2000 Interim Results Australia and New Zealand Banking Group Limited 1 May 2000
ANZ Delivers on Financial Commitments � 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 $1bn buyback announced
Financial Performance EPS Tier 1 Ratio ¢ % 120 10 8 % ROE 20 100 6 4 15 80 2 0 10 60 1997 1998 1999 Mar-00 1997 1998 1999 Mar-00 5 Lending Mix 1997 1998 1999 Mar-00 % Cost Income Ratio % 70 40 35 Mortgages 65 30 25 60 WBC 20 15 Emerging Markets 55 10 CBA NAB 5 ANZ 50 0 1997 1998 1999 Mar-00 1998 1999 Mar-00 ProForma
Drivers of Performance NII/Interest Earning Net Interest X X � Assets Assets ROA 3.05 2.93 2.41 2.34 1.02 0.98 99 1h00 � 99 1h00 ROE Other Income � Assets 17.8 17.2 1.69 1.57 / 1.61* 99 1h00 � Cost/Income 99 1h00 Cost 51.4/ 52.4* 54.5 � Assets “Leverage” 2.17 2.07 17.6 17.5 1999 1h00 99 1h00 99 1h00 Provisions � � Provisions/NLA Assets 0.43 0.40 0.34 0.32 99 1h00 Risk 99 1h00 99 1h00 Business Mix */ 52.4 excludes abnormal income
Business Unit Performance Group 8% Personal 45% International 9% A$ 400 350 Corporate 38% 300 250 200 150 100 50 0 Personal Corporate International Other 1H99 2H99 1H00
Change in Profit Sale of Strategic Investments Other 33 Income $m Property Other Fee 17 Revaluation Growth 30 30 850 Doubtful Lending Fee Debts Costs 20 Net Interest 817 (4) (9) Income Tax Restatement of 34 800 (34) Deferred Tax 764 Balance (64) 750 Significant one off items (1) 700 650 600 Second Half First Half 1999 2000
Improving Asset Quality Provisioning: ELP v SP Non Accrual Loans $m $m Personal Corporate International 140 Financial Financial Services Services 120 762 100 886 871 80 60 444 40 900 657 554 20 428 0 Mar-99 Mar-00 Mar-99 Mar-00 Mar-99 Mar-00 1997 1998 1999 1H00 ELP SP Net Non Accrual Loans Specific Provisions
Transformation from the Sale of Grindlays ELP Percentage of Grindlays Exposure to % Countries Rated below ‘Single A’ Net 1.1 Lending % Assets 82 0.4 48 Grindlays Group Of Group Of Total Grindlays Exposure <A Exposure Proforma ROE March 00 Post Grindlays Excludes warranties and indemnities Sale Buyback � Comparable ROE and leverage yet much 17.8% 17.3% lower risk � Scope for further capital management -1.9% � Proforma includes re-investment of sales -1.4% price excluding “free funds” effect of sales provisions 15.9%
Transformation from the Sale of Grindlays Tier 1 Ratios Sale Buyback Other Influences � Lower risk implies move to 0.5 lower end of 6.0 - 6.5% range RWA 0.8 � NZ Tracking Stock � 0.4% Tier 1 Profit 0.3 � 60/40 2000 & 2001 EPS - Proforma March 2000 (Annualised) Other Influences Sale Buyback � Significantly lower risk � Higher quality income streams 5-6¢ � More consistent business 2-3¢ Buyback
Buyback to Reduce Capital Surplus % Capital Adequacy 12 Capital Management Philosophy: 10 � Capital scarce resource to be managed effectively and efficiently 8 � Maintain capital consistent with ANZ’s AA status and peer group 6 ratings 4 � Tier 1 (6.5 - 7.0%) � Inner Tier 1 (6.0% - 6.5%) 2 aligned to Economic Capital � $500 million buyback completed 0 $1B buyback announced 1997 1998 1999 1H00 Target Inner Tier 1 Hybrid Tier 1 Net Tier 2
Good Progress on Business Strategies Outcomes Business Strategy Mortgage & cards share up � Accelerate growth in Personal Personal 45% of group profit FM challenging, new team Leadership position enhanced � Build on strength in Corporate ROA 0.9% (0.7%) Non accruals 0.4% (0.9%) Grindlays sale � Simplify and focus International Latin America Offices closed Asia-Pacific e-Commerce focus Approaching leadership B2C � Build leadership in e-Commerce Strong portfolio B2B Web enabled internal processes Numerous venture investments
Delivering via the Web B2C B2B E-Procurement FX On-line Identrus (ANZ On-Line) eisa Transformation Directors on line ERP operations.com Sales & Service Enterprise Resource Planning Employee PCs Platform
Clear Strategic Direction Imperatives � Improve sustainability of core franchise � Radically transform the business � Accelerate growth program � Develop strategic international positions
Clear Strategic Direction Response Imperative Accelerate growth of up-scale segments in Personal Improve sustainability of core franchise Address retail funds management strategic position Seek value enhancing infill acquisitions in Personal Continue to build leadership in Corporate Revolutionise cost base with web-based technology Radically transform the business Rapidly enable ANZ customers on anz.com Become a more customer-centric company Build culture and talent to compete in the new economy Accelerate pace of investment in growth segments Accelerate growth program Build substantial portfolio of e-products and businesses Accelerate medium-term search for transforming acquisitions Improve our capacity longer term to participate in industry consolidation on our terms Develop strategic international positions Build semi-global niche positions in trade, FX, structured finance, cards and e-Commerce Rapidly roll-out e-Commerce investments in Asia
Financial Goals Going forward � EPS growth that outperforms the average of our peer banks � Increasing Return on Equity: Target 20% � A cost income ratio comfortably below 50% � An Inner Tier 1 ratio approaching 6% � Maintenance of credit rating in AA category
Personal Momentum Share of Credit Card Spend Share of Housing Lending % % 14 30 13 25 12 20 11 10 15 Feb-00 Jun-94 May-96 Apr-98 Jun-94 May-96 Apr-98 Feb-00 Internet Banking Users as % of Main Relationships 14.3 11 10.3 10.2 4.9 ANZ WBC St George NAB CBA Source Ord Minnett and Roy Morgan Research
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