AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ANZ Commercial Banking UBS conference, June 2009 David Hisco Group Managing Director Commercial Banking
Not all commercial banking strategies are alike ANZ s approach: Commercial objectives driven by our super regional bank aspiration A proven operating strategy built on more convenient banking The underlying rationale is built on where to play and how to win A commitment to our brand Delivering a superior customer experience Fundamental belief in the need for a strong balance sheet: We are focused on the best use of available capital RoA, RoE Strong risk management Simplification to reduce risk Customer is at centre of everything we do But so is the shareholder! 2
ANZ s journey to becoming a Super Regional bank commenced in late 2007 RESTORE Institutional back to system Restore jaws increase revenue faster than costs Drive Asia profit Capture existing opportunities Strategic cost management OUT PERFORM Quality on par with global leaders in our markets Best of breed customer experience In-fill mergers and acquisitions in Asia (core geographies) Unlock the value of our franchise TRANSFORM Create a leading Super Regional bank Global quality, regional focus 1 to 2 years 2 to 5 years 5+ years 3
Growth will be based on 4 core capabilities FROM Product based Customer centric TO Customer/segment focused Marketing is for Retail Sales/marketing focused Sales/marketing core skills for everyone Technology a constraint Technology based Technology a core source of advantage Meeting expectations Performance driven Out-performing 4
Our Commercial Bank Aspirations: To become the commercial bank of choice in the Asia Pacific, by: Making convenience, simplicity and responsibility not just a value proposition but a business system: Growing revenue while driving productivity Investing in the front end of the business, powered by back end efficiencies. Building platforms NOT separate models invent once deploy many times. Simplifying product design, distribution, systems and processes to reduce risk Developing deeper customer relationships. Analytics has proven a powerful tool in the retail business - One view of the customer. Australian risk based pricing models being rolled out more broadly. 5
Commercial Banking s position within the ANZ structure ANZ divisions Australia New Zealand Asia Pacific Europe & America Retail Retail Retail (including partnerships) Commercial Commercial Commercial (Emerging) Wealth Wealth Wealth Global institutional 6
Commercial - an important part of ANZ s Super Regional strategy Super Regional Commercial business Asia Pacific, Europe & America Australia Commercial ANZ Small Business Banking (Nick Reade) Partnerships Business Banking (Mark Lang acting) New Zealand Commercial Business Rural (Mark Hand) Business Corporate and Banking Commercial (Graham Banking Turley) (Turnover up to NZ$150m) Asset Finance (Esanda)(Moray McDonald) Rural (Charlie Graham) Asset Finance (UDC) (Anthony Healy) NOTES: 1 Includes UDC Asset Finance. Business Bank Small and Medium-sized Enterprises (SME) sits in Retail Segment 7
Pre-provision profit up 12% in 1H09, NPAT and balance sheet stability maintained during the economic downturn Solid pre-provision growth, offset by increased credit costs across the portfolio (AUD m) 422 2H08 NPAT 107 9 Income +12% (2%) 108 Expenses Provisions & tax 22% of group profit 412 1H09 NPAT Financial performance includes Australia and New Zealand Commercial businesses Customer deposits (AUD bn) 38 39 38 10 10 8 7 7 8 17 17 17 5 5 5 1H08 2H08 1H09 Net Loans and Advances (AUD bn) 70 73 73 17 17 16 3 3 3 28 29 29 22 24 25 1H08 2H08 1H09 Asset Finance Small Business Banking Business, Corporate & Commercial Regional Commercial & Agri/Rural 8
We are investing in our people and culture to drive improved customer satisfaction Customer experience is the critical driver: Employing staff who live in our customer s world Experience in small business Specialisation both by geography and segment Separation of frontline versus back office to enable greater focus Aust Commercial Customer satisfaction* (Customer Satisfaction with Main Bank) 90 80 70 Higher staff engagement a priority Culture and systems built on: 60 Convenience Simplicity Responsibility 50 Mar-06 Mar-07 Mar-08 Mar-09 ANZ Peer 1 Peer 2 Peer 3 Peer 4 * TNS Business Finance Monitor. Base:All businesses with annual turnover under $40mil (excluding agribusiness) rolling 12 months 9
Small Business Banking multi channel offering a differentiator Small Business Banking Customer service/sales staff typically have either worked for or been involved in a family run small business Channel offerings target all sectors of the small business segment Convenience & Simplicity - our multi-channel offering (branch, phone, face to face, web). Our small business hub allows our clients to access data about customers and other market trends The phone based relationship proposition in the micro end of the market gives smaller businesses access to the benefits of a Relationship Manager Face-to-face relationship for SMEs Phone-based relationship for growing microbusinesses Branch and phone-based service for microbusinesses Customer Complexity 10
Business Banking simplifying and focusing the business Business Banking (Aus); Corporate & Commercial (NZ) Strategic priorities Closely aligned to retail strategy (natural affinity) improve sales execution (whole of wallet approach, self fund asset growth, split sales and admin), margin management (pricing for risk), tighten risk processes (e.g. underwriting standards, credit risk), simplify (product development, processes) District of the Future business model will create room to grow by separating sales from administration functions Over riding focus is on relationships rather than transactions Benefits: District of the Future Greater focus and clear accountabilities Sales calls up by 30%+ Increased annual review capacity and compliance Enhanced productivity and customer service Streamlined processes Faster customer response times Proving popular with staff 11
Business Rural focused on all sides of the transaction Regional Commercial & Agribusiness (Aus); Rural Banking (NZ) Competitive advantage through the super regional strategy Aim - leverage best practice and capture both sides of every trade 60% of agricultural product is exported with the bulk of that into Asia Leveraging the NZ expertise in both Australia and in Asia Pac to bank all sides of the transaction Replicating successful small and business bank sales initiatives. Transferring our successful growth strategy in metro to the rural business 12
Leading Asset Finance businesses in Australia and New Zealand, supporting international network Asset Finance Long history in Asset Finance ANZ has been in this business for over 50 years Essentially 2 businesses retail auto and business equipment. Risk-based pricing is critical to success in this business Sophisticated pricing model Selectively growing the business Have been highly selective with new opportunities Risk-based pricing attracts low risk customers and covers higher risk exposures Customer Rate Low Traditional Pricing Risk-Based Pricing Loan Risk High 13
To become the commercial bank of choice in the Asia Pacific: Super Regional a unifying objective across ANZ All commercial banking strategies are not the same: ANZ s Commercial banking objectives are driven by its super regional bank aspiration Exposure to growing new world economies Making convenience, simplicity, responsibility not just a value proposition but a business system A proven operating strategy built on more convenient banking Fundamental belief in the need for a strong balance sheet: Strong risk management Experienced team Customer is at centre of everything we do But so is the shareholder! 14
APPENDICES 15
Management Team - Background Nick Reade, General Manager, Small Business Banking Nick joined ANZ in 1999 & was appointed GM, Small Bus Banking in 2007. He has held a number of senior roles within ANZ including GM Personal Lending & GM Consumer Cards where he was responsible for managing the large Consumer Credit Card portfolio. Mark Hand, General Manager, Regional Commercial & Agribusiness During his 21 year career with ANZ Mark has worked in front-line, off-shore & head office roles. Most recently he was GM Business Banking Managers and prior to that he held the roles of State Manager VIC/TAS for Business Banking & Head of Credit & Operating Risk for SME Banking. Mark Lang, Acting General Manager, Business Banking Mark has been with ANZ for 29 years & acting in this role for 4 months. Prior to this role he was GM Business Banking VIC/TAS, & has held a range of relationship positions in Corporate & Institutional Banking. Moray McDonald, Managing Director, Esanda Moray joined ANZ in November 2008 from Citibank Australia where he had been MD of Diners Club Australia since 2003. He was previously Director of Secured Lending, managing Citibank's largest residential & commercial mortgage portfolio in the Asia Pacific Region. Moray joined Citibank in Australia as Director of M & A in 1998. 16
Management Team - Backgrounds Graham Turley, Managing Director, Commercial NZ Graham has had over 20 years experience in corporate finance and debt capital markets before taking on his current role late 2008. He joined ANZ over 4 years ago & has held leadership roles in the New Zealand Corporate Finance Team & ANZ s global Capital business. Charlie Graham, Managing Director, Rural Banking, NZ Charlie has led ANZ National s Rural business since the acquisition of The National Bank of New Zealand (NBNZ) in 2003. He was previously GM Rural Banking for The National Bank of New Zealand, a role he held from 1996. Anthony Healy, Chief Executive, UDC Finance Anthony has more than 17 years experience in the banking & finance sector in senior corporate & business banking and international roles with the ANZ Group, including previous roles Deputy Group Managing Director for AMMB Group in Malaysia. Anthony has been leading the UDC business since November 2008. 17
Broadly based revenue generation * Asset Finance 18% 39% Business Banking, Corporate & Commercial Banking 25% Regional Commercial & Agribusiness/ Rural 18% Small Business Banking *Revenue for Australia & NZ 18
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 This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to ANZ s business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in this presentation, the words estimate, project, intend, anticipate, believe, expect, should and similar expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such statements constitute forward-looking statements for the purposes of the United States Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release the result of any revisions to these forwardlooking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. For further information visit www.anz.com or contact Jill Craig Group GM Investor Relations ph: (613) 9273 4185 fax: (613) 9273 4899 e-mail: jill.craig@anz.com 19