Banks and Wealth Management Will they make it pay?

Transcription

1 Banks and Wealth Management Will they make it pay? Elmer Funke Kupper Managing Director, Personal Banking and Wealth Management Australia and New Zealand Banking Group Limited May 2003

2 Banks and Wealth Management Will they make it pay? Banks have invested to make Wealth Management a core part of their capability Growth, margins and valuations are lower today Retirement needs have not changed Banks are well placed to extract value from their customer base Footprint and touch Product range and diversity Customer knowledge ANZ s approach is different shared ownership of scale business Specialisation as a core part of its strategy Unique and strong relationship with ING Distribution model 2

3 Banks are now the largest players Top 10 March 2003 Retail Inflows Dec 2002 Retail Inflows March 2003 Manager Size $B Manager Inflow $m Manager Inflow $m Commonwealth/Colonial 45.5 ANZ/ING UBS Global Asset Mgt National/MLC 32.4 UBS Global Asset Mgt ANZ/ING AMP 27.3 Commonwealth/Colonial Platinum Asset Mgt ANZ/ING 26.5 AMP AXA Asia Pacific Holdings BT/Westpac 23.7 Platinum Asset Mgt Challenger International AXA Asia Pacific Holdings 13.8 Sandhurst Trustees APN Funds Mgt 79.3 Macquarie 11.1 AXA Asia Pacific Holdings Sandhurst Trustees 70.7 Perpetual Investments 6.60 National/MLC Deutsche Asset Mgt 62.4 UBS Global Asset Mgt 4.34 Perpetual Investments Citicorp Investment 54.0 Tower Holdings Australia 4.03 APN Funds Mgt State Super Financial 44.5 Source: Assirt 3

4 The world has changed its views From Mid 1990s To Today RAMPAGING BULL MARKET THE BEARS ARE BACK DOTCOMS DRIVE RECORD NASDAQ UNCERTAINTY WEIGHS ON MARKETS DOW JONES BREAKS 10,000 NEGATIVE RETURNS SPOOK INVESTORS ALL ORDS AT RECORD HIGH NEGATIVE RETURNS PUT FUNDS UNDER PRESSURE BANKS WEIGH IN TO WEALTH MANAGEMENT BANKS YET TO MAKE WEALTH MANAGEMENT WORK 4

5 Correction towards normal returns 12,000 10,000 Dow Jones Index Value 8,000 6,000 4,000 FTSE All Ords 2,000 NASDAQ

6 INGA Performance ING Australia NPAT ($m)* Comments Life Insurance business performing well 50 6 (29) 31 Subdued equity markets continue to impact Funds Management Improved capital investment returns, combined with hedge 2H02 Life Insurance Funds Mgmt Capital Investm Costs/Tax 1H03 Synergies in line with plan; costs well managed * All data semi-annualised 6

7 Valuations have come down Carrying Value of ANZ Share in ING Australia ($m) 360 (approx) 2, , % 1,617-1,808 $1,591m 1,612 Carrying Value May 02 Unrecogn. Profit on Sale ANZFM Opening Pro Forma Value Synergies in INGA Expected Value Reduction in Expectations Updated Valuation Carrying Value March 03 7

8 Changed environment not changed needs 37 Year Old Salary started at $50K; now $100K 9% Super Contribution Options 1,200 Public policy: Net Proceeds ($k) 1, Funding Gap of $450k Year Increase contributions Reduce input/ output taxes Personal decisions: Increase personal savings rate Accept volatility Growth Growth Delay retirement Expectations 1997 * Expectations 2003 * * Typical growth expectations held by investors 8

9 Banks and Wealth Management Will they make it pay? Banks have invested to make Wealth Management a core part of their capability Growth, margins and valuations are lower today Retirement needs have not changed Banks are well placed to extract value from their customer base Footprint and touch Product range and diversity Customer knowledge ANZ s approach is different shared ownership of scale business Specialisation as a core part of its strategy Unique and strong relationship with ING Distribution model 9

10 Banks are well placed to play in Wealth Management Trust and Security Footprint and Touch Customer Knowledge Product Diversity Potential Value 14% 3% 2% Deposits Investments Lending Protection Current Value 10

11 Large foot print and high touch Scale Distribution Branches 747 ATMs 1,171 High Touch Relationships No of Transactions Phone Banking 40m Internet 25m Branches 55m Phone 1.1m users Internet 1.2m users ATMs 95m 11

12 Product diversity across the cycle Investments FUM growth %* Deposits Growth %* Retail Lending Growth %* Deposits Investments Lending Protection * Source: RBA; Plan for Life. Market growth from Dec. month to Dec. 12

13 Using CRM to understand needs Age Distribution (%) Net Income ($) Customer Profile at Branch Level* min 48,120 max 296,628 High 14% 3% 2% FUM ($) min 75,546 Potential Value Mortgage Product Mix 2% 15% Trans. Acc. 4% max 1,171,362 # of Products Low Low High 5% 59% 13% # accounts 4.7 # categories 2.9 Current Value * Data for one branch in Victoria Credit Card 2% 13

14 Banks and Wealth Management Will they make it pay? Banks have invested to make Wealth Management a core part of their capability Growth, margins and valuations are lower today Retirement needs have not changed Banks are well placed to extract value from their customer base Footprint and touch Product range and diversity Customer knowledge ANZ s approach is different shared ownership of scale business Specialisation as a core part of its strategy Unique and strong relationship with ING Distribution model 14

15 ANZ s specialist business model ANZ Distribution: Local markets supported by Specialist Advisers Deposits/ Transaction Services Mortgages Investments/ Insurance (ING) Asset Finance Consumer Finance To be developed Brokers Financial Advisers Dealers Partnerships 15

16 Shared ownership of scale business Strong franchise in consumer and corporate Specialist Business Model The brand I know and trust ING-ANZ Joint Venture Funds management expertise Distribution experience Global presence Three million customers Two great organisations One objective 16

17 Unique and strong relationship with ING IIM (ING) ING-ANZ Joint Venture ANZ Investment Management Product Manufact. Platforms 3rd Party Distrib. Bank Distribution Outsourced Global capability Best-of-breed focus Scale to battle margin squeeze Scale Technology choices (wrap; mastertrust) Process efficiencies to improve margin Performance Relationship Management Independence Compliance focus increasing Consumer and corporate Aligned to bank distribution Bring in ING expertise Needs based marketing 17

18 Benefiting from the JV in distribution Current performance Increasing contribution to Joint Venture. Driven by: New products Joint Venture platforms Strong cash performance Link to the Joint Venture Build consumer business Leverage branch distribution expertise Launch platform - ANZ OneAnswer Continue business development focus Leverage corporate franchise Dedicated channel Relationship model 18

19 ANZ OneAnswer will be launched in May Science Placing the investor on the efficient frontier Art Tailoring investment strategies around lifestage and need ANZ OneAnswer Delivering solutions and choice Moderate Conservative Aggressive Moderate Aggressive 21 Core Strategies Retirement Planning Retirement Planning Lump Sum Retirement Planning Regular Savings Plan Taxation Planning General Taxation Planning Non Resident Taxation Planning Superannuation Wealth Creation Lump Sum Wealth Creation Regular Savings Entities Company Trusts Strategy Options Super as a pension Pension as a lump sum Dividend Imputation Margin Lending Instalment gearing Instalment warrants 19

20 Key messages Banks are now the biggest players in Wealth Management Market conditions have changed impact valuations ING-ANZ Joint Venture performing well in relative sense Long term customer needs have not changed Banks are well placed to meet them ANZ has taken a unique approach Shared ownership of scale business Specialisation as core part of strategy JV gives sustainable position without being overweight 20

21 Copy of presentation available on

22 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 or contact Philip Gentry Head of Investor Relations ph: (613) fax: (613) gentryp@anz.com 22