2 0 0 1 I nterim Results Australia and New Zealand Banking Group Limited 26 April 2001
Results highlights • NPAT from continuing operations $907m - up 18% • EPS up 13% to 55.8 cents • ROE of 19.6% , up from 17.8% • Costs flat - cost income ratio down to 49.4% • Credit quality sound: – ELP charge down to 35 bp’s – 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) Page 2
2 0 0 1 I nterim Results Australia and New Zealand Banking Group Limited 26 April 2001 Peter Marriott Chief Financial Officer
Strong incom e grow th, w ith good progress across the board $m Profit on 1,100 Write sale of St downs George (84) 65 Non- Interest Income 1,000 76 Expenses Abnormal/ (34) Discontinued Provisioning Interest Items Tax (14) 930 Income Discontinued 104 (12) 84 (12) 907 895 900 Eftpos NZ acquisition 826 and GST ($26m) 800 700 2H 2000 2H 2000 2001 1H 2001 Continuing Continuing 1H Page 4
“Unusual” item s – St George profit offset by w rite dow ns in investm ents • St George - $99m profit ($65m after tax) Panin – regulatory issues IDR 280 Share Price - not critical to strategy – attractive price 230 180 Panin - $43m writedown # • 130 – long term growth prospects remain positive 80 Oct -00 Dec-00 Feb-01 Apr-01 $ • E* Trade - $21m writedown # 2.30 E* Trade – online broking service provides 1.80 Share Price core customer offering 1.30 Other - $20m writedown # • 0.80 – a number of small eCommerce related investments 0.30 Oct -00 Dec-00 Feb-01 Apr-01 # - no tax relief on these writedowns Page 5
I ncom e drivers * % 4 3.68 3.56 Margins stabilised in first 3.35 3.23 3.22 half 3.45 3.48 3 • Benefit from differential 3.12 PFS 2.81 between 90d BBSY and cash International 2.62 CFS rate 2 1.90 1.90 1.91 • Greater focus on improving 1.73 1.64 margins 1 Mar-99 Mar-00 Mar-01 143 Other 32 126 Non-interest incom e 173 Trading 44 continues to grow 140 FX • Driven by higher non-lending 560 496 fee income Other Fees • FX profits higher, reflecting AUD volatility Lending 372 351 Fees 1H 2000 1H 2001 * For continuing businesses Page 6
Cost-incom e ratio on track to m eet target of m id 4 0 ’s $m CTI Sale of Expenses • Reduction in Cost Grindlays 3500 70 Income Income ratio driven CTI by revenue growth 3000 65 and cost control • Approximately $65m of restructuring 2500 60 provision used – two year program, 2000 55 with benefits principally 2002 and beyond 1500 50 • eTransformation will continue to drive 1000 45 costs down Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- 97 98 98 99 99 00 00 01 Page 7
Good profit grow th across m ost businesses General Banking Mortgages Institutional Structured Finance Corporate Cards Transaction Services Sm all Business Page 8 Asset Finance Foreign Exchange Mar 0 0 v Mar 0 1 International and Investm ent Mgm t subsidiaries Corporate Asia Personal Capital Markets Pacific Wealth $m 200 180 160 140 120 100 80 60 40 20 0
8 0 % of businesses delivered revenue grow th greater than expense grow th revenue ROE Mortgages 50 grow th top third % * 45 middle third 40 35 bottom third Cards 30 25 Institutional GCM 20 Asia 15 GFX Pacific GTS 10 General Corporate expense Banking 5 Small grow th Wealth Business % * -25 -20 -15 -10 -5 5 10 15 20 25 30 Asset -5 Finance Investment -10 Management -15 * based on pcp Page 9
Personal portfolio Profit Breakdow n Wealth • Mortgages and Cards Small 3% Bus reinforce value of our Mort 11% specialisation strategy 27% Metro 27% • Clear opportunities for Cards customer businesses to 14% Region replicate success of 18% product businesses $m • Significant market share 1250 growth opportunities 1050 remain – creation of Metrobanking 850 Int erest Income and Regionalbanking Ot her Income – a 1% increase in market 650 Expenses share for customer 450 businesses worth $100m+ revenue 250 Sep-99 Mar-00 Sep-00 Mar-01 Page 10
Corporate portfolio – fee incom e driving profit grow th Profit Breakdow n • Five of six businesses I nst delivered profit growth GSF 25% 24% greater than 10% GTS Corp • “Non-traditional” income 15% 18% for Corporate Banking GCM GFX 7% grew 40% + on 11% annualised basis, largely by executing Wall St to $m 600 Main St strategy 550 Int erest Income Ot her Income 500 Expenses 450 400 350 300 250 Sep-99 Mar-00 Sep-00 Mar-01 Page 11
I nternational & Subsidiaries – risk reducing, profits up Profit Breakdow n Pacific 16% Asset Finance • Asset Finance 35% reconfiguring back office Asia 23% platform to deliver Inv substantial efficiencies Mgm t 26% • Negative profit growth for Investment Asian Credit Quality Management due to tax changes and increased 28.8 AAA to growth spend BBB+ 43.8 52.0 BBB to 14.1 • Asia showing positive BBB- signs, on track to record 20.4 BB- 24.4 significant profit growth 26.0 7.4 BB+ to BB for the full year 12.7 15.5 B to CCC 10.0 5.1 3.0 4.0 13.7 3.0 Non-accrual 11.1 5.0 Sep- 99 Sep- 00 'March- 01 Page 12
Total non-accrual loans continue to fall, but increase in Australia Historic Geographic $m Gross Non-Accrual Loans Gross Non-Accrual Loans (LHS) 1800 2.0% $m Non-Accrual Loans/ 1662 Loans & advances (RHS) Mar- 00 1000 1543 Sep- 00 Mar- 01 858 1500 1391 1295 800 1.5% 749 681 1200 651 600 872 900 495 900 1.0% 457 727 699 657 400 600 428 0.5% Net Non-Accrual Loans (LHS) 200 300 89 72 59 0 0 0.0% 1997 1998 1999 2000 2001 1H Aust NZ Inter Page 13
Current provisioning in line w ith expectations $m Actual SP v ELP 140 ELP charge charge 120 SP charge 100 80 60 40 20 0 Mar- Sep-00 Mar-01 Mar-00 Sep-00 Mar-01 Mar-00 Sep-00 Mar-01 -20 00 -40 Personal Corporate I nt & Sub. • 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 Page 14
Arrears analysis indicates no system ic deterioration % personal lending assets over 6 0 days in arrears % % 2.50 7.50 Personal Loans 7.00 2.00 Business FDAs 6.50 6.00 1.50 5.50 Credit Cards 5.00 1.00 Housing Loans 4.50 4.00 0.50 RILs* 3.50 Overdrafts 0.00 3.00 Mar-00 Sep-00 Dec-00 Jan-01 Feb-01 Mar-01 Mar-00 Sep-00 Dec-00 Jan-01 Feb-01 Mar-01 • Small upturn in arrears in Jan-Feb • Increase in credit card arrears largely reversed during March reflects seasonal influences • Arrears broadly in line with same • Personal loan arrears continue to period last year increase in % terms due to reducing book * Residential Investment Loans Page 15
Corporate book holding up w ell, despite a few one off “issues” Corporate risk grade profile Risk actively m anaged AAA to 38.4% 38.9% 37.9% 38.4% BBB+ • Quarterly strategy reports prepared for all high risk accounts • June to October 2000 - all BB rated accounts within Corporate reviewed BBB to in expectation of downturn 26.4% 26.7% 26.9% 27.4% BBB- • New accounts > $3m to be referred “one level higher” BB + to 18.2% 19.1% 19.4% BB 20.3% 11.7% BB- 12.3% 11.7% 9.3% > B 5.3% 4.1% 4.0% 3.6% Sep-99 Mar-00 Sep-00 Mar-01 > B = B, B-, CCC & non-accrual Page 16
Group risk grade profile continues to im prove $114.6bn $126.5bn $134.9bn $141.0bn AAA to 14.8% 16.2% 16.2% 16.9% BBB+ BBB to 41.5% BBB- 45.3% 49.7% 50.5% BB + to BB 19.2% 15.8% 14.6% 14.7% BB- 17.3% 5.4% 17.3% 14.1% 15.6% 3.9% > B 7.2% 3.8% Sep 1998 Sep 1999 Sep-2000 Mar-01 45 43 38 35 ELP (bp’s) > B = B, B-, CCC • Risk grade profiles by division and & non-accrual geography in appendix Page 17
Credit quality is sound in som e of our larger industry exposures - Australia Lending Assets (AUDm) % of Portfolio (RHS scale) % in CCR 7D-8G (RHS scale) x % in CCR 9-10 (RHS scale) Manufacturing Retail Trade Real Estate Operators & Dev. 10bn 12.0% 10bn 12.0% 10bn 12.0% 10.0% 8bn 10.0% 10.0% 8bn 8bn 8.0% 8.0% 8.0% 6bn 6bn 6bn 6.0% 6.0% 6.0% 4bn 4bn 4bn 4.0% 4.0% 4.0% 2bn 2bn 2.0% 2bn 2.0% 2.0% 0bn 0.0% 0bn 0.0% 0bn 0.0% Sep-98 Mar-01 Sep- 98 Mar- 01 Sep- 98 Mar- 01 Accom m . Cafes & Construction Agriculture Restaurants 10bn 12.0% 10bn 12.0% 10bn 12.0% 10.0% 10.0% 10.0% 8bn 8bn 8bn 8.0% 8.0% 8.0% 6bn 6bn 6bn 6.0% 6.0% 6.0% 4bn 4bn 4bn 4.0% 4.0% 4.0% 2bn 2bn 2bn 2.0% 2.0% 2.0% 0bn 0.0% 0bn 0.0% 0bn 0.0% Sep- 98 Mar- 01 Sep- 98 Mar- 01 Sep- 98 Mar- 01 Page 18
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