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Corporate & Institutional Banking. Dr Bob Edgar Managing Director Australia and New Zealand Banking Group Limited 20 July 2001. The relationship gateway to our corporate customer base. Financial performance Strong customer focus Conservative risk management - PowerPoint PPT Presentation
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Corporate & Institutional Banking
Dr Bob EdgarManaging Director
Australia and New Zealand Banking Group Limited 20 July 2001
Page 2
The relationship gateway to our corporate customer base
• Financial performance
• Strong customer focus
• Conservative risk management
• Growth focused on fee-based investment banking style products
• Goals for Corporate & Institutional Banking
Page 3
Corporate & Institutional Banking
Institutional Banking
• Middle market companies with $10 - $100m turnover
• 5500 customers & targets• Geographic relationship
management model with 21 regions across Australia & New Zealand
• Regional Credit Executives located with relationship
• Management of overall customer relationship & profitability
• Balance sheet management
• Navigation, co-ordination & solutions development between product areas for our customers
Corporate Banking
Key Responsibilities
• Top end corporates in with $100m plus turnover
• Has ~1000 customers & targets, in Australia and New Zealand
• 9 Specialised Industry Segments
• Supported by Credit Products Group
Page 4
Institutional Banking continues to perform strongly
Mar-01
422
435430
350
375
400
425
450
475
500
Mar-00 Sep-00
FTE
6770
88
40
50
60
70
80
90
100
Profit After Tax
Mar-00 Sep-00 Mar-01
31% Growth176
209
171
100
120
140
160
180
200
220
Mar-00 Sep-00 Mar-01
Operating Income
22% Growth
$m $m
Mar-01
21.123.922.2
0
10
20
30
40
50
Mar-00 Sep-00
Cost Income%
Page 5
Corporate Banking performance has been more subdued
34.638.0
35.0
20
30
40
50
60
70
Mar-00 Sep-00 Mar-01
Cost Income%
Mar-01
756769762
650670690710730750770790810830850
Mar-00 Sep-00 Mar-01
FTE
183187 188
160
165
170
175
180
185
190
195
200
Mar-00 Sep-00
Operating Income
3% Growth
$m
6160
65
50
55
60
65
70
Profit After Tax
Mar-00 Sep-00 Mar-01
7% Growth
$m
Page 6
CIB relationship management is the gateway to our corporate customers
0%
10%
20%
30%
40%
50%
60%
70%
CIB GSF GFX GTS GCM PFS
• The value of the CIB customer franchise is much larger than the reported ‘balance sheet’ driven numbers
• Over 40% of revenue from CIB customer base is booked in other business units
• Over 60% of NIACC (Net Income After Capital Charge*) is booked in other business units
• Taking a complete customer view ensures cross-selling opportunities are optimised
* NIACC is an EVA based profitability measure used within ANZ at the customer level
Revenue NIACC
Source of Customer Revenue & NIACC
CIB Australia & NZ
Page 7
CIB drives for continuous change to be a high performing customer business
•Distribution StrategyRole clarityProcess improvement
• Customer Profitability tool• Product specialists in regions
• e-Transformation • Outsourcing / centralisation - CTSC - Securities
• Industry specialisation in IB
NIACC $130mCTI 36%ELP 53bp
NIACC $460mCTI 28%ELP 37bp
1998 1999 2000 2001
• Corporate Banking portal CARBe Impact
Page 8
We are a leader in customer relationship management
0% 20% 40% 60%
#2
=1
=1
=1
=1
Overall Satisfaction with Bank(Corporate Bank)
7.67.5
7.67.4
6.97.0
7.1
6.46.0
6.5
7.0
7.5
8.0
1997 1998 1999 2000
ANZ NAB CBA WBC
Source: Roberts Research Group
8.1 8.1 8.1 8.38.0
7.47.5
6.8
7.4 7.4
6
6.5
7
7.5
8
8.5
1995 1996 1997 1998 1999
Satisfaction with Relationship Manager(Corporate Bank)
2000
8.4
7.0
0% 20% 40% 60% 80%
#2
#1
#1 Total customers
Significant Bank R’ships
Lead bank customers
Market Position(Institutional Bank)
Relationship Management(Institutional Bank)
Overall satisfaction
Quality of account management
Level of ideas & initiatives
Understanding and knowledge of business
Prompt follow-up
Source: Greenwich Associates
Page 9
Risk profile and management stance remain conservative
• Risk grades 7D-10 [ie B to D external credit ratings agency equivalents] are less than 4% of total book
• This reflects a substantial improvement in book quality
• Risk grades 5-7C [ie BB+ to well secured B] improved from 54.3% to 43% of book.
Risk Profile
0
5
10
15
20
25
30
35
1 2 3 4 5 6 7 8 9 10
CCR
Ass
ets
(%)
Page 10
For key asset quality indicators, CIB has a solid record - no systemic credit issues
Risks actively managed
• Enhanced credit management processes reducing expected loss rates in the business, (eg ‘one-up’ reviews)
• Whilst net specific provisions have increased during the first half year, the loss rate is still well below ELP rate
• At this stage of the credit cycle, we expect specific provisions to increase towards ELP
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
Mar-98 Mar-99 Mar-00 Mar-01
ELP Rate
SP Rate
% o
f Len
din
g A
ssets
ELP is a key measure of
portfolio quality
Page 11
Growth is increasingly being driven by investment banking style products…
Traditional Income – lending, transaction, deposit & trade products
Other - principally products from the Personal portfolio
34
100
1671
32
80
90
100
110
120
130
140
150
160
170
180
11
4
100
117
2
80
85
90
95
100
105
110
115
120
Institutional Corporate
Traditional Income
Inv. Bank products
Other
Mar-00 Mar-01
Traditional Income
Wall St to Main St
Other
Mar-00 Mar-01
Index Index
Page 12
What do our customers want? - their top 3 needs are
CB to focus on:
• Wall St to Main St
• Cross sell products from the Personal businesses into our customer base:
• Corporate portal to lower cost to serve
Corporate Banking
• ‘Balance Sheet’ on reasonable terms
• Partner & trusted advisor• Smart products / customised
solutions
Institutional Banking
• Industry Knowledge• Creative ideas and solutions• High quality service proposition
IB’s focus will be:• Leverage the success of
Industry Specialisation to our institutional customers
• Client servicing• Corporate Portal – helps
customers streamline operations
Page 13
…supported by world class customer value management systems like MARS
Management Analysis Reporting System
Relationship expense
Transaction details
Product & pricing details
Risk profile
Key Inputs Key Outputs
Customer profitability
“What if” scenarios
Product profitability
Risk based pricing
Share of overheads
Page 14
Summary
• The pre-eminent domestic corporate banking franchise
• Our cross sell focus is embedded in the sales network, driven to growing non-balance sheet product solutions for customers
• Optimising overall customer value is driving new revenue opportunities
• The business will continue to build industry specialisation
Goals• Double digit earnings
growth
• Continue growth and
diversification of
customer revenue
mix
• Maintain customer
satisfaction ratings
• Performing loans
remain at 99% of
total book
Page 15
Copy of presentation available on
www.anz.com
