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ANZ Shareholder Strategy Update Specialisation, eTransformation and Growth

ANZ Shareholder Strategy Update Specialisation, eTransformation and Growth. John McFarlane Chief Executive Officer Brisbane 18 August 2000. ANZ has now built a solid foundation. Competitive cost structure – cost to income ratio at low 50s

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ANZ Shareholder Strategy Update Specialisation, eTransformation and Growth

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  1. ANZ Shareholder Strategy Update Specialisation, eTransformation and Growth John McFarlane Chief Executive Officer Brisbane 18 August 2000

  2. ANZ has now built a solid foundation • Competitive cost structure – cost to income ratio at low 50s • Demonstrated ability to make bold portfolio moves (Grindlays sold, ANZIB reconfigured, retail stockbroking sold) • Demonstrated ability to execute fast against important imperatives (cost & risk positions transformed over 2 years) • Most businesses displaying strong underlying momentum • High calibre, committed, dynamic management team

  3. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will deliver superior customer value and erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth businesses which leverage capabilities and brands

  4. We are experiencing very profound change Globalisation Globalneweconomy Oldeconomy Internet

  5. 1996, $ Index, 1980=100 100 10 1 0.1 1980 1985 1990 1995 2000 2005 Technology is driving costs down Elapsed time for 100kb transfer Cost of a 3-minute telephone call from New York to London

  6. EDS IBM Yodlee Quicken Product Manufacturing Distribution Channels & Processing Sales & Marketing Customer Need House Purchase Countrywide AHL Credit Card MBNA NextCard Cash Deposit Egg ING Wealth Mgmt Fidelity Schwab A disaggregated approach is required

  7. Fragmentation . . . to consolidation . . . and specialisation Leading to globalisation leading to globalisation Many Australian institutions focused on consolidation stage USA EUROPE AUSTRALIA ASIA

  8. Strategy 1:Reconceive ANZ as portfolio of specialist businesses • Make each of our 21 businesses a specialist in its own right • Establish three new stand alone customer businesses - Wealth Management, Small Business and General Banking • Accelerate the growth of our strong product monoline businesses • Move towards open architecture, selectively over time • Manage the portfolio and brands actively from the centre

  9. Contribution balanced between personal and corporate, and product and customer 738m* 368m 311m % % Other Small Business Institutional General Banking Corporate Corporate Personal Wealth Mgmt Transaction Services Asset Finance Mortgages Capital Markets International Foreign Exchange Funds Mgmt Structured Finance Cards 37m* Customer Businesses Shaded Pacific Asia * Excluding Grindlays International

  10. #1 Best Bank in Australia US Global Finance Magazine 1999 ANZ: aleader in Corporate Banking Share of Primary Relationships with Middle-Market Companies Overall Satisfaction with Bank 30% ANZ 20% NAB CBA WBC 10% 0% ANZ NAB WBC CBA Source: Corporate Banking Roberts Research Group

  11. Momentum in Personal Financial Services Mortgage Market Share % % Apr-00

  12. Distribution model “Make what we sell and sell what we make” ANZ Manufacture ie Mortgages ANZ Distribution ie Branches Customers

  13. Distribution models “Make what we sell and sell what we make” Open Architecture ANZ Manufacture ie Mortgages ANZ Manufacture ie Mortgages Other Manufactures ANZ Distribution ie Branches Other Distribution ie Mortgage Brokers ANZ Distribution ie Branches Customers Customers

  14. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will offer superior customer value and will erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth business which leverage capabilities and brands

  15. Technology transforms what customers expect Time required to find a high rate certificate of deposit Minutes Telephone 25 10 WWW -60% WWW + agent 1 -90%

  16. Strategy 2 : the “eBank with a human face” Automated, seamless Straight-through Processing Single IP Network Customer Management Better Service Lower Costs Customers Web enabled Channels Standard Platforms

  17. anz.com Internet Banking Signups Internet Banking Users % of Total Relationships Internet Banking Customers Online Applications - Credit Cards Lending Balance Deposit Balance Number of Products Profit Attrition

  18. myanz.com

  19. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will offer superior customer value and will erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth business which leverage capabilities and brands

  20. Strategy 3: Create growth businesses • Build from our strong corporate franchise by creating new businesses in corporate ePayments and eProcurement • Strengthen our consumer proposition through building on our early eCommerce momentum, creating strong core offers and new businesses • Extend our leadership in the Pacific by replicating our model in new countries • Leverage our consumer and corporate eCommerce and Cards capabilities by partnering to build new businesses in Asia • Build a small number of regional and/or global niches which leverage our capabilities • Be very selective about acquisitions, considering only those which add strategically to individual businesses or enhance capabilities and create value

  21. Web-enabling ANZ Sales & Service Platform B2C AST Real Time Loan Approvals B2B Internal ERP VIPS Directors on line

  22. ANZ in 3-5 years • Leading positions in a number of specialist businesses in Australia, New Zealand and Asia • Portfolio of businesses likely to be narrower and more focused • A performance orientated driver of individual businesses • Portfolio actively re-shaped by the corporate centre • Multiple strategic alliances • A range of growth businesses and options • A leader in eCommerce • Higher market to book ratio

  23. Financial goals • Earnings per share growth above peer average • ROE above 20% • Cost income ratio comfortably below 50% • Inner Tier 1 capital approaching 6% • Maintaining rating in AA category

  24. For more information visit anz.com

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