$m

Times

(383)

502

FX impact

(51)

(90)

1373

1395

Net SP transfer

Sale of Grindlays

ELP charge

Surplus406

967

2000

1999

APRA Guidelines

ELP - Economic Loss Provision

SP - Specific Provision

* ex Grindlays for 2000


Accelerating our transformation program

Accelerating our transformation program

35 Initiatives across our portfolio of businesses including:

  • Standardisation and rationalisation of IT and processing platforms

  • Rationalisation and upgrading of EFTPOS network

  • Transformation of Branch Network

  • Improving efficiency in Asia/Pacific by rationalising IT platforms and centralising back office processing

  • Establishing new business platform for Esanda

Expected cost reduction

$300m


Building for the future recap on our strategy

Building for the future - recap on our strategy

  • Proposition

  • Specialists will win over conglomerates

  • Corporations need to embrace new technologies

  • Value depends on performance and growth

  • Strategy

  • Reconfigure ANZ as a portfolio of 21 specialist businesses

  • An e-Bank with a human face

  • Drive results whilst investing in growth businesses

  • Implications

  • Specialist approach to customer and product businesses

  • Transform the way we do business by using IP technology

  • Meet expectations, fund growth by cost reduction

Specialise

e-Transform

Perform and Grow


Anz in the medium term

Material reallocation of resources

Substantial e-transformation reducing costs and focused service

Performance optimised

EPS, ROE, investment

capital management

Transformational cultural change

Substantial portfolio shifts

Narrower, more focused portfolio with leading positions

Increased investment in high growth business

Modern performance culture

Higher stock rating

ANZ in the medium term

ANZ in 1 - 2 years

ANZ in 3 - 7 years


2000 annual results presentation to fixed interest investors

Capital management will continue

  • Capital Management

  • Philosophy:

  • Capital scarce resource to be managed effectively and efficiently

  • Maintain capital consistent with ANZ’s 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

6.9

6.5

6.7

6.4

  • Progress

  • $1014m of buyback

  • Capping of DRP/BOP to reduce dilution

  • Remaining $500m buyback in progress

  • Restructure more EPS accretive than buyback


Goals going forward

Goals going forward

  • EPS growth above peer average (target 10+%)

  • ROE over 20%

  • Cost-income ratio comfortably in the 40’s

  • Inner Tier 1: 6%

  • Maintain AA category credit rating


Domestic corporate bond investor presentation

Domestic Corporate Bond Investor Presentation

1 November 2000

Rick Sawers

Group Treasurer


Wholesale term funding anticipated

Wholesale Term Funding - Anticipated

1999/2000 Term Funding Objectives

  • Forecast term wholesale funding requirement

    A$5/$6 billion

  • To be sourced

    30% Domestic markets

    60% Euro markets

    10% US market

  • Extend ANZ domestic yield curve

  • Build liquid lines + A$500 million.

    Constraints envisaged:

  • S128F

  • Issue Size

  • Inconsistent pricing between AA rated banks


Wholesale term funding in retrospect

Wholesale Term Funding - In Retrospect

Scorecard 1999/2000 Financial Year

  • Issued A$5.9 billion term wholesale debt

  • Sourced

    11% Domestic market (v 30%)

    80% Euro markets (v 60%)

    9% US markets (v 10%)

  • Domestic Market:

    Increased 10/2002 series by an $300 million

    Added new series - $500 million 9/2004

    Extended yield curve

    Outstandings now A$1.75 billion

    MTBs trading within 1bp

  • S128F still unresolved


Term debt issued 1999 2000

AUD

13%

CHF

2%

E

USD

20%

54%

HKD

JPY

10%

1%

Term Debt Issued 1999/2000


Wholesale term funding strategy for 2000 2001

Wholesale Term Funding - Strategy for 2000/2001

  • Pursue diversification - by investors and markets

  • Maintain prudent approach to liability maturity management

    • spread of maturities from 1 to 5 years with an objective to achieve a weighted average term of 3 years

    • maintain yield curve out to a maximum of 5 years in both domestic and euro markets

  • Funding requirement $6 billion subject to amount of securitisation undertaken

  • Sourced

    20% domestically

    80% offshore


Wholesale term funding

Wholesale Term Funding

Issues to Resolve:

  • S128F

  • Transparency of issuance

    • no standardised practice established

    • Consider US style “Pot System”


2000 annual results presentation to fixed interest investors

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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