Cards and ePayments Brian Hartzer Managing Director Australia and New Zealand Banking Group Limited...

Cards and ePayments

Brian HartzerManaging Director

Australia and New Zealand Banking Group Limited24 August 2001

Building the leading cards business in Australasia

• Strong financial performance

• Growing market share

• Leveraging our core capabilities into new areas

• Attractive growth opportunities and goals

Cards and ePayments – An overview

Merchant acquiringUnsecured personal

lending

Australia

• Customer acquisition• Portfolio

management• Commercial cards• Loyalty management• Alliances

COMMON TECHNOLOGY & OPERATIONS PLATFORM

Card issuing

NZ Offshore Australia Australia NZ

• Credit and debit transaction processing

• e-Acquiring• Terminal sales & rentals• Chip development and

value added services

• Branch sales

• Direct sales

239

304

276

150

200

250

300

350

Mar-00 Sep-00 Mar-01

Operating Income

34

46

55

20

30

40

50

60

70Profit After Tax


869

777

590

400

500

600

700

800

900

1000

48.7

47.1

51.0

45

46

47

48

49

50

51

52

53

Delivering substantial growth

Mar-00 Sep-00 Mar-01 Mar-00 Sep-00 Mar-01

FTE Cost Income

$m $m

%

Co-branded cards drive customer numbers and scale

Proprietary Cards Co-Brand Acquiring

Revenue Costs NPBT

Relative profitability of Australian issuing & acquiring*

Note: Co-brand accounts increased 70% between Sep-98 and Mar-01

Growing share in both issuing and acquiring

15%

16%

17%

18%

19%

Mar-99 Sep-99 Mar-00 Sep-00 Mar-01

Share of Issuing - Outstandings

19%

20%

21%

22%


Share of Acquiring*

* Excludes $1 billion+ p.a. in Coles Myer volume, commenced this month

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Sep-99 Mar-00 Sep-00 Mar-01

0

2

4

6

8

10

12

14

16

18

1996 1997 1998 1999 2000 2001

… with a strong risk management focus

Credit losses - credit cards

Fraud losses – credit cards

• Application and behavioural scorecards in use

• Vision Plus and Triad to further enhance capabilities (3/02)

• Falcon and Eagle systems installed (neural networking tools)

• 24 hour analysis and detection team

Industry average (7 bp)

Rolling 12 mth loss rate

90/210 days delinquent

Bp of turnover

Proprietary Card Cross-sell(Recent Case Study)

100

167

ControlGroup

Propensity toBuy Model

Cross-sell is delivering promising results

Index

Capabilities

• Full account and customer EVA

• Segmentation markers and profiles

• Propensity-to-buy scores

• Application/behavioural scores

• Multiple campaign management

• Attrition scores by customer

• Recovery scores

• Automated, event-based campaigns

• Automated prospect list delivery (“My Sales”)

• “Optimal” strategy selection by customer (longer term)

In Pilot/Develop-

ment

In Pilot/Develop-

ment

In PlaceIn Place

Despite 27% share of card spend, we still have significant potential for profitable growth

Share of total Personal Consumer Expenditure

Share of Consumer Non-Mortgage Debt*

Total Personal Consumer Expenditure = $360bn

Total Consumer Non-Mortgage Debt = $50.6bn

* includes personal loans

ANZ cards 6.5%

Other banks cards ~17.5%

ANZ cards 7.9%

The merchant business offers significant growth:

• MultiPOS terminal will

lead market in

functionality and price

• Chip capabilities open up

new opportunities for

merchants

• Offshore banks are

expressing interest in our

capabilities

Leveraging our distinctive capabilities internationally

First Place:

Qantas Telstra Visa Card

“Best Frequent Traveller Credit or Charge Card

(International)”*

* source: InsideFlyer Magazine, 2001

• Target: Hong Kong platinum market

• Niche product with unique features to attract profitable segment

• Proof of concept for marketing and operational capabilities in the region

• Specialisation and “monoline” focus

• High quality people and dynamic culture

• Strong team experience in

– Loyalty management: QTV, Westfield

– Terminal/chip: Eftpos New Zealand

– International markets: India, Asia

• Investment in technology:

– Platform of the future: Vision Plus,

Falcon/Eagle, Triad

– CRM

– Chip

Execution will be key to our success

59%

67%

75%

40%

50%

60%

70%

80%

1999 2000 2001

Staff Satisfaction

Summary

• Focus & specialisation has driven strong financial performance

• We will continue to grow market share

• We are leveraging our distinctive capabilities into new growth opportunities

• Cultural change has been significant, and will continue

Goals

• 20%+ pa earnings growth to 2005

• Consolidate position as the leading cards business in Australasia

• Become a meaningful player in Asia

Cards and ePayments Brian Hartzer Managing Director Australia and New Zealand Banking Group Limited...

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