2000 Annual Results Presentation to Fixed Interest Investors Australia and New Zealand Banking Group...
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Transcript of 2000 Annual Results Presentation to Fixed Interest Investors Australia and New Zealand Banking Group...
2000 Annual Results
Presentation to Fixed Interest
Investors
Australia and New Zealand Banking Group Limited 1 November 2000
John McFarlaneChief Executive Officer
Page 2
2000 Annual Result• Strong result – better than expectations
– $1,703m up 15%
– $885m second half up 8.2% on first half
• We delivered on all our commitments
– Financial performance
– Rebalancing the portfolio
– Reducing risk
• Restructuring program accelerates strategy
– Sensible application of surplus capital
– EPS accretive
– Superior to buyback alternative
Page 3
Our three year commitments to shareholders
• Achieve superior financial performance– Deliver double-digit earnings growth
– Improve return on equity
– Bring down our cost income ratio to 53%
• Re-balance our portfolio– Increase proportion of Personal business
– Enhance leadership position of Corporate
– Simplify and focus our International business
– Build momentum in eCommerce
• Reduce risk
Page 4
Financial Parameters
• Assets $172 billion
• Shareholders equity* $9.8 billion
• Return on average ordinary shareholders’ equity (excl. abnormals) 18.3%
• Credit ratings: AA - (stable) S&P’s
Aa3 (stable) Moody’s
*Includes $1.4b preference shares
Page 5
Financial Highlights
• NPAT before abnormals $1,703 million versus $1,480 million
• Income up 6%, cost flat
• Cost income ratio 51.7% (54.5%)
• ROA 1.03% (1.0%)
• $361m restructuring charge to accelerate new strategy
Page 6
We have delivered superior financial performance
1171 1175
1480
1703
400
600
800
1000
1200
1400
1600
1800
1997 1998 1999 2000
$m NPAT
CAGR 13.3%
18.3
16.915.5
17.2
10
12
14
16
18
20
1997 1998 1999 2000
% ROE
51.7
54.5
60.963.1
45
50
55
60
65
1997 1998 1999 2000
Cost Income Ratio
100
100
84
135
020406080
100120140160
1997 1998 1999 2000
Total Shareholder Return
Page 7
Good progress across the board
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
1480
1999 20002000
Net interest income
146
Lending fee 48
Other fee 111
Other income
47
Debt provisioning
8
Costs (14) Tax & outside
interests(123)
Profit before abnormals
1703
Abnormals44
Net profit after
abnormals1747
Page 8
Cost-income ratio continues to decline
45
50
55
60
65
70
1997 1998 1999 2000
NAB
CBA
WBC
ANZ
Target - comfortably in the 40’s
*
*
* estimate of market expectations for 2000
51.7
63.1
Page 9
We didn’t get everything right – firm action taken
• Personal loan portfolio
• International provisioning from historical book
• Panin writedown to market
• Took action to put historical Grindlays issues behind us
Page 10
We have re-balanced our portfolio
302
772
547
647251
149
1997 2000
NPAT Loans & Advances
PFS
CFS
International
41577
65264
46861
456847966
5930
1997 2000
27%
50%
23%
49%
41%
10%
56%
39%
5%
43%
49%
8%
• Includes Grindlays
• Excludes Group
Page 11
Portfolio breakdown - indicative
International
PersonalCorporate
Other
0
100
Cards
Wealth Mgmt
Mortgages
Funds Mgmt
General Banking
Small Business
Corporate
Foreign Exchange
Asset Finance
Capital Markets
Institutional
ANZIB Financial Services
Transaction Services
0 100AsiaPacific
%
* Excluding Grindlays ($127m)
$1,703m*
40m*
$772m $647m
International CustomerBusinesses
100
0
%
Personal Corporate
Page 12
We continue to reduce risk
43
3936
20
25
30
35
40
45
AN
Z 1
999
AN
Z 2
000
AN
Z 2
000
- ex
Gri
ndla
ys
ELP Factors
bp’s
1997 1998 1999 2000
Market Risk (Av. VaR)
A$m2323
5.4 4.4
• Beta reducing towards 1.0, in line with peer average
Page 13
Overall book continues to improve
18 16
1615
49 53
14 13
3 30%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000
AAA to BBB+
BBB to BBB-
BB + to BB
BB-
> B
Australian Lending Asset Profile
28.4 31.7 36.2 40.6
41.843.6
45.548.4
0
10
20
30
40
50
60
70
80
90
100
Mar-99 Sep-99 Mar-00 Sep-00
Other
Mortgages
$b
Australian Loans & Advances
• Investment grade 66% of book
• Diversified portfolio
• Minimal exposure to media/telco’s
• Mortgages now represent 46% of book, up from 40% in March 1999
Page 14
Non-accrual loans stable despite asset growth
1662
1543
1391
872
699657
900
428
0
200
400
600
800
1000
1200
1400
1600
1800
1997 1998 1999 20000.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%Gross Non-Accrual Loans (LHS)
Net Non-Accrual Loans (LHS)
$mNon-Accrual Loans/Loans & advances (RHS)
Historic
870
59
623
50
681651
0
100
200
300
400
500
600
700
800
900
1000 1999
2000
Aust. Inter.NZ
Geographic
$m
Page 15
Provisioning levels strengthen
500
700
900
1100
1300
1500
1700
1900
2100
2.7
3.1
1.5
1.7
1.9
2.1
2.3
2.5
2.7
2.9
3.1
3.3
1999 2000
1395
502 (383)
(51)(90)
1373
967
1999 2000 APRA Guideline
s
ELP charge
Net SP transfer
FX impact
Sale of Grindlays
ELP - Economic Loss Provision
SP - Specific Provision
General ProvisionELP charge*
* ex Grindlays for 2000
Times$m
Surplus406
Page 16
Accelerating our transformation program
• Standardisation and rationalisation of IT and processing platforms
• Rationalisation and upgrading of EFTPOS network
• Transformation of Branch Network
• Improving efficiency in Asia/Pacific by rationalising IT platforms and centralising back office processing
• Establishing new business platform for Esanda
35 Initiatives across our portfolio of businesses including:
Expected cost reduction
$300m
Page 17
Building for the future - recap on our strategy
Proposition
• Specialists will win over conglomerates
• Corporations need to embrace new technologies
• Value depends on performance and growth
Strategy
• Reconfigure ANZ as a portfolio of 21 specialist businesses
• An e-Bank with a human face
• Drive results whilst investing in growth businesses
Perform and Grow
e-Transform
Specialise
Implications
• Specialist approach to customer and product businesses
• Transform the way we do business by using IP technology
• Meet expectations, fund growth by cost reduction
Page 18
ANZ in the medium term
• Material reallocation of resources
• Substantial e-transformation reducing costs and focused service
• Performance optimised– EPS, ROE, investment– capital management
• Transformational cultural change
• Substantial portfolio shifts
• Narrower, more focused portfolio with leading positions
• Increased investment in high growth business
• Modern performance culture
• Higher stock rating
ANZ in 1 - 2 years ANZ in 3 - 7 years
Page 19
Capital management will continue
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
Mar-99 Sep-99 Mar-00 Sep-00100
105
110
115
120
125
130
135
140
Tier 1
Inner Tier 1
RWA's
% $b
7.77.9
7.5
7.4
6.76.9
6.56.4
Progress• $1014m of buyback• Capping of DRP/BOP to reduce
dilution• Remaining $500m buyback in
progress• Restructure more EPS accretive
than buyback
Capital ManagementPhilosophy:• Capital scarce resource to be
managed effectively and efficiently• Maintain capital consistent with
ANZ’s AA status and peer group ratings
– Tier 1 (6.5 - 7.0%)– Inner Tier 1 (6.0%)
Page 20
Goals going forward
• EPS growth above peer average (target 10+%)
• ROE over 20%
• Cost-income ratio comfortably in the 40’s
• Inner Tier 1: 6%
• Maintain AA category credit rating
Domestic Corporate Bond Investor Presentation
1 November 2000
Rick SawersGroup Treasurer
Page 22
Wholesale Term Funding - Anticipated
1999/2000 Term Funding Objectives – Forecast term wholesale funding requirement
A$5/$6 billion– To be sourced
30% Domestic markets60% Euro markets10% US market
– Extend ANZ domestic yield curve– Build liquid lines + A$500 million.
Constraints envisaged:– S128F– Issue Size– Inconsistent pricing between AA rated banks
Page 23
Wholesale Term Funding - In RetrospectScorecard 1999/2000 Financial Year
• Issued A$5.9 billion term wholesale debt
• Sourced 11% Domestic market (v 30%)80% Euro markets (v 60%)9% US markets (v 10%)
• Domestic Market:Increased 10/2002 series by an $300 millionAdded new series - $500 million 9/2004Extended yield curveOutstandings now A$1.75 billionMTBs trading within 1bp
• S128F still unresolved
Page 24
Term Debt Issued 1999/2000
AUD13% CHF
2%
E20%
HKD10%
USD54%
JPY1%
Page 25
Wholesale Term Funding - Strategy for 2000/2001
• Pursue diversification - by investors and markets
• Maintain prudent approach to liability maturity management– spread of maturities from 1 to 5 years with an objective to
achieve a weighted average term of 3 years– maintain yield curve out to a maximum of 5 years in both
domestic and euro markets
• Funding requirement $6 billion subject to amount of securitisation undertaken
• Sourced20% domestically80% offshore
Page 26
Wholesale Term Funding
Issues to Resolve:
– S128F
– Transparency of issuance• no standardised practice established• Consider US style “Pot System”
Page 27
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 GentryHead of Investor Relations
ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]