ING ANZ Joint Venture Market Briefing 4 December 2002
Agenda Elmer Funke Kupper Introduction Environment John Wylie Integration Flows Peter Marriott Financials Elmer Funke Kupper Leveraging ANZ s planner force Summary Page 2
Environment deteriorated markedly following JV commencement Index* 105 100 Equity markets Down 11% $m 6,000 5,500 Industry Net Retail Funds Flow# Down 15% 95 5,000 90 4,500 85 80 INGA commenced Down 23% 4,000 3,500 75 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 3,000 March Quarter June Quarter MSCI World All Ords * Indexed to 100 as at 1 May 2002 Source: CSFB Page 3 # Plan for Life ex cash
JV has delivered reasonable performance since 1 May 2002 Operations Integration substantially complete from operational perspective Efficiency Program (Project 70) launched Revenue/Flows Gross inflows holding up well in core retail products Market share maintained during integration FuM flat reflecting investor sentiment and market performance OneAnswer Mastertrust launched; Full ANZ OneAnswer suite by May 2003 Financials Operational profit in line with expectations, however lower FUM starting to impact on run rate Strong performance in risk business Capital Investment earnings well down reflecting investment markets - ANZ risk hedged Page 4
900 800 Integration progressing well, key challenges remain Progress against milestones 86% of milestones now complete. FTE reduction of 250 achieved 700 600 500 400 300 200 2003 integration tasks Product set integration and rationalisation IT integration Entity rationalisation Culture roll-out 100 0 Total milestones being tracked Not due yet Completed Amber Red Amber: milestone overdue < 1 week Red: milestone overdue > 1 week Page 5
Inflows holding up well, despite market conditions $m 2000 1800 1600 1400 1200 1000 800 600 400 JV gross flows excluding cash year to September 2002* $b 35 33 31 29 27 25 23 21 19 26.6 6.4 (5.8) (0.6) 26.6 200 17 0 Inflows Outflows Dec Qtr Mar Qtr Jun Qtr Sep Qtr INGA (other channels) ANZ INGA (other channels) ANZ 15 Starting FUM Inflows Redemptions Market Movements Closing Fum * Australia only, includes wholesale & mezzanine, excludes cash Page 6
Net flows remain healthy $m 800 JV product flows year to September 2002* 600 400 200 0-200 Retail V2+ Employer Super Master Trust/Wrap Mezzanine Wholesale Life Investments Closed -400-600 * Australia only Page 7
JV performance impacted by adverse equity markets $m 240 220 ING Australia NPAT 31 (5) (62) Life Insurance business performing well due to improved service, efficiency, and claims management 200 180 160 140 120 187 (7) 3 147 Contribution from the Funds Management has held up well despite lower flows Lower net flows likely to adversely impact future revenue performance - programs in place to enhance net flows 100 2001 pro forma Life Insurance Funds Management Capital Investment Other* Tax 2002 pro forma Investment earnings well below expectations, although capital invested in equities is conservative ANZ share hedged September 02 * Other includes impact of higher commission rates, lower expenses Page 8
Performance lower in last five months due to integration costs and lower market returns 7 months to April 2002 5 months to September 2002* 12 months to September 2002 Capital Investment Earnings 16-6 10 Funds Management & Life Insurance# 359 241 600 Income 375 235 610 Expenses 243 184 427 PBT 132 51 183 Tax 31 5 36 PAT 101 46 147 *PAT for 5 months to Sep 02 is pre non-anzi goodwill in INGA of $4m and correspondingly reduces contribution to ANZ # net of commissions Page 9
JV capital is conservatively invested, but still had negative impact last half Investable Capital - $1.27b Other 8% Equities 23% Fixed Interest 35% Cash 34% Page 10
Deriving ANZ s share of JV profit 50 $m ANZ Profit from JV 40 42 30 20 20 (18) 10 5 7 (14) 0 2 (7) -10 NPAT - 5 months ANZ 49% share Notional G'will Amort ANZ Equity a/c profit Hedging Net Return to ANZ Net funding cost Return net of funding costs Page 11
Investing in new financial planners and building productivity Planner mix (total = 337) Planner Productivity $m 16 14 12 10 8 6 4 2 0 ANZ average Private Client Advisor Financial Planner >12 months Financial Planner <12 months Associate Planner > 12 months Associate Planner < 12 months Private Client Advisor Planner >12 months Planner <12 months Associate Planner Page 12
2003 investment priorities Productivity and Growth OneAnswer Platform Improve productivity and redemptions Active management of new advisors supported by ING --------- -------- ------- ---------- Incentives skewed more towards FUM than flows Build planner force through Internal development Experienced recruitment Network based roles Core: Core One Product Offering Answer Tilt Product Offering ANZ Imputation Fund Tailor ING Blue Chip Imputation Build systematic advice model and workbench Page 13
Summary JV performing below expectations, due to earnings on capital Funds management business flat, with positive gross flows offset by redemptions and market movements Life insurance business performing above expectations Majority of synergy benefits on track for delivery in FY03 and beyond Target Double digit earnings growth from operations* ANZ has a growing planner force, which will become more productive over time ANZ & ING committed to JV for at least 10 years Page 14 *excluding earnings on capital
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 mob: (61) 411 125 474 e-mail: gentryp@anz.com Page 15