2002 Annual Results - Accounts, credit cards, loans, insurance...Oct 24, 2002 · 100 120 1H00 2H00 1H01 2H01 1H02 2H02 1H03 (F) 2H03 (F) 1H04 (F)2H04 (F) 0 100 200 300 400 500

2002 Annual ResultsAustralia and New Zealand Banking Group Limited

24 October 2002

2 2002 Annual Results

Agenda

John McFarlane• Highlights

Peter Marriott• Result review

• Credit quality

• Capital

John McFarlane• Commentary

• Outlook

John McFarlaneChief Executive Officer

24 October 2002

2002 Annual Results3


Delivering on our commitments

• Performing well - record profit of $2,168m*

• Exceeded all targets*

– EPS Growth 17%– ROE 21.6%– Cost Income ratio 46.0%

• Strong capital position, well provisioned

• Record staff satisfaction – up 16% to 78%

• Exciting Restoring Customer Faith pilot

• Specialised business strategy operating well

• Stretch target for 2003 of 10% EPS growth

* Before significant transactions

Peter MarriottChief Financial Officer

24 October 2002

2002 Annual Results5


Outline

• Result review– 2002 Overview– Revenue– Expenses

> Cost income ratio> Software amortisation

– Doubtful debt provisions– Business Unit summary

• Credit Quality

• Capital


A good result, driven primarily by revenue growth

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

1870

2001

Interest Income

185 Provisioning (79)

Non Interest Income

223

Expenses(61)

Tax & OEI30 2168

$m

2002

Before one-offs

Significant transactions

154 2322

2002

Tax rate change $79

Tax on higher profit $49


Steady underlying earnings momentum

0.0

5.0

10.0

15.0

20.0

25.0H

ead

lin

e

Tax r

ate

chan

ge

Sig

nif

ican

ttr

an

sact

ion

s

Un

derl

yin

gg

row

th0.0

5.0

10.0

15.0

20.0

25.0

Head

lin

e

Sig

nif

ican

ttr

an

sact

ion

s

JV G

oo

dw

ill

Un

derl

yin

gg

row

th

7.7% (4.2%)

(19%)

1.6% 5.1%

22%

1.8% 5.0%

Mar 02 v Sep 01

EPS Growth

Sep 02 v Mar 02

EPS Growth% %


Healthy underlying income growth

64066375

6814

4172

439

6000

6100

6200

6300

6400

6500

6600

6700

6800

69002001

AN

Z/J

V

Acq

uis

itio

ns

& F

X I

mpact

Adju

sted

reve

nue

bas

e

Under

lyin

ggro

wth

2002

$m

• Mortgage outstandings up $8.9b, partly offset by $2.7b decline in Corporate lending assets

• Deposits up $8b, with an equal increase in both Personal and Corporate

• Margins were flat over the year at 2.77%, although second half slightly higher than first half

• Lending fees up 11%, principally driven by corporate businesses

• Non lending fees up 8%, with strong transaction volumes in consumer finance a major contributor

Income Drivers6.9%

6.3%


1000

1200

1400

1600

1800

2000

2200Sep

-97

Mar

-98

Sep

-98

Mar

-99

Sep

-99

Mar

-00

Sep

-00

Mar

-01

Sep

-01

Mar

-02

Sep

-02

40

45

50

55

60

65

70

ExpensesCost Income RatioPeer Average CTI*

Cost income ratio on track to meet target of 45

$m CTI (%)

45.5

• Peer average impacted by funds management acquisitions

• $31m expense reduction from sold businesses

• Effective half on half cost growth of 1.8%

• We will invest more in growth areas, particularly personal businesses

• 2000 $361m restructuring provision fully utilised, ongoing $60m+ charge likely

* Source: CSFB


0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

1H 01 2H 01 1H 02 2H 02

We will continue to carefully manage cost growth relative to revenue growth

Underlying cost growth trending upward • Balancing

earnings outcomes with investment in growth

• “Surplus” earnings targeted for investment

• Cost-income ratio to trend downward

+

• Higher amortisation and depreciation

• Increasing growth investment


0

20

40

60

80

100

120

1H00 2H00 1H01 2H01 1H02 2H02 1H03 (F) 2H03 (F) 1H04 (F) 2H04 (F)0

100

200

300

400

500

Amortisation (LHS) Capitalisation (LHS) Balance (RHS)

Software capitalisation – generational change in core infrastructure

• Sales and Service Platform (SSP)– Replaces telling system from early ‘80s

• Common Administration System (CAS)– Replaces GL, HR, payroll, fixed asset register, accounts payable, procurement

• Vision Plus – Replaces existing card system in operation since the mid 80’s

$m $mSoftware Capitalisation

Post Y2K catch-up


309

241246258 252 256

301290

434242

36 35

4245

40

0

50

100

150

200

250

300

350

Mar-99

Sep-99

Mar-00

Sep-00

Mar-01

Sep-01

Mar02

Sep-02

0

10

20

30

40

50

60

70

80ELP adjustmentELP $ELP BP's

Provisioning charge reflects conservative management

ELP Charge$m bp’s • ELP portfolio level

adjustment continued

•reflecting ongoing global economic uncertainty

•calculated as one notch downgrade across GSF portfolio

• Domestic ELP rate declining

• ELP adjustment likely to continue until international defaults stabilise


0 100 200 300

A diversified portfolio performing well

2002 NPAT $m

NPAT increase

NPAT decrease

Prior period NPAT

2nd half NPAT $m

0 100 200 300

Personal Banking AustraliaMortgagesInstitutional BankingTransaction ServicesSmall Med BusinessCorporate BankingPersonal Banking NZConsumer FinanceAsset FinanceForeign ExchangeStructured FinanceGroup TreasuryWealth ManagementCorp Finance & AdvisoryAsia/Pac Personal BankingCapital MarketsING JV/ANZ FM


Outline

• Result review

• Credit Quality– Consumer

> Overview> Mortgages

– Corporate> C&IB, GTS, Asia corporate> ANZIB> Global Telecommunications portfolio> Global Energy portfolio> Top 10 exposures

– Specific provisions– Non-accrual loans– Provisioning coverage

• Capital


Consumer portfolio continues to improve

Arrears > 60 days%

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Mar

-01

Jun-0

1Sep

-01

Oct

-01

Nov-

01

Dec

-01

Jan-0

2Fe

b-0

2M

ar-0

2Apr-

02

May

-02

Jun-0

2Ju

l-02

Aug-0

2Sep

-02

Small Business

Mortgages

Cards & Personal Loans

Personal & SME Businesses - Overall (exclAsset Finance, Pacific, Asia)

• Consumer sector in good shape, with continuing low levels of unemployment

• Mortgage arrears at record lows – unlikely to be sustainable

• Ongoing focus on collections management

• Scorecards remain “tight”


Mortgage outlook – slight deterioration

0.000.100.200.300.400.500.600.700.80

Jan-01

May-01

Sep-01

Jan-02

May-02

Sep-02

Home LoanRes Inv Loan

60 day arrears improving%

• ANZ has not allowed FHOG to be the source of minimum equity requirement

• Behavioural scores remain stable

• Scorecards tightened in 2001, resulting in higher quality borrowers

• Unemployment, a key driver of default, continues to trend downwards

• Scenario analysis at 95% confidence suggests loss not exceeding 4-6 bpover next 12 months, compared with ELP of 5 bp

• Based on uncommitted monthly income at time of application, 100% of customers could meet a 1% rise in interest rates, and 97.2% could meet a 2% increase without rearranging affairs

-20

-10

0

10

20

30

40

50

60

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Sydney

Melbourne

% change House prices well below previous peaks


4.3% 4.3% 3.1%

11.1% 11.1% 10.6%

22.9% 23.0% 22.3%

26.8% 28.8%26.3%

37.7%32.8%34.9%

Sep-01 Mar-02 Sep-02

Domestic corporates in good shape, some concerns in ANZIB offshore

>BB- = B+ B, B-, CCC & non-accrual

AAA to BBB+

BBB to BBB-

BB+ to BB

BB-> BB-

$40.8bn $38.7bn

C&IB, Asia & GTS Risk Grade Profile*

B+ to CCC 3.0% 3.2% 2.4% 4.5% 2.7% 4.1%

Non-accrual 1.3% 1.1% 0.7% 1.9% 4.1% 4.6%

$39.4bn

* Risk grade profile by outstandings

6.4% 6.8% 8.7%3.4% 2.5%

3.8%12.9% 15.3% 13.2%

30.0%33.3% 29.9%

44.4%42.1%47.3%


$15.9bn $15.0bn $14.2bn

ANZIB Risk Grade Profile*


6.7%0.8%

8.7%

21.2%

62.6%

Sep-02

Global telecommunications portfolio in reasonable shape

50%

12%

35%

3%

Aust/NZ (97.6% Investment Grade)

Americas (69.3% Investment Grade)

UK/Europe (71.1% Investment Grade)

Asia (34.5% Investment Grade)

Exposure by geography

83.8% investment grade

Telco Risk Grade Profile*

4.8% $0.3bNon Accrual

1.9% $0.1bB+ to CCC

$5.5bTotal Limits (AUD)

AAA to BBB+

BBB to BBB-

BB+ to BBBB->BB-

>BB- = B+ B, B-, CCC & non-accrual*Risk grade profile by limits

$3.4b

$1.2b

$0.5b

$0.4b

49

4

3

# of customers


8%1%

24%

21%

46%

Sep-02

Global energy portfolio – some issues, but containableGlobal Energy Portfolio*

AAA to BBB+

BBB to BBB-

BB+ to BB

BB-

>BB- 16%

36%

16%

32%

Sep-02

US Energy Portfolio

>BB- = B+ B, B-, CCC & non-accrual

(AUDm)Total Limits $9.6bn $2.2bnB+ to CCC 4.8% $0.46b 12.2% $0.27bNon Accrual 3.2% $0.3b 4.0% $0.09b

Exposure by geography

53%

25%

9%

9%4%

Aust/NZ (77.5% Inv Grade)

Americas (43.5% Inv Grade)

UK/Europe (64.6% Inv Grade)

Asia (61.0% Inv Grade)

Middle East (98.0% Inv Grade)

$4.5b

$2.0b

$2.3b

$0.8b

*Risk grade profile by limits

$0.7b

$0.36b

$0.8b

$0.36b

7812

5

# of customers

265

2

# of customers


40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

Top 10 exposures significantly reduced

Top 10 committed exposures

Top 10 exposures as % of ACE

Sep 01 Sep 02

Limits represent total 7 month limits excluding uncommitted and non-recourse, net of credit derivatives

excludes non-recourse and uncommitted facilities

0 250 500 750 1,000 1,250

Funded Unfunded

S & P Rating

AA-

AA+

AAA

BBB+

A

AA-

AA-

AAA

BBB+

A-


Specific provisions again impacted by large corporate collapse

0

50

100

150

200

250

300

350

400

Mar-98

Sep-98

Mar-99

Sep-99

Mar-00

Sep-00

Mar-01

Sep-01

Mar-02

Sep-02

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Net specific provisions - $m (LHS)% International SPs (RHS)ELP charge - $m (LHS)

Provisions$m Single

customers2nd half Specific

Provisions by size

• Only 4 customers with specific provisions greater than $10m

< $5m

$5m - $10m

$10m - $20m

$20m - $50m

1customer

1customer

>$100m2

customers


869

5950

623651 681

388

80

792

523

37

643

0

200

400

600

800

1000

1999

2000

2001

2002

1543

1391

12601203

1662

628

770699

657

900

0

300

600

900

1200

1500

1800

1998 1999 2000 2001 20020.0%

0.5%

1.0%

1.5%

Non-accrual loans have decreased due to domestic reductions

Gross Non-Accrual Loans (LHS)

Net Non-Accrual Loans (LHS)

$m

Non-Accrual Loans/ Loans & advances (RHS)

Historic

Aust InterNZ

GeographicGross Non-Accrual Loans

$m9%78%

% of total lending assets13%


New non-accruals dominated by 2 large customers over each of the past 2 years

GeographicNew Non-Accrual Loans$m

1,029

931

1,3571,285

1,395

0

300

600

900

1,200

1,500

1998 1999 2000 2001 20020.0%

0.5%

1.0%

1.5%

HistoricNew Non-Accrual Loans (LHS)

New Non-Accrual Loans/Loans & advances (RHS)

2 Customers

2 Customers

0

100

200

300

400

500

600

700

800

900

Mar

-99

Sep

-99

Mar

-00

Sep

-00

Mar

-01

Sep

-01

Mar

-02

Sep

-02

Aust/NZ UK/US Asia Other Inter

$m


Overall - provisioning levels strong

0.96

0.88

1.051.06

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

ANZSep 02

CBAJun 02

NABMar 02

WBCMar 02

GP/RWA’s%

0

20

40

60

80

100

120

140

160

180

200

ANZ

Austr

alia

Cana

da

Germ

any

France UK

%Provisions/Non Accrual Loans

Source: CSFB


Cumulative ELP well above specific provisions

0

500

1000

1500

2000

2500

3000

3500

1997 1998 1999 2000 2001 20020

100

200

300

400

500

600

700

ELP (LHS) SP (LHS)

Cumulative difference (RHS) Cum + $250m top up (RHS)

GP top up$m $m


Outline

• Result review

• Credit Quality

• Capital– Global comparison


3.25%

3.75%

4.25%

4.75%

5.25%

5.75%

6.25%

6.75%

7.25%

7.75%

AN

Z S

ept

02

NAB

CBA

WBC

*

CIB

C

HSBC

HBO

S

Bar

clay

s

RBC

ANZ’s adjusted common equity to RWA in line with peer average

Notes• Excludes mortgage servicing rights.• Calculation excludes the fact that the Australian banks’ GP/RWAs is approx. 40bp higher than the

average of the UK and Canadian banks.• * WBC adjusted for acquisitions and buyback

Target range

• ACE ratio at top end of target range

• Increasing possibility of buybacks over the next 12 months

ACE/RWA


Summary

• Solid result in more challenging times, driven by healthy income growth

• Consistent earnings momentum

• Investing for growth in our businesses

• Credit quality strong in Australia, but some offshore issues we are dealing with

• Remain well provisioned

• Capital position is strong

• Leadership in disclosure and transparency

John McFarlaneChief Executive Officer

24 October 2002


10241106

1480

17471870

2168

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

1997 1998 1999 2000 2001 2002*0

250

500

750

1000

1250

1500

1750

2000

2250

2500

Profit (RHS) Revenue (LHS)Expenses (LHS) Provisions (LHS)

Building a credible track record $m $m

*excludes significant

transactions


In 2002 we made progress with all stakeholders

• Shareholders – Delivered on commitments with EPS at the upper end of expectations

• Staff – Satisfaction now 78%, up 16% following Breakout

• Customers – 10 customer charter promises, strong restoring customer faith pilot results

• Community – New community fund, matched savings a/c


Delivering on our commitments to shareholders

• Specialised business units performing well– 14 of 16 recorded higher profits year on year

• Specific provision unusually high, but cumulative specifics well covered by cumulative ELP from inception in 1997

• Major new governance and transparency initiatives– Substantially enhanced disclosure on capitalised expenses,

asset quality, options expense, compensation– Upgraded audit policy introduced– Recognition for disclosure and transparency– Remuneration practices substantially reformed


Executive options will only reward out-performance against market

Year 1 Year 2 Year 3 Year 4 Year 7 etc…

S&P200BAIANZ Share Price

Executives rewarded for value premium after allowing for market growth

ANZ share option indexed by movement in the S&PAB200I (The value below this line is passed to executives under a conventional option)

Each 1/2 year the options will be issued at the prevailing weighted average five day price

Standard TSR Option strike price

Price


Delivering for staff, and increasingly a preferred employer

62

4046

78

6571

0

10

20

30

40

50

60

70

80

90

Satisfaction ANZ Regard ANZ Values

2001 2002

0

2000

4000

6000

8000

10000

12000

2001 2002

Graduate Applications

225 positions

Staff satisfaction up Strong employment brand%


New customer initiatives getting real traction

32

85

127

96

159181

020406080

100120140160180200

Opene

d

Close

d Net

Opene

d

Close

d Net

2001 – prior corresponding

period

2002 – 30 weeks since

launch

Net new account openings up 165%*000’s

Indicators

Revenue growth 5.1% 4.0%

Staff advocacy 65% 62%

Customer satisfaction 6.8 6.6

FUM growth 8.0% 6.2%

Vic Other States

2H 2002

Key indicators show Restoring Customer Faith program is

beginning to deliver

165%

* Victoria RCF pilot


Current performance issues addressed

Offshore credit losses• Reductions in credit limits• Re-focus strategically

Consumer Finance 2nd half• Management reorganisation• Restructure programs

Technology project benefits • Wind down of major projects• Appointed MD major programs

JV performance below plan • Accelerate integration• Capital return hedged

NZ consumer satisfaction • Greater local autonomy and resourcing• Roll out Restoring Customer Faith

Issue Response


Clear strategic investment priorities

Asia/Pacific

Global Businesses

Domestic Businesses

Options

Refocus

Invest in options for longer term

Lower risk orientation Eliminate concentrations

Invest for growth and positionGrow


Opportunities for growth

Personal Banking• Full rollout Restoring Customer Faith• Expand network in growth locations

• Autonomous customer organisation• Rollout Restoring Customer Faith

Wealth Management • Maintain high investment spending• Lower profit volatility from JV

Institutional & ANZIB • Leverage leading relationship position• Leverage business integration synergies

Corporate & SME• Investment spending budgeted• Leverage business integration synergies

Opportunity Approach

New Zealand


Key priorities for 2003

• Rollout Restoring Customer Faith, reconnect with community

• Complete JV integration. Leverage distribution opportunity

• Reposition cards and mortgages for tougher environments

• Narrow focus of offshore activities to reduce risk

• Capture share of cyclical upswing in corporate lending and SME

• Implement three major strategic cost programs, fewer projects

• Accelerate shift in performance culture and identify and develop the next generation of leaders


2003 targets stretching but unchanged

EPS growth

ROE

Cost-income ratio

ACE Ratio

Credit rating

2003 Target

10%

20%

45%

5.25% - 5.75%

AA-

2001

10%

20.2%

48.0%

5.9%

AA-

2002*

17%

21.6%

46.0%

5.7%

AA-

*excluding significant transactions


Summary – delivering on our commitments

• Exceeded targets in a difficult year

• Specialisation strategy working

• Becoming employer of choice

• Increasingly delivering for customers and the community

• Risks being addressed

• Moving from “perform” to “perform and grow”

2003 target 10% EPS growth

Copy of presentation available on

www.anz.com


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.comor contact

Philip GentryHead of Investor Relations

ph: (613) 9273 4185 fax: (613) 9273 4091 e-mail: [email protected]

2002 Annual Results

Supplementary Information PackAustralia and New Zealand Banking Group Limited

24 October 2002


Additional information on strategy


Our growth philosophy unchanged – but primary focus on organic out-performance

Organic out-performance

Portfolioreshaping

Transformationalmoves

• Extend specialisation• Grow customer

numbers• Increase share of

wallet• Drive productivity

• Revenue growth materially higher than expense growth

• Take business units to sustainable leadership positions

• Build a range of strategic options

Our targets

• Invest in high growth areas• Build specialist capabilities• Exit weak positions• Risk reduction

• Step changes in positioning• Creating new growth options• Proactively shaping industry


0

10

20

30

40

50

ANZ CBA NAB WBC

Consumer portfolio – significant opportunity for ANZ in domestic markets

Share of Customers*

Wallet Share*

Priorities

• Deliver on promise of Restoring Customer Faith

• Improve community perceptions

• Deliver on JV

• Continue product innovation

• Utilise CRM capabilities

• Target market share growth of 1% pa in key markets

0

10

20

30

40

50

60

ANZ CBA NAB WBC

%

%

* source: Roy Morgan Research


-10

-5

0

5

10

15

1990

1992

1994

1996

1998

2000

2002

2004

2006

Corporate portfolio – positioned for upturn, targeting fee income

System Business Credit Growth*

5765

4335

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Today 2005Aspiration

Non-Interest Interest

Corporate Portfolio Revenue Mix

• Capture expected stronger lending growth from SMB and middle market corporates

• Focus on fee income in institutional business

%

* Forecasts – economics@anz


C&IB successfully managing the transition to lower balance sheet intensity

331

510

377

642

0

100

200

300

400

500

600

700

NPAT NIACC

2001 2002

14%

26%

0

50

100

150

200

250

1999 2000 2001 20020

5

10

15

20

25

30

35

40

45

50

Lending Fees Balance Sheet

Higher lending fees, flat balance sheet

NIACC growth greater than profit growth


Asia/Pacific – create low risk growth options

• East Asia and the Pacific are our priorities

• Focus on modest, low risk options in the Asian consumer sector

• Leverage Panin experience and our core capabilities

• Strengthen position in the Pacific

PacificEast Asia


We will continue to shift the portfolio towards more attractive segments

Weak Strong

Low

High

Mark

et

Att

ract

iven

ess

Current ANZ Position

Wealth

Cards

ConsumerBanking

SmallBus

ANZIBCorporate

AssetFinance

Mortgages

15 - 20%

35 - 45%25 - 35%

5 - 10%

Source of profit - today

< 10%

5 - 10%

Source of profit ~2005

~80%

ANZPosition

High

LowWeak Strong

Mar

ket

Att

ract

iven

ess


Additional information on results


0 200 400 600 800

A diversified portfolio performing well

Personal Customers

Corporate Businesses

ANZIB

Mortgages

Small Med Business

Consumer Finance

Asset Finance

Group Treasury

47

61

23

10

27

50

10

49

573

527

311

246

157

149

102

124

9%

13%

8%

4%

21%

51%

11%

65%

2002 NPAT Change from 2001

2002 NPAT $m

2002 NPAT increase

2002 NPAT decrease

2001 NPAT


2.35

1.61

1.15

3.20

2.79

2.25

1.21

1.16

2.84

3.06

3.93

2.83

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Sep-00

Mar-01

Sep-01

Mar-02

Sep-02

Corp Bkg Bus ANZIBMortgages Asset FinPersonal Group

Interest margins stable, lending and deposit volumes up

%Interest Margins

92.8

53.9

83.0

46.0

57.2

88.6

45.3

61.6

43.6

20

30

40

50

60

70

80

90

100

Mortgages Business Deposits


Average Lending & Deposit Volumes

$b

* Business Lending includes Corporate, ANZIB and Small Business Segments


Underlying expense growth of 2.3%

3153

3081

3092

20

72

31

3000

3020

3040

3060

3080

3100

3120

3140

31602001

AN

Z/J

V

Acq

uis

itio

ns

& F

X I

mpact

Adju

sted

Under

lyin

gG

row

th

2002 A

dj

2.3%

$m

• Computer expenses increased by 16%, reflecting:

• depreciation and amortisation charges up 30%

• software purchases up 28%

2%


Executive options will only reward out-performance against market

Year 1 Year 2 Year 3 Year 4 Year 7 etc…

S&P200BAIANZ Share Price

Executives rewarded for value premium after allowing for market growth

ANZ share option indexed by movement in the S&PAB200I (The value below this line is passed to executives under a conventional option)

Each 1/2 year the options will be issued at the prevailing weighted average five day price

Standard TSR Option strike price

Price


Additional credit quality information


House prices – unemployment a key driver

-20

-10

0

10

20

30

40

50

60

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

-3

-2

-1

0

1

2

3

4

5

Sydney House PricesChange in Unemployment

-20

-10

0

10

20

30

40

50

60

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

-8

-6

-4

-2

0

2

4

6

Sydney House Prices

Change in Mortgage Rate

Sydney house prices v change in unemployment

Sydney house prices v change in interest rates

Ch

an

ge in

Syd

ney H

ou

se P

rices (%

)

Ch

an

ge in

Syd

ney H

ou

se P

rices (%

)

Ch

an

ge in

NS

W u

nem

plo

ym

en

t (inverte

d sca

le)

Ch

an

ge in

mo

rtgag

e ra

tes (in

verte

d sca

le)


4

6

8

10

12

14

16

18

90 92 94 96 98 00 02 044

5

6

7

8

9

10

11

12

90 92 94 96 98 00 02 04

Key drivers of house prices expected to remain benign

Unemployment Mortgage rates% %

Source: economics@anz


Scenario analysis from ANZ economics

0

2

4

6

8

10

12

14

16

18

20

1996/9

7

1997/9

8

1998/9

9

1999/0

0

2000/0

1

2001/0

2

2002/0

3

2003/0

4

2004/0

5

2005/0

6

Main Case Stronger Case Weaker Case - Domestically Driven Weaker Case - Globally Driven

0

2

4

6

8

10

12

1996/9

7

1997/9

8

1998/9

9

1999/0

0

2000/0

1

2001/0

2

2002/0

3

2003/0

4

2004/0

5

2005/0

6

Housing credit growth Business credit growth


Assumptions underlying scenario analysis

Main case• Global economy: moderate rebound in

global economy• Moderate tightening in policy - 50 bps

over the next 12 months• Moderating house price gains (3-5%)• Housing investment falls, consumption

slows, but business investment picks up

Stronger case• Global economy: as per main case• Monetary policy as per main case• Ongoing house price gains (8-12%

growth)• Consumption & business investment

continue to grow firmly• Credit growth strong

Weaker case - domestically driven• Global economy: as per main case• 3x50bp interest rate rises up to Mar

quarter 2003• Negative 3% house prices • Flow through to weaker employment,

business investment and housing construction and turnover which in turn feed through to Credit and deposit volumes

Weaker case – globally driven• Global economy sharply weaker - double

dip US recession• Interest rates cut to 4.00%• Negative 6% house prices (peak to

trough)• Negative employment growth, mild

recession, much weaker business investment which in turn feed through to Credit and deposit volumes

Source: economics@anz


0 50 100 150

ConsumerFinance

CBB

Asset Finance

GSF

Personal

Mortgages

SME

CF&A

GFX

0

50

100

150

200

250

300

350

400

GFX

CF&A SM

E

Mortg

ages

Perso

nal B

ankin

g GSF

Asset F

inance CB

B CF

SPELP

0

20

40

60

80

100

120

140

160

180

GFX

CF&A SM

E

Mortg

ages

Perso

nal B

ankin

g GSF

Asset Fina

nce CB

B CF

SP

ELP

Specific provisions in most businesses lower than expected losses

SP’s v ELPSep 02 Year

SP’s v ELPSep 01 Year

$m

$m

Specific Provisions Sep 02 v Sep 01

$mLower SP

Higher SP

356


Fallen Angels phenomenon continues

March 2001 ratings for Full Year 2002 new non accrual loans

• Speed of collapse difficult to model

• We continue to diversify the portfolio

• SCCL’s further reduced and refined

B4%

BB1%

CCC9%

BBB + to BBB-86%


Offshore SCCLs now in place

60%

100%

Australia/New Zealand OffShore Corporates

Comparative SCCL Customer Limits

25%

75%

100%

80%

> 100%Security

< 100%Security

Lending type SCCL % for offshore Corporates (excl. GSF)

indicative based on BBB- grading

Direct Exposure(Including on and Off Balance sheet)

Indirect or Contingent Exposure

Market Related

Exposures

Capped at AUD 300m

Capped at AUD 100m

GSF Direct Exposures capped at AUD 450m for > 100% Security and AUD 200m for < 100% Security


Offshore lending assets decreasing as a proportion of total lending assets

70% 69% 70% 73% 77% 76% 78%

15% 15% 13% 13%12% 13% 13%

15% 16% 16% 14% 11% 11% 9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 1999 2000 2001 2002

Australia NZ International


Increased industry diversification

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Co

mm

erc

ial

Pro

pert

y

Man

ufa

ctu

rin

g

Reta

il T

rad

e

Fin

an

ce -

Ban

ks

Wh

ole

sale

Tra

de

Ag

ricu

ltu

re

Bu

sin

ess

Serv

ices

Fin

an

ce -

Oth

er

Cu

ltu

ral

& R

ec

serv

ices

Acc

om

m,

Pu

bs,

Clu

bs

Tra

nsp

ort

&S

tora

ge

Oth

er

1993 2002

% of Group Lending Assets(Aust/NZ)

Policy Cap


Industry exposures – Australia & NZ

0.0bn

0.5bn

1.0bn

1.5bn

2.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0.0bn

0.5bn

1.0bn

1.5bn

2.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0.0bn

0.2bn

0.4bn

0.6bn

0.8bn

1.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0.0bn

0.2bn

0.4bn

0.6bn

0.8bn

1.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0.0bn

0.5bn

1.0bn

1.5bn

2.0bn

2.5bn

3.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

5.0%

10.0%

15.0%

Health & Community Services

Mining

Cultural & Recreational Services

Personal & Other Services

Forestry & Fishing

Communication Services

0.0bn

0.2bn

0.4bn

0.6bn

0.8bn

1.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%10.0%

Lending Assets (AUDm)% of Portfolio (RHS scale)% in CCR 7D-8G (RHS scale)% in CCR 9-10 (RHS scale)x



0bn

1bn

2bn

3bn

4bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0bn

1bn

2bn

3bn

4bn

5bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Finance - Other

Finance – Banks, Building Soc etc.

0bn

1bn

2bn

3bn

4bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0bn

1bn

2bn

3bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Transport & Storage

Accommodation, Clubs, Pubs etc.

0bn

1bn

2bn

3bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

0.0bn

0.5bn

1.0bn

1.5bn

2.0bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Utilities

Construction




0bn

2bn

4bn

6bn

8bn

10bn

12bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0bn

2bn

4bn

6bn

8bn

10bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Real Estate Operators & Dev.

Manufacturing

0bn

2bn

4bn

6bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0bn

2bn

4bn

6bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Retail Trade

Wholesale Trade

0bn

1bn

2bn

3bn

4bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0bn

1bn

2bn

3bn

4bn

Sep-99 Sep-00 Sep-01 Sep-020.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Agriculture

Business Services


Documents

2002 Annual Results - Accounts, credit cards, loans, insurance...Oct 24, 2002 · 100 120 1H00 2H00 1H01 2H01 1H02 2H02 1H03 (F) 2H03 (F) 1H04 (F)2H04 (F) 0 100 200 300 400 500