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1999 Annual Results1999 Annual Results
Australia and New Zealand Banking Group LimitedAustralia and New Zealand Banking Group Limited3 November 1999 3 November 1999
Shareholder HighlightsShareholder Highlights
Earnings per ordinary share 90.6c (77.2c) up 17%
Dividend 56 cents, up 8%
Franking increased to 75% interim, 80% final (60%)
Total shareholder return 19.6% (-15.6%)
$500 million share buy-back
Financial HighlightsFinancial Highlights
NPAT $1,480 million versus $1,106m ($1,175 before abnormals)
Income up 6%, costs down 4%, ELP up 5% (SP down 6%)
Return on Equity 17.2% (15.5%)
Cost income ratio 55.0% (60.9%)
ROA 1.0% (0.8%)
Risks reduced. Gross non-accruals down 7%, net down 27%
Earnings quality improved. No Abnormals. No Surprises
18.3
15.516.9 17.2
1996 1997 1998 1999
724428
900657
501
444
762886
1996 1997 1998 1999
Significant Improvement AchievedSignificant Improvement Achieved65.8
60.963.1
55.0
1996 1997 1998 1999
0.900.80
0.901.0
1996 1997 1998 1999
ROE % Cost Income Ratio %
ROA % Gross and Net Non-Accruals $m
1,225
872
1,6621,543
Business HighlightsBusiness Highlights
Strategic re-positioning on track in all segments
Good earnings growth in Australia and NZ
Business mix substantially improved. High risk businesses exited
Domestic market share up notwithstanding cost focus
105,000 internet banking customers (8,000). ANZ E*TRADE launched
Major technology projects completed on time
Improving Business MixImproving Business Mix
1998 1999
Business Segment Profit After Tax
Other
International
Corporate
PersonalUp 33%
Up 17%
Down 20%
Business Segment Proportion
Personal
Corporate
InternationalOther
0
40000
80000
120000
Oct Jan Apr Jul Oct
0
10
20
30
40
May Jun Jul Aug Sep Oct
Leveraging Technology: anz.comLeveraging Technology: anz.comRegistrations
Days Required to Add 10,000 Customers
Online application for all major products
ePos service for merchants New Edify Internet Banking
platform Alliances with Excite & Yahoo ANZ e*TRADE alliance Esanda 10% stake in Autogroup “Pay Anyone” open payments eGate business payments
platform Internet Banking launched in NZ
Achieve growth in Personal and Business Banking Enhance focus on Premier, Small Business, Retail Funds Improve asset mix and return in Corporate Complete re-positioning of International, turn around sub-
optimum businesses Build anz.com market position to domestic leadership
Business StrategyBusiness Strategy
Increase ROE. Add RORWA to EVA as key measure Target flat costs. Lower cost income ratio Improve asset quality, particularly International Achieve an optimal capital structure Set stretch performance targets and linked incentives Successfully manage the Y2K transition Target highest increase in e-Commerce customers No surprises
Continue to Deliver in 2000Continue to Deliver in 2000
Drivers of PerformanceDrivers of Performance
15.517.2
1998 1999
0.81.0
2.37 2.46
1.4 1.57
2.29 2.22
0.32 0.34
2.97 3.05
60.9 55
0.45 0.43
ROA
ROE
NII/Interest Earning AssetsNet Interest
Assets
Other IncomeAssets
CostAssets
ProvisionsAssets
Leverage
Risk
Business Mix
Cost/Income
Provisions/NLA
Good Progress Across the BoardGood Progress Across the Board
900
1000
1100
1200
1300
1400
1500
1600
1700
1,106
Abnormal Items
69 1,175
Net InterestIncome Growth
98
Lending Fee Growth
87
Other Fee Growth
93
Growth in Other Income
42
Lower Costs83
Software Capitalisation
61
Higher Provisions
(23)
Increased Tax (136)
1,480
$m
PostAbnormals
1998
PreAbnormals
1998
1999
Margins Stable as Balance Sheet Re-positionedMargins Stable as Balance Sheet Re-positioned
Net Interest A
verage Margins
Ave
rage
Inte
rest
Ear
ning
Ass
ets
0
50
100
150
1996 1997 1998 1999
0
1.5
3
4.5
%
$b
Australia
0
20
1998 1999
New Zealand
0
20
40
1998 1999
International
0
40
80
1998 1999
Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99
80102 62 44 45
275
418
111
116
295
471
126
116
286
488
196
96
306
494
177
333
517
180
91
346
558
160
78*
* Sept 98 trading loss of 145m, Other income of 139m
Other
FX
Other Fees
Lending Fees
Trading
Non Interest Income Non Interest Income Steady Growth, Better QualitySteady Growth, Better Quality
Costs and Cost Income Ratio LoweredCosts and Cost Income Ratio Lowered
50
60
70
1993 1994 1995 1996 1997 1998 1999
Cost Income Ratios %
ANZ
WBC
CBA
NAB
*NAB & WBC first half
Improving Business MixImproving Business Mix
36.8 42.8
77.680.7
35.4 25.5
1998 1999
167
200189
238
1042819
0
200
400
600
800
1000
1200
1400
1600
1998 1999
Australia
New Zealand
Overseas
Geographic Profit After Tax Balance Sheet Assets
Overseas
Other Domestic
Mortgages
A$mA$b
150 149
Gains in Australian Market ShareGains in Australian Market ShareTotal Market Share
Share of Credit Cards
10
12
14
16
18
20 %
ANZ
NABCBA
WBC
10
11
12
13
14
Jun-94 Apr-96 Feb-98
Share of Housing Lending%
10
12
14
16
18
20
Jun-94 Apr-96 Feb-98
% Share of Business Lending %
19931988 1998
15
20
25
30
Jun-94 Apr-96 Feb-98 Aug-99
Aug-99
Aug-99
0
20
40
60
80
100
1996 1999
1997 1998 1999
1997 1998 1999
US$b
FX
Interest
Reducing RiskReducing RiskUS$b
Asian Exposure
Market Risk (VaR - Ave)A$m 2323
AAA-BBB+
BBB
BB
BB-<B+
$65b $90b
Australian Lending Asset Profile
7
11.5
6.1 5.6%
Equities
0
500
1000
1500
2000
2500
3000
1994 1995 1996 1997 1998 1999
Gross Non-Accrual Loans
Non-Accrual LoansNon-Accrual Loans
Net Non-Accrual Loans
As at 30 September $mGross Net Cover
Australia 623 345 44%New Zealand 50 30 40%International 870 282 65%
$m
Provisioning: Personal & Corporate Provisioning: Personal & Corporate Offset InternationalOffset International
103
217
155
79109
301
110
219
154
96111
247
0
50
100
150
200
250
300
350
1998 1999 1998 1999 1998 1999
ELP SP
Personal Financial Services
Corporate Financial Services
International
$m
Specific Provisions by RegionSpecific Provisions by Region
Asia
Australia & NZMiddle East
UK/EuropeSouth Asia
Asia
Australia & NZ
Middle East
UK/EuropeSouth Asia
1998$512m
1999$482m
Provisioning: ELP > SP at Group LevelProvisioning: ELP > SP at Group Level
ELP - Economic Loss ProvisionSP - Specific Provision
Sep 98 Sep 99 APRAGuideline
ELPCharge
Net SPTransfer
1395
0
300
600
900
1200
1500
1800
2100
1401
510 482
967
$m
FX Impact
Buyback to Reduce Capital Surplus Buyback to Reduce Capital Surplus
Capital Management Philosophy: 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% - 6.5%) aligned
to Economic Capital $500 million buyback
Capital Adequacy Ratio%
Tier 1 APRA minima
0
2
4
6
8
10
12
1996 1997 1998 1999
Hybrid
10.7
7.9
Economic Value Added (EVA)Economic Value Added (EVA)
Net Income 5,966
Operating Expenses (3,294)
ELP Charge (510)
Tax (676)
Franking & Other Adjustments 352
Adjust Profit 1,838
Cost of Capital* @ 11% (1,004)
EVA 834
* Hurdle of 15% used in internal models
$ million
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
David Ward
General Manager Office of the Chief Executive
ph (613) 9273 4185 fax (613)9273 4091 email [email protected]
Sep-99
Profit & LossProfit & LossA$M Sep-97 Sep-98Net Interest Income 3,437 3,547
Fees 1,459 1,574FX 237 373
Trading Securities 182 <83> Other 232 235
Net Income 5,547 5,646Expenses Personnel 1,949 1,854
Premises 362 347Computer 330 341
Other 771 776Restructuring Costs 90 120Total Expenses 3,502 3,438Profit Before Provisions 2,045 2,208Doubtful Debts 400 487Tax 466 537NPAT Before Abnormal Items 1,171 1,175Abnormal Items <147> <69>NPAT and Abnormal Items 1,024 1,106
3,6451,754
34089
138
5,9661,732
31434481391
3,2942,672
510676
1,480-
1,480
Non Interest Income 2,110 2,099 2,321
Profit Before Provisions 1,024 1,021 1,164 1,044 1,302 1,370
Mar-99
Profit & LossProfit & LossA$M Mar-97 Sep-97 Mar-98 Sep-98Net Interest Income 1,718 1,719 1,773 1,774 1,811
Fees 693 766 774 800 850FX 111 126 196 177 180
Trading Securities 80 102 62 <145> 44 Other 116 116 96 139 60
Net Income 2,718 2,829 2,901 2,745 2,945Expenses Personnel 954 995 972 882 860
Premises 184 178 172 175 157Computer 173 157 168 173 186
Other 383 388 385 391 391Sub Total 1,694 1,718 1,697 1,621 1,594Restructuring Costs - 90 40 80 49Total Expenses 1,694 1,808 1,737 1,701 1,643
Doubtful Debts 197 203 237 250 258Tax 243 223 298 239 324NPAT Before Abnormal Items 580 591 625 550 716Abnormal Items <31> <116> - <69> -NPAT and Abnormal Items 549 475 625 481 716
Sep-991,834
904160
4578
3,021872157158422
1,60942
1,651
252352764
-764
Non Interest Income 1,000 1,110 1,128 971 1,134 1,187
Strong Management TeamStrong Management Team John McFarlane CEO Citibank, Standard Chartered David Boyles CIO AMEX, BOA Roger Davis Corporate Citibank Peter Hawkins Personal ANZ Peter Marriott CFO ANZ, KPMG Greg Camm Mortgages ANZ Larry Crawford Distribution First Bank Systems, Wells Fargo Bob Edgar Business Bank ANZ Kathryn Fagg Banking Products McKinsey & Co Brian Hartzer Cards First Manhattan Elmer Funke Kupper International McKinsey & Co Mark Lawrence Risk Soc Gen New York Peter McMahon Asset Finance ANZ, Costain Grahame Miller ANZIB ANZ Elizabeth Proust People Victoria Public Service Alison Watkins Strategy McKinsey & Co