ANZ ASIA
INVESTORTOUR 2014
AUSTRALIA AND
NEW ZEALAND
BANKING GROUP
LIMITED
23 JULY 2014

ANDREW GÉCZYCHIEF EXECUTIVE OFFICERInternational & Institutional
BankingANZ remains focused on building the best connected,
most respected bank across Asia PacificSUPER REGIONAL STRATEGYSTRONG
CORE
MARKETSPROFITABLEASIANGROWTH

ENTERPRISEAPPROACH

STRONG LIQUIDITY AND CAPITAL MANAGEMENTDISCIPLINED AND EXPERIENCED MANAGEMENT
Improving
CustomerExperience

Diversifying
Revenue

Improving
Productivity

Improving
Returns2

Macro fundamentals remain compelling across Asia
The economic centre of the world isshifting back to Asia

By 2020 Asia will account for 35% of world
trade with the majority being Intra-Asia
Share of total world trade2

Share of world GDP1

%

%

60

20

Intra-Asia

12

Asia
50

6

Europe-Asia

40

MidEast-Asia

30

A/NZ-Asia

Europe20

Africa-Asia

LatAm-Asia
10
US

N.America-Asia

4
2
1
1

1
2020

1

2001

0

2
1
3
5

0
1900s

2000

2050

1. Source: Economist Intelligence Unit, 2013
2. Source: ITC, EIU, BCG Analysis, 20133

These macro fundamentals propel Asian banking
revenue pool growth
ANZ’s markets are expected to deliver~50% of growth in banking revenue pools

Key Asia Pac markets will represent~US$800b in revenues by 2017

Forecast absolute growth in Global Banking revenues
US$b, 2012-171

Forecast revenue pools for key Asia Pacific markets byproduct
US$b, 20171
363
4%

CAGR:

6%

10%

4%
4,151

Markets

11%

Transaction Banking
Lending andstructured finance

53%
232
11%
9%
86%

46%
3,087

80%

2%

80

71%
World
2012

Australia
& NZ

Asia

Rest of
World

World
2017

CN

JP

IN

11%
18% 53

19% 35
43%
27%
2%
12%
19 13% 17 13%
12%
69%
86%
44%
60%

AU &
NZ

ID

HK

SG

1. Source: BCG Banking Pools 20134

ANZ has quickly established itself in Asia
In 2009

REPUTATIONWITH CLIENTSFOOTPRINT

PRODUCT
BREADTHFINANCIALCONTRIBUTION

In 2014• Top 12 Corporate Bank in Asia1• Top 4 Corporate Bank in Asia1• Institutional Brand awareness in
HK – 20%2• Institutional Brand awareness in HK –79%2

• Operated in 13 countries3• Operates in 15 countries• ~6,500 employees• ~16,800 employees• ~1,800 Corporate customers,~900,000 including Retail• ~4,000 corporate active Asia
customers, >2 million including Retail• #52 in FX market share4• #20 in FX market share4• No Asian based Trade awards• Best Trade bank in Australasia,
Vietnam5• #3 Mandated Lead Arranger, Asia
ex-Japan6• #1 Mandated Lead Arranger, Asia exJapan6• $1,184m operating income• Operating income has almost doubled
to $2,277m (FY13)• <$300m revenue generated fromcross-border business (FY10)• >$500m generated in cross borderactivity• Current ROE exceeds the cost of capital

1. Greenwich Associates 2009 and 2013 Asian Large Corporate Banking Study; 2. Total ANZ Asia Institutional Brand Awareness survey;
3.Pre-RBS acquisition in 2008‟; 4.Euromoney FX Market Share League Table, 2009 & 2014; 5.Trade Finance, Award for Excellence 2012;
6.Asia, ex-Japan, Thompson Reuters 2009 & 31st March 20145

We have steadily diversified earnings as the Businesshas grown
Asia now represents 36% of IIB’s NPAT,
up from 28% in 2013
IIB NPAT by Region$m
AUS/NZ
APEA

Non-lending income is growing steadily
relative to NII

2,452

6,427

2,111

6,602

5,528
59%

1,664

Net interest income
Other operating income

IIB Revenue mix
$m

62%

57%
1,372

56%

60%

3,592

57%
52%

43%

FY09

38%

FY12

55%

41%
48%

FY13

1H14

40%

FY09

43%

44%
45%

FY12

FY13

1H14

6

IIB has achieved these outcomes while maintaining awell funded and low risk balance sheet
We continue to be well funded withdeposits, enabling strong lending growth…
IIB Balance sheet – Deposits & Loans$b
RetailRegional Risk Grade Profile
by Total Exposure (%)1

Corporate & FIG

+16%
CAGR

133
7%

152
7%

Regional Risk Grade Profile
by Tenor (%)1

Investment Grade

Tenor <1 year

Sub-Investment Grade 2

Tenor >1 year

Default

172

1%

8%

15%

+16%
CAGR

27%

27%

33%

32%

67%

68%

Aus

NZ

136
6%

109
7%

93%

…while maintaining superior credit quality
in Asia

93%

92%

87
3%

103
4%

114
5%

70%

85%
94%

93%
97%

96%

73%

72%

95%

30%

1H11 1H12 1H13 1H14

1H11 1H12 1H13 1H14

Customer Deposits

Net Loans & Advances

1.As at Mar-14
2.Sub-Investment Grade defined as exposures with a rating below BBB-

Asia

Aus

NZ

Asia

7

And we have strengthened our leadership position inhome markets
ANZ is a market leader in Australia forboth overall and lead penetration

We continue to be #1 in New Zealand witha substantial and widening gap

Australia - Domestic Banking Relationships Market
Penetration and Competitive Position1
72 72

75

72 73

70

70

66

86 86

30 28 34

31 31

31

22

88

68
61

21

New Zealand - Domestic Banking Relationships
Market Penetration and Competitive Position1

21
21

84
79

64
60
20
20

81

76 76

72
28 24

49 48 53

29

27 27

59

21

7

55

5 51
7

23
39 41 39

38 38 37

42

45 44

37

40

40 43

37 33 35
37

28
25

40

31 32 30
29

3

3

2

‟12 ‟13 ‟14

3

4

2

2

4

3

3

4

3

‟12 ‟13 ‟14‟12 ‟13 ‟14‟12 ‟13 ‟14

Bank 1

Bank 2

Bank 3Lead

2nd Tier

3rd Tier

66

5‟12 ‟13 ‟14

22 19

13 16 1416 14

‟12 ‟13 ‟14‟12 ‟13 ‟14‟12 ‟13 ‟14

Bank 1

Bank 2

Bank 3Lead

2nd Tier11

3rd Tier

1. Peter Lee Associates Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand 2014; 2nd tier includes „top 3‟
relationships but not lead; 3rd tier includes all relationships outside „top 3‟ relationships, up to a maximum of 8 relationships

8

We are now able to provide more products to morecustomers in more geographies
Number of countries with presence vsnumber of distinct products1

Singapore

2009

2014

16

32

Our ability to serve our clients and expand
our wallet potential has grown
Product and geographic penetration of ourinternational customers(2009-14)

4.9
2009

Hong Kong

13

31

Indonesia

12

22

2014

2.6
China

11

22

India

1

20

Greater
Mekong1022Australia

36

36

2.9

1.8

Average number ofcountries per customer

Average number of
products per customer

1. Based on number of 36 distinct product classifications offered
9The next 5 years will provide notably different conditions
to the last 5 – we are well positioned

Macroeconomics
Remaining attractive

ANZ today
Solid foundations inplace• Reputation withclients established• Footprint in key

Simplicity &transparency• Trade flows• Capital flows• Banking pools• Growth rates• Rise of Regional

Banking
conditions

Competitors

geographies andproducts
established

Increasingly
challenging• Relevant to Group• Regulatory costs• Excess liquidity• Margin pressures

performance

Customers

Treasury Centres• Shrinking bankpanels

ANZ in the
futureGrow Share of Key
Corridors

Tough butvulnerabilities can be
exploited• Trade flows• Foreign Direct• Global‟s distracted• Regionals• Wealth flows

Investment flows

expanding

10Against this backdrop, our overarching objective is todeliver growth while also improving returns
Strategic Imperatives

 Leverage product positions we have built in the region to insight-driven
solutions for clients

 Convert clients on-boarded post GFC to increasingly profitable multiproduct and multi-country relationships

 Change how we think of “markets” from a traditional country basis to acorridor focus

 Achieve more productive use of our RWAs as a Division
 Continuously reduce unit cost and increase STP rates

11

We have focused on four strategic priorities to addressthese imperatives and taken steps to sharpen our delivery
IIB STRATEGICPRIORITIESConnecting more
Customers by
ProvidingSeamless ValueORGANISATION
Customer
Segments
4

1

6

GlobalBankingGlobalMarkets and
Loans

2

Delivering Leading
Products throughInsights

International
Banking3

Retail Banking
Asia PacificIntensifying Balance
Sheet Discipline

Scaling & Optimising
Infrastructure

Business
Execution &Performance

Global
Products

8

Business
Performance
Management

GlobalTransaction
Banking

Finance
9

Risk
10

7

5

Enablement

HR
Credit &CapitalManagement

11

Operations

MANAGEMENT PROCESSES

Customer
Planning
Processes

PeopleDevelopment

Customer
Portfolio
Analysis

Strategic
WorkingGroup

12

Our priorities should drive improved Divisional ROE andallow IIB to contribute to Group commitments
IIB
PRIORITIESConnecting More
Customers by
ProvidingSeamless Value

Delivering
Leading Products
through Insights

Intensifying
Balance Sheet
Discipline

Scaling &Optimising
Infrastructure

Outcomes for the business• More customers with deep crossborder wallets• Serving Customers in lucrative
corridors more effectively• Superior slate of products to form
into solutions for clients• Increasing higher margin, nonlending product mix• More effective RWA deployment• Increased relationship returns• Better pricing and service levels• Higher STP & Lower Unit Cost
• Reduced Operational Risk

Impact to Shareholders


Revenues

Leverage(Equity/
Assets)



f


ROE

(Income/
Equity)Asset
Velocity(Rev/Assets)


Costs

13

Our fundamental competitive strength: connecting
newly built Asia with historically strong Australia/NZ

2009 – 2010

Use Home
MarketHeritage

Grow
Share
2011 - 2013of KeyCorridors• #1 Institutional Player• Asia-Australia• Deep Industry Expertise• Intra-Asia• Investors-Issuers

Today
Leverage
Newly Built
Asia• Maturing Client
Relationships• Established Country
Franchises• Competitive ProductFootprint

14

APPENDIXIIB Organisation Structure
CEO IIB
Andrew Géczy(Melbourne)

Customer Segments

Global Products

Chief of Staff
Peter Chan
(Melbourne)

Business Execution& Performance

Enablement

Head of International
BankingFarhan Faruqui(HK, starting in August)Head ofGlobal Markets and Loans
Steve Bellotti(Sydney)

Deputy CEO & Business
Performance Management
Gilles Planté
(HK)

CFO
Mary MacLeod(Melbourne, starting in
October)

Head of Global
Relationship Banking
Sameer Sawhney(Singapore)

Head ofGlobal Transaction
Banking
Alan Huse (Acting)(Melbourne)

Head of Credit andCapital Management
Kevin Corbally(Melbourne)

Chief Risk Officer
Doug Stolberg(HK)

Head of Retail Banking
Asia PacificSanjoy Sen(Singapore)

Chief Operating Officer
Sreeram Iyer
(Singapore)

Head of Institutional
New ZealandDavid Green(Auckland)

Human Resources
Anouk De Blieck(HK)

Senior Managing Director IIB
Cath Carver
Senior Managing Director IIB
Warwick Smith

16

Greenwich Associates Large Corporate Banking Study,
Asia• ANZ‟s upwards momentum over a

A top 4 Corporate Bank in Asia1
by Market Penetration

short period of time has beensignificant

Greenwich Associates Large Corporate Study

Asian Large Corporate Banking Market Penetration
60%• The bank has grown to now

occupy its current position of Top
4 Corporate Bank in Asia, basedon market penetration

50%• In addition, the bank has deepened
its relationship with its client baseinto „core‟ and „lead‟ status, whichleads to product diversification andhigher cross-sell• Our on-going growth and successwill continue to be driven byclients seeing ANZ as a strategic
partner to its business

Important Relationships

40%
6%

11
%

17
%

12
%

11
%

24
%

2013

2010

Bank D
Bank G

10%

Bank
B

Bank C

30%

20%

Bank A

17%

Bank IBank EBank FBank H0%
Greenwich Quality Index2 - Overall Relationship Quality(Difference from the Average)
Represents the momentum of growth and quality
improvement achieved by ANZ Bank over the past 4 years

1.
2.

As defined by Total Relationships Market Penetration In Asia
The Greenwich Quality Index score is based upon a normalized composite of all qualitative evaluations transformed to a scale of 0 to
1,000 with the difference from the average shown. Note: Cross-hairs are calculated by the average of the banks shown in graph.

17

Foreign direct investment inflows to Australia recovered
following the GFC due to investment in the mining sector
Foreign direct investment inflows
60

50

AUD bn

40

30

20

10

0
06

07

08

09

10

11

12

13

Total
Source: NAB, ANZ Research18Foreign direct investment in the Australian mining sector
has become much more important in recent years
Foreign direct investment inflows by industry
60

50

AUD bn

40

30

20

10

0
07

08

09

10
Mining11

12

13

Non-mining

Source: NAB, ANZ Research
19

The US, Japan and the UK remain the most important sources
for foreign direct investment, although investment from
China has grown in importance
Foreign direct investment inflows by major countries
60
50

40

AUD bn

30
20
10
0
-10
-20
06

07

08

09

Canada

China

Japan

10
Singapore

11
UK

12

13

US

Source: NAB, ANZ Research
20What are the key trade corridors and how have theygrown?

21

We are devoting management attention to key corridors
particularly those to and from our home markets
Source ofopportunity

How we are relevant
to clients

Key market
corridors• We aspire to be a leading
Trade
flows

Converting
physical flow tocash (e.g.
Exports, Imports)

regional Trade Bank
across Asia Pacific• Our home markets(Australia & NZ) are thekey drivers for tradeacross Asia Pacific• Only regional bankAustralia
China
Japan
Korea

• We have established
Capitalflows

Foreign Direct
Investment flows(e.g.
Infrastructure)strong relationships with
FDI sources (e.g.
infrastructure assets)• Ongoing investments into
our home markets where
our strengths lie

Australia
EMEA
Japan
Korea

• Our focus on originate-toWealthflows

Financial
Institutions
managing
financial assets

distribute directly aligns to
the investor clients• We now have track recordin key products (e.g. Debt
Capital Markets,
Syndicated Loans)

Positive for ANZ andshareholders

Australia
Hong Kong
Singapore
Japan
Korea

with Australia as its
anchor market• Flow product cross-sell(e.g. FX) driving higher
ROEs• Only regional bankwith Australia as its
anchor market• Complements our focus
on our FIG business• Complements our focus
on our FIG business• Less capital intensive

products driving higher
ROEs

22

Over 35% of Australia’s merchandise exports now go to
China, reflecting a sharp increase in bulk commodity exports
Australian merchandise exports by country
120

Exports, rolling 12m sum, AUD bn

100

80

60

40

20

0
90

92

94
China

96

98
Japan

00
Korea

02

04
India

06

08

10

12

14

United States

Source: NAB, ANZ Research
23

The rise in short-term Chinese tourist arrivals has been driven
by higher incomes and the emergence of a large middle class
80

14

70

12

60

10

50
8

40
6
30
4

20

2

10
0

Share of total short-term arrivals, %Number per month (000s)

Short-term Chinese arrivals

0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Share of total short-term arrivals (RHS)

Short-term arrivals from China (LHS)

Source: ABS, ANZ Research
24There has also been a sharp increase in imports from
China
Australian merchandise imports by country
50
45

Exports, rolling 12m sum, AUD bn

40
35
30
25
20
15
10
5
0
90

92

94
China

96

98

Japan

00

02

Germany

04

06

Singapore

08

10

12

14

United States

Source: NAB, ANZ Research
25What is the growth rate in intra-regional trade?

26

ASEAN intra-regional trade to expand with thecommencement of ASEAN Economic Community in 2015
forecasts

2000
1800
1600

CAGR (2011-2020):
12.9%

USD bn

1400
1200
1000
800

CAGR (2000-2010): 12.6%

600
400
200
0
2000

2005

2010

2015

2020

•

Over the coming decade, Asian production is expected to migrate south, away from the mature-aged
expensive labour markets of Japan, China and South Korea to the demographically young and low
labour cost economies of the ASEAN•

The launch of the ASEAN Economic Community (AEC) will usher in a period of higher intraregional
trade growth as powerful synergies across the region unlocked, facilitating more mobile movement ingoods and services across the region•

Specifically, the AEC will draw upon the abundant and cheap labour of Myanmar, Laos and Cambodia
and combine it with the production sophistication of economies such as Singapore and Malaysia•

Hence ANZ forecasts intra-regional trade growth to be structural faster in the coming decade

Source: ASEAN Regional Information Exchange Database System, ANZ Research27

Similar to the surge in intra-regional trade following
China’s WTO ascension
1400

1200

CAGR (2001-2012):
16.8%

USD bn

1000

800

600

CAGR (1990-2000):
16.4%
400

200

0
1990

1994

1998

2002

2006

2010

• The creation of the ASEAN economic community is likely to be a positive supply side shock similar to
China‟s WTO ascension in 2000. As production platforms migrate south to the ASEAN, trade shouldpick up significantly
Source: WITS, CEIC, ANZ Research
28How is the Retail Affluent segment growing?

29

Asian high net worth individuals growing strongly
Asia-Pacific HNWI Population, 2007-2012 (by Market)
4000

197

3500
166
3000

154

Number of HNWI

149
2500

2000

71
78
96
123
118

24
44

169
413

138
84
105
129

19
42
58
61
37

83
82
76
127
127

24
50

94
99
101
153

30
58

146

173
89
91
85
126

32
65

95
101
114

38
73

153
160
207

144
180

193
643

174
535

562

477

364

1500

1000
1517

1650

1739

1902

1822

1366

500

0
Japan

2007
China
Australia

2008
South Korea

India

2009
Hong Kong

2010
Singapore
Taiwan2011
ThailandIndonesia

2012
Other Markets

Source: Capgemini Global Wealth Report 2013, ANZ Research
30

High Net Worth Individual Wealth continues to growstrongly, led by China and Japan
Asia-Pacific HNWI Wealth, 2007-2012 (by Market)
12,000969

829

10,000
749

807
234
225
319
386

8,000

523

USD billion

264
232
340
369

85

379
671

437
540

6,000

2109

4,000

80

276
272
181
310
380

61
176
190

477

302
272
396

298
355

840

100
279
298
381

453

106

408

582

477

426
489
560

439

511

125

589
625

542

582

519

3128
2657

2706

3892

4135

4231

4452

2009

2010

2011

2012

2347

1672

2,000

3815
3179

0
2007
Japan

China

Australia

2008
South Korea

India

Hong Kong

Singapore

TaiwanThailandIndonesia

Other Markets

Source: Capgemini Global Wealth Report 2013, ANZ Research
31

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 ofany particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding ourintent, belief or current expectations with respect to ANZ‟s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions andrisk management practices. When used in this presentation, the words “estimate”, “project”,“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ
and its management, are intended to identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the datehereof. Such statements constitute “forward-looking statements” for the purposes of the UnitedStates Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to
publicly release the result of any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit

www.anz.com
or contact
Jill Craig
Group General Manager Investor Relations

ph: (613) 8654 7749 fax: (613) 8654 9977

e-mail: jill.craig@anz.com

ANZ ASIA
INVESTORTOUR 2014
AUSTRALIA AND
NEW ZEALAND
BANKING GROUP
LIMITED
23 JULY 2014

DREW RIETHMULLER
MD, CUSTOMER SOLUTIONSGROUPClient Value Proposition &Coverage

Business Performance Management supports Global Products &Customer Segments through a range of centralised functions
International & Institutional
Banking

Customer
Segments
4

1

Business Execution& Performance

Global Products

GlobalBanking

8

6

Business
Performance
Management

Global Markets
and Loans

Enablement &Control

Finance
9

Risk

2

International
Banking

5

10

7

HR
3

Retail Banking
Asia Pacific

GlobalTransaction
Banking

Credit &CapitalManagement

11

Operations &Technology

2

ANZ’s Asia Pacific network coupled with depth of
product capability and strong risk discipline is unique
Leveraging
leadership indomestic
markets to drive
offshore growth• Deep presence in Asia coupled with strategic expansion rounds out our
network footprint• Connecting clients to growth opportunities in key corridors, winning
regional cross-border deals• Network presence in Europe and America links customers into the Asia
Pacific corridors• ROE accretive, capital-light products

Strong productcapabilities• Product leadership in key categories (e.g. Cash & Trade, FX, Loans &Syndication & Commodities)• Competitive product platforms (e.g. Transactive, Markets)

Disciplined
execution tocomplement
growth• Targeted customer segments developing deeper, more profitable
relationships• Risk discipline - AA rated bank with strong reputation• Centralised optimisation of capital allocation and business performance

ANZ will compete via insights-led, deep customer relationships• Insights-driven relationships and comprehensive product suite• Diverse network to facilitate corridor flows for priority customer segments and industries• Enhancement of customer platforms

3

Clear market leadership in Australia and NZ is acompetitive advantage in facilitating cross border deals
Leading bank in Australia and
New Zealand…
Ranked #11:
PETER LEE

• Overall Lead Bank
Penetration

PETER LEE

• Relationship Strength Index

AUSTRALIA / NEWZEALAND
2014

and a top 4 Corporate Bank in Asia bymarket penetration3…
Greenwich Associates Large Corporate Study

Asian Large Corporate Banking Market Penetration

Bank A17%• Overall Satisfaction with
Products and Services

11%

17%

• Most Trusted Advisor

12%

11%

6%

24%

Bank B

Bank C• Knowledge of Customers’
Industry

2013

Other awards:• Best Trade Finance Bank in Australia (2012 –2013, The Asian Banker)• Australia/New Zealand Loan House of the Year(2013, IFR Asia Awards)

2010

Bank D
Bank G…with a leading global brand• Amongst the top 55 global brands2• Brand value up 15% in 2014, ahead of Citi,
Westpac, Standard Chartered, DBS and NAB

Bank IBank EBank FBank H

Greenwich Quality Index4 - Overall Relationship Quality(Difference from the Average)
Represents the momentum of growth and quality improvement
achieved by ANZ Bank over the past 4 years

1. Peter Lee Associates Large Corporate and Institutional Relationships Banking surveys, Australia and New Zealand 2014. Rank ed against the
Top 4 competitors. 2. BrandZ Top 100 Most Valuable Global Brands study (2014) 3. As defined by Total Relationships Market Penetration In
Asia 4. The Greenwich Quality Index score is based upon a normalized composite of all qualitative evaluations transformed to a scale of 0 to
1,000 with the difference from the average shown. Note: Cross-hairs are calculated by the average of the banks shown in graph.

4

ANZ has demonstrated great customer momentum inbecoming a regional player
Well managed growth in Institutionalcustomers…
Australia and New Zealand
APEA1#

Product and geographic penetration of internationalcustomers2+7% CAGR

6,000… and deepened wallet share ofstrategic clients

2009
2014

4.9

4,000
2.6

2.9

1.8

2,000
0
Sep
2009

Sep
2010

Sep
2011

Sep
2012

Sep
2013

Mar
2014

Average number ofcountries per
customer

Average number of
products per
customer… to deliver strong growth in ANZ’s priority segments and industries• 329 Institutional clients have an active relationship with ANZ in 5 or more countries, representing
an 8% annual increase3• Cross-border revenue is up 6% year-on-year3• Steady customer growth in priority segments; Local Diversified Industries up 8%, Natural
Resources up 7%, Agribusiness up 6%, Utilities and Infrastructure up 4% year-on-year3
1. Pre-2011 Pacific individual customer data not captured historically; extrapolated based on FY11 Pacific customer growth rate
2. Based on customers outside of Australia and New Zealand and existed between 2009 and 2014
3. As at 1H14

5

Our expanded footprint assists us to differentiate ourclient offerings
Rounding out ANZ footprint to supportclients’ needs across the network•

Representative Office in Myanmar•

Full banking license in Thailand•

Sub-branch in Shanghai FTZ•Regulatory approval obtained to open two
branches in India and one Paris branch

Our unique corridors connect clients
more effectively•

 Support 100% of all significant Asia (ex.
Japan) Agri investment deals into
Australia
 Manage 35% of all iron ore flows from
Australian producers into Asia

Comprehensive product capabilities• Leading Australasian bank with full suite ofonshore and offshore RMB products

Only regional bank with Australia as anchor
markets:•

Support 100% of all significant FDI
transactions from China into New Zealand•

Leading foreign bank in Greater Mekong,allowing us to bank supply chains of global
names

•

Dominant corporate bank in Pacific•

EMEA contributes half of IIB’s cross borderthrow• Comprehensive DCM offerings with strong

global cross-border distribution capabilities

Steady growth in key corridor flows:

From

To

Growth1Asia

Australia

+6%

Asia

Pacific

+13%

EMEA

Asia

+4%

1. FY13 year on year growth
6

IIB will win by driving insight-led, deep customer
relationships with targeted customer segments
IIB STRATEGICPRIORITIESKEY AREAS OF FOCUS FOR CLIENT COVERAGE

Connecting more
Customers by
ProvidingSeamless Value• Tailored customer segment value propositions to deepen relationships

Delivering leading
products throughInsights• Generate proprietary insights to drive solution dialogue with clients

Intensifying balance
sheet discipline

Scaling & optimisinginfrastructure• Strengthening relationships with International businesses requiringcross-border banking• Attack key corridors across Asia, Australia and New Zealand• Deep dives on regional corridor flows to identify value add opportunities• Systematically commercialise solutions to targeted clients• Less capital intensive and shorter tenor products• ROE discipline core to execution• Optimise capital allocation via centralised approach• Increase volumes in flow products to drive down unit cost

• ROE accretive products to increase customer relevance• Enhance digital platforms to improve customer experience

7

IIB is focused on developing deeper, more profitable relationships with
GB, IB and Retail segments by delivering targeted value propositions
Segments

What we offer• Bespoke products covered by
GlobalBanking

International
Banking

product specialists andcustomised operations• Intense coverage by Senior
Bankers and Industry Heads

How we serve• Invest to deliver bespoke banking
insights and solutions• Global Account Management
leveraging on global footprint• Top 3 regional

Local Corporates• Partial product customisation
covered by in-country
relationship teams• Sophisticated product range• Insight-driven solutions provided• Lead bank with

Emerging Corporates• Standardised products (i.e.
Trade Finance, FX andhedging)• Local and offshore multicurrency funding• Selective industry insight-driven

by in-country teams• Comprehensive client coverageleveraging on domestic market
leadership and regional footprint

solutions• In-country coverage leveraging
local footprint• Dedicated Relationship Managers• End-to-end financial solutions
RetailBanking

Our target(deposit services, credit/debit
cards, secured & unsecured
lending facilities, investment &insurance)

supported by product specialists(investment & insurance, treasury
and mortgage) to serve Affluent
segment• Regional network and local
specialists via branches, ATMs,
call centres, e-banking and mobilebankingbankfull-service offeringin Aus/NZ• Top 3 Asian bankfor flow products• Top 3 internationalbank for flow
products (cash,
markets and trade)• Top 3 foreign bankoffering / Leading
foreign bankproviding full suiteof banking,investment
products, andadvisory services

8Insight capabilities create a more compelling client
offering by delivering superior customer outcomes
Origination and delivery of insights-led customer solutions through:Using proprietary data to
generate high-value crossborder solutions

Collaborating withRelationships and Products
to accelerate product sales

Systematicallycommercialising solutions
to targeted clients

Example: Landmark crossborder deal Formosa Plastic Group

Example: Designed the first
Basel III compliant
Additional Tier 1 issue
in Asia - UOB

Example: Unlocked value inAustralia Retail supply chain• End-to-end solution tofacilitate a significant
Taiwanese investment in an
Australia iron ore project• Insights delivered world-classcountry, product and industry
advisory that gave ANZ theedge to win exclusive mandate• Design issuance structure andguided client throughregulatory change• Cross-jurisdictional
engagement differentiated our
DCM sales approach• Replicating approach led tomore bank Joint Lead
Manager roles in theregulatory capital space• Analysis on Australia
Retailers’ direct sourcing
trends led to development of
FX solutions in anticipation ofincreasing FX volatility
exposure• Led discussions with 120
Retailers• Generated A$1m incremental
revenue

9Comprehensive flow products and platforms in key
corridors

Cash &
Trade

Current Capability(2014)

Target Capabilities (2016)
With key focus on flow products

Benefits• Payment and Cash

• Enhance Supply Chain and Trade Finance• Shorter tenor

capabilities• Sophisticated Structured Trade Finance• Network Cash Management (pooling)• Enhance wholesale digital channels acrossweb, mobile/tablet and host-to-hostdeals• Less capitalintensive• Increase volume
to drive down unit
cost

• Integrated segment sales and service• E-channel capability at competitive speeds• Increase transactional capacity to trade in• Capture greater

management• Full trade products
across Documentary
Credits, Guarantees
Supply Chain andTrade Finance• GlobalMarkets

Syndication/Bonds• FX, Rates andCommodities spotand derivatives• Insurance andRetail
Products

investment products(i.e. bonds, mutual
funds, dual currency
deposits)• Mortgages• Consumer Financeproducts (i.e. credit
cards and personalloans)

commodities markets• Agency and Asian currency clearing• Specialised/high yield bonds and crossborder debt

• Alternative investments: collateralised FX,

equity and bond financing; uniquecommodities offerings• Full suite of transaction capability for
payment channels (e.g. e-banking, mobilebanking)• Foreign and business property mortgages
and unsecured loans• Consumer finance products

cross-sellopportunities• Increase noninterest income• Increase fee-based income• Deepen customer
relationships
through cross-sell• Drives greater
customeracquisition

10

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 ofany particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding ourintent, belief or current expectations with respect to ANZ’s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions andrisk management practices. When used in this presentation, the words “estimate”, “project”,“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ
and its management, are intended to identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the datehereof. Such statements constitute “forward-looking statements” for the purposes of the UnitedStates Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to
publicly release the result of any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit

www.anz.com
or contact
Jill Craig
Group General Manager Investor Relations

ph: (613) 8654 7749 fax: (613) 8654 9977

e-mail: jill.craig@anz.com

ANZ ASIA
INVESTORTOUR 2014
AUSTRALIA AND
NEW ZEALAND
BANKING GROUP
LIMITED
23 JULY 2014
DOUG STOLBERG
CHIEF RISK OFFICER,INTERNATIONAL &INSTITUTIONAL BANKING

Risk & Regulatory

ANZ Risk Framework supports the achievement of IIB’s
Strategic Objectives within the Group’s Risk Appetite
International & Institutional
Banking

Customer
Segments
4

1

Business Execution& Performance

Global Products

GlobalBanking

8

6

Business
Performance
Management

Global Markets
and Loans

Enablement &Control

Finance
9

Risk

2

International
Banking

5

10

7

HR
3

Retail Banking
Asia Pacific

GlobalTransaction
Banking

Credit &CapitalManagement

11

Operations &Technology

2

IIB governance mirrors Group governance model toensure robust end-to-end risk management framework
Credit Risk

Market Risk

Operational
Risk

Compliance

Reputational
Risk

Liquidity &Balance
Sheet Risk
(chaired by
CFO)

Risk Committee

Board

Group
(members
including CEO
IIB, Andrew
Géczy & CRO
IIB,
Doug Stolberg)

Divisional(chaired by
IIB CRO,
Doug Stolberg)Country(chaired byCountry CROs)

Credit and Market Risk
Committee (CMRC)

Technology
Committee

GovernanceCommittee

Operational Risk Executive
Committee (OREC)

Reputational
Risk
Committee(RRC)

CreditRating
Systems
Oversight
Committee(CRSOC)
Risk Management Committee (RMC)
Product Committees

Risk Management Committee (RMC)

Group Asset& Liability
Committee(GALCO)

Asset &
Liability
Committee(ALCO)

Asset &
Liability
Committee(ALCO)

3

Risk Culture and Appetite are Fully Integrated and Aligned“Risk is the guardian of the Balance Sheet, Reputation and Strategy”
Business/Enablement

Risk

Internal Audit

First Line of Defence

Second Line of Defence

Third Line of Defence

Day-to-day ownership ofrisks and controls

Objective Challenge andOversight

Independent evaluation andsupervision

Risk Culture and Appetite• Risk is included within Business Unit and Individual performance metrics• Risk has input into Remuneration• Effective challenge from second line of defence and oversight via governance model• Group Risk Appetite Statement (RAS) is approved by
the Board and cascaded across the Divisions / Business
Units (country, client segment and product) Used by management teams to monitor risk profile

Group RAS

 End-to-end coverage of all risk types
IIB RAS Qualitative and quantitative Monthly dashboard reporting and escalation
framework

Country RAS

Segment RAS

Product RAS

4

Global approach to risk management executed locally“Setting the bar high”
ANZ operates a Global Risk Framework which specifies stringent standards
required to be consistently met across the globe. The Risk Operating Model isbased on global expertise for specialised and technical areas of Risk, executed
locally by experienced jurisdictional management and Risk teams

Subject
MatterExpertise• Specialist and technical expertise include Market Risk, Wholesale

Credit, Product specialisation (e.g. project and structured
financing), Client Segment specialisation (e.g. Natural Resources,
Financial Institutions and Government, etc.), Compliance• Global frameworks and policies are implemented through the local
Local
Execution

GlobalConsistency

Risk teams• Local in-country Risk teams are capable of and accountable formanaging all risk disciplines in their specific jurisdiction and theyhold primary accountability for Compliance and Operational Risk

• Scale, knowledge sharing and DRP/BCP are enabled throughcentres of excellence in Melbourne, Wellington, Bangalore, Manila
and Chengdu

5Comprehensive risk management processes and controls
ensure global consistency and disciplined execution• Consistent global credit principles and policies• Dual credit approval process ensures Business and Risk support for transactions• Early Alert process in place to proactively manage deteriorating credits and emerging risks
Credit &Country
Risk• Deep-Dive portfolio reviews directed by Risk Management Committee• Exposures to countries are managed by a specialist team through a country limit framework
which takes into consideration various factors including macro economy, jurisdictional
enforcement, product types, tenor, etc.

• Deep in-country experience across the region (Asia is not one country). Country CRO's haveright of veto on decisions impacting their balance sheet and portfolio• China example - Customer selection, jurisdictional selection, Trade beneficiary and applicant
selection, exposure diversification• Value at Risk limits authorised and monitored globally for both traded and non-traded market
risk. We are driving uncorrelated / diversification of our market risk

• Fit for purpose systems for more granular measurement and reporting: Market Risk Engine,
MarketRisk

Counterparty Credit Risk Engine, Derivative Valuation Rebuild – Credit Valuation Adjustment,
Funding Valuation Adjustment. All new business investment plans include Risk Technology
and resourcing requirements• Conduct risk / risk culture – rogue trader controls, Trade systems and communication
surveillance framework, Customer suitability framework, training• The Markets Risk team based in APEA has increased 28% since 2012 and now represent 53%
of the Global Markets Risk team6

Comprehensive risk management processes and controls
ensure global consistency and disciplined execution• Policy and framework established by Group ALCO and Group Treasury including standard
minimum liquidity and funding parameters tested under different scenarios

Liquidity &Balance
Sheet Risk

• Compliance with the metrics is overseen by the Market Risk team and ALCO
• Stress testing methodology ensures that asset portfolios are structured for both credit andliquidity characteristics e.g. Trade Finance – short term and self-liquidating with favourable
liquidity characteristics• Proactively managing capital efficiency and productivity• A standardised Operational Risk Measurement and Management Framework ensures global•
Operational
Risk

•
•
•
•

consistency in identification of key risks and controls across all functional business lines
All in-country High residual risks are escalated to the Divisional IIB RMC for review andacceptance of Treatment Plans. Local execution of these Treatment Plans is centrally
monitored
Quality Assurance and Key Control Testing embedded within all Business Units
In-country Business Unit Risk Forums have been established to enable management to
identify emerging risks, resolve issues and track remediation plan implementation
In addition to Group standard controls, unique local controls are implemented to address
specific jurisdictional risks
Strong emphasis on documentation risk and enforceability• Global compliance framework ensures consistently high compliance standards in all theCompliance

•
•
•
•

jurisdictions in which we operate – default to the most stringent jurisdictional standard
wherever possible
Conduct: Clear expectations set and reinforced for all staff, particularly in Global Markets
Customer suitability / sales governance frameworks closely monitored and regularly enhanced
Established a global Centre of Excellence for AML/CTF compliance support
Regulatory risk: We are committed to strict compliance given the number of jurisdictions weoperate in and the changing regulatory landscape7

High quality credit risk profile maintained through growth phase“We will not compromise our standards”
IIB portfolio composition
Credit Risk Weighted Assets (CRWA)1

CRWA Trend
IIB Total

$b
OTHER
12%

ASIA
29%

Sep-11$120b

10% CAGR

OTHER
14%
ASIA
38%

Mar-14
$156b

AUS/
NZ
59%

23% CAGR

35

41

Sep-11

Sep-12

Portfolio Quality
Investment Grade as % Exposure at Default

75% 75%77% 73%

Sep-13Mar-14Mar-14

Asia Insto

0.17%
0.06%

Sep-12

Sep-13

0.65%

0.19%

Sep-1159

IP Charge / CRWA

Asia Insto78% 75%53

Low credit provision charges

Total Insto73% 76%

156

145

123

120

AUS/
NZ
48%

Total Insto

IIB Asia

FY11

0.11%
0.13%
FY12

FY13

0.12%
0.03%
1H14

1. “Other” comprises of Europe, America and Pacific.
8

IIB’s strategic priorities have clear implications for ourareas of focus over the coming two years
IIB STRATEGICPRIORITIESKEY AREAS OF FOCUS FOR RISK
• Simplify Risk processes to streamline decision making and ensure
consistency

Connecting more
Customers by
ProvidingSeamless Value• Establishment of Peak Credit Appetite globally to enable effective andtimely responsiveness to customer requirements

Delivering Leading
Products throughInsights• Drive greater alignment between specialised Risk resources andBusiness growth / priorities – investing in specialist Risk expertise

Intensifying Balance
Sheet Discipline• Improve capital efficiency through active business / portfolio reviewsand enhanced data management

Scaling & Optimising
Infrastructure• Extend target client appetite into key business corridors and supply
chains – banking our customer’s customer• Connecting the global Risk team in alignment with global Relationshipteams driving multi-jurisdictional client relationships – consistency inappetite• Deploy Risk resourcing / expertise globally in alignment with Businessleadership• Increase and enhance the use of Centres of Excellence to drive global
efficiency, scalability and Best Practice• Adopt Global Risk systems, processes and policies wherever possible(do things one way globally)

9

Proactive relationships with our Regulators
ANZ recognises that our relationships with regulators need to be strong andwell managed to sustain respect and trust. Our objective is to be open,transparent, and collaborative in our regulator interactions, and demonstrate
our ongoing commitment to strict regulatory compliance
Responsibility

Areas of focus• Provides global insights to support local
engagement

Group

Oversees a global
regulator engagement
approach• Identifies matters relevant to multiple
regulators• Performs consolidated reporting of

regulatory obligations and engagement

Country CEO
and CRO
in conjunction
with Head ofCompliance• Communicates summary of local regulator
Manages local
regulator engagement

interactions to Group• Escalates issues to Group as necessary• Performs local regulatory reporting10

APPENDIXIIB Divisional Risk Management Structure
Nigel Williams
Chief Risk Officer,
ANZ Group

Andrew Géczy
Chief Executive Officer,
IIB

Doug Stolberg
Chief Risk Officer, IIB
1

Geographies

Markets Risk

GM, Institutional
Credit, APEA

Global Head ofTraded Market Risk &Markets Credit Risk

GM, Wholesale
Credit, Australia

Global Head of
Non-Traded Market Risk

GM, Institutional
Credit, NZ

Global Head of
Global Markets
Operational Risk &Governance

CRO, EMEA& CRO, Europe

CRO, Pacific &CRO, Fiji

Head of Credit,
Asia Commercial

CRO, Hong Kong

CRO, America

CRO PNG, Timor &Solomon’s

Head of Retail,Wealth & PB Risk,
Asia PacificCRO,
American Territories

CRO, China

GM Compliance, IIB

5

Global Head of
FIG Credit

Head of Op Risk, IIB
Head of Credit Risk
& CRO, Samoa,
Tonga & Cook Islands

CRO, India

Head of Governance
CRO, Taiwan

6

Head ofLending
Services, IIB& Complex Credits
1

Manager Compliance
Pacific

CRO, Indonesia

CRO, Vietnam

CRO, Philippines

CRO, Cambodia

4

CRO Vanuatu, Kiribati& New Caledonia

CRO, Korea & Japan

3

Wholesale Credit

CRO, Asia

CRO, Singapore

2

Functional Lines

CRO roles matrix report to their respective
Regional & Country CEOs
2
Wholesale Credit roles jointly report to Chief
Wholesale Credit Officer
3Markets Risk roles jointly report to GGM, Markets
Risk
4
RWPB Risk role jointly reports to Global CRO,
Wealth, and Global Head of Retail Risk
5
Compliance role jointly reports to Chief
Compliance Officer
6
Lending Services role jointly reports to GGM,
Lending Services

CRO, Laos

12

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 ofany particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding ourintent, belief or current expectations with respect to ANZ’s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions andrisk management practices. When used in this presentation, the words “estimate”, “project”,“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ
and its management, are intended to identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the datehereof. Such statements constitute “forward-looking statements” for the purposes of the UnitedStates Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to
publicly release the result of any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit

www.anz.com
or contact
Jill Craig
Group General Manager Investor Relations

ph: (613) 8654 7749 fax: (613) 8654 9977

e-mail: jill.craig@anz.com

ANZ ASIA
INVESTORTOUR 2014
AUSTRALIA AND
NEW ZEALAND
BANKING GROUP
LIMITED
23 JULY 2014

STEVE BELLOTTIMANAGING DIRECTOR
Global Markets & LoansGlobal Markets and Global Loans are two of the three
product lines within IIB
International & Institutional
Banking

Customer
Segments
4

1

Business Execution& Performance

Global Products

GlobalBanking

8

6

Business
Performance
Management

Global Markets
and Loans

Enablement

Finance
9

Risk

2

International
Banking

5

10

7

HR
3

Retail Banking
Asia Pacific

GlobalTransaction
Banking

Credit &CapitalManagement

11

Operations

2

Global Markets is integral to the success of ANZ’s superregional strategy, servicing clients in all key markets
Australia & New Zealand• Well established and leading Markets business• Predominantly FX and Rates delivered by an

Global Markets support a number of ANZ’s key
customer segments
Australia

RetailCorporate &Commercial
BankingNew
Zealand

RetailCommercial

IIB

RetailCommercial
Banking

efficient cost-to-serve model to Institutional,
Corporate and Commercial clients
Asia Pacific• Growth market serving a broad client base,competing against regional and global players

Global
WealthGlobalInstitutional

GlobalMarkets• Corporate/Institutional: Multi-currency flow
platform (FX, Rates, Credit) and Debt CapitalMarkets (DCM) delivering liquidity and accessto global capital markets• Commercial: Preferred bank for clients withcross-border needs

Europe& America
Asia
Pacific

Europe & America• Niche market focused on Investor clients doing
business in Asia Pac• Offer access to Asian names via top tierregional credit platform with capability to“originate and distribute”

Australia& New
Zealand3

Macro fundamentals shows that Asia will enjoy thehighest growth in banking revenue pools to 2017
Asia Pac is expected to deliver almost 50%
of growth in banking revenue pools

Asia Pac markets will represent~US$800 billion in revenues by 2017

Forecast absolute growth in Global Banking revenues
US$b, 2012-171

Forecast revenue pools for key Asia Pacific markets byproduct
US$b, 20171

CAGR:

6%

10%

Lending

Transaction
Banking

Markets

Australia
& NZ

36.9

6.3

10.0

Singapore

10.0

2.1

4.5

Hong Kong

8.5

2.5

8.2

Indonesia

29.9

4.2

0.6

China

310.7

39.2

13.1

Japan

186.4

20.6

25.0

India

56.6

14.1

9.0

4%
4,151

53%

46%
3,087
2%

World
2012

Australia
& NZ

Asia

Rest of
World

World
2017

1. Source: BCG Banking Revenue Pools Database, 2013
4

Global Markets operates a full service business model
ANZ Global Markets
Client Franchise - providing liquidity, transactional and risk management
solutions to ANZ clients
Institutional

Corporate &Commercial

Financial Institutions /Investors

Large Multinational andregional clients thattypically require solutions
in multiple markets

Corporate andCommercial clientslocated in Australia, New
Zealand and Asia

Real Money funds, Central
and Regional banks,
Asia Wealth clients

Non-Client
FranchiseManageManagetheANZ
ANZ Groupgroup
Balance Sheetbalancesheet.

Global Markets Functions
Relationship Sales

Product Manufacture& Deal Structuring

Liquidity &Transaction
Processing

Risk Management &TradingGlobal Markets Products
Foreign
Exchange

Rates

CreditCommodities

Equities1

1. Equities offering represented by a niche equity derivative origination and sales capability and limited ECM capability
5

The Global Markets business model is built aroundsupporting the needs of ANZ clients
Global Markets income is generated throughthree principal sources

ANZ Global Markets income
composition• Direct client flow business on coreSales

products such as Fixed Income, Foreign
Exchange, Commodities and DCM

Client facing
income 77%• Focused on increasing the mix of sales
income through client acquisition andgreater penetration

Trading26%• Trading represents management of

Trading

positions taken as part of direct client
sales flow and strategic positions• Trading in the rates and credit product,in line with balance sheet trading• Management of interest rate risk for the

BalanceSheetloan and deposit books• Management of the bank’s liquidity

Sales
51%

1H14 =$1,243m
Balance
Sheet
23%
Non-Client
facing income
23%

position6

Global Markets’ stable earnings growth has been achievedby diversifying across client, product and geography
Global Markets income

Global Markets income by type$m$m
12% CAGR

2,500

Sales

Balance Sheet

2,500

2,000

2,000

1,500

1,500

1,000

1,000

500

500

0

0
FY11

FY12

FY13

2H13

1H14

FY11

Global Markets income by product1$m

Trading

FX

Rates

Credit

FY12

2,500

2,000

2,000

1,500

1,500

1,000

1,000

500

500

0

0
FY13

2H13

1H14

$m

Commodities

2,500

FY12

2H13

Global Markets income by geography

Aus/NZ

FY11

FY13

1H14

36%

40%

APEA

43%

64%

60%

57%

FY11

FY12

FY13

CAGR
‘11 –‘13
21%

45%
7%

49%

55%

51%

2H13

1H14

1. Excludes balance sheet income
7Global Markets has strengthened the business throughdiversification of its client franchise
Global Markets has built a regionally diverse
client base

The client franchise is increasing in size

1%9%+3,5003%Australia
New Zealand
47%

29%

Asia

Pacific
EuropeAmerica

Sep-11

11%

Delivering increased client flow to our corebusinesses e.g. FX Vanilla Sales

Sep-12

Sep-13Mar-14Meaning more client deals at an averagedeal size that remains relatively stable
Average Deal Size
$m
5.5

+75%

5.0
4.5

4.0
3.5
3.0

FY11

FY12

FY13

1H14

64%
36%

60%

57%
51%

40%

43%

45%

49%

2.5
FY11

FY12

FY13

1H14

8

Business diversification is delivering an uplift in trading
revenue for Global Markets with an improved risk profile
Global Markets trading income$m
30% CAGR

600

Global Markets revenue per $ Value at Risk1$mGlobal Markets Sales & Trading (Traded)
Balance Sheet (Non-Traded)

300

4x revenue for every $of Traded VaR

500

250

400

200

300

150

200

100

100

50

0
FY11

FY12

FY13

2H13

0

1H14

170

198

163

91
42
17
FY10

12

17

14

18

FY11

FY12

FY13

1H14

Increase in
TradedMarket VaRdriven byincreased
marketvolatility

Revenue from a typical client transaction
Client traded
price

Sales Component• Defined amount, fixed at execution• Difference between client price and trader
risk price• Reported a Sales income
Trader ask
price

•

•
Mid-point of
bid-ask spread1.

•

Trading component
Revenue crystalised by capturing thedifference between ask and mid-point
price, but trader may choose not to hedge
Trading performance impacted bysubsequent market price moves andtransaction costs
Reported as Trading income• Price making, the provision of liquidity and risk

management solutions are all critical to supporting theclient franchise• The majority of trading revenue is generated by client••

related activity with a small proportion attributable tostrategic positioning or macro hedging
60%
64%
In a typical client transaction there is a trading and
sales
51%
55%
component to the revenue generated by
the deal
43%
40%
36%
49%
45%
Sales component is a “hard” dollar amountwhereastrading revenue is “at risk” over the life of the deal so
traders aim to capture, and add to, product margins.

Average 1-day 99% VaR
9Global Loans & Advisory operates a full service
business model
ANZ Global Loans & Advisory
Providing advisory and lending solutions to ANZ clients
Institutional

Corporate & Commercial

Large Multinational and regional clients that typicallyrequire solutions in multiple markets

Corporate and Commercial clients located inAustralia, New Zealand and Asia

Solves strategic financing decisions for clients
Specialist
Advisory

Origination

Structuring &Execution

Portfolio/Risk
Management

Distribution

Global Loans & Advisory Functions
Corporate Advisory• Offers corporate andproject advisory
services• Specialises in Natural
Resources,
Infrastructure andAgriculture for clientswith a focus on regionalcross border investment
flows

Specialised Finance• Structured Project &Export Finance• Structured Asset
Finance• Debt Structuring &Acquisition Finance

Loan Product &Execution• Loan Structuring &Execution• Loan Agency• Loan ProductManagement

Loan Syndications• Award winning Loan
Syndications team1• Specialises inoriginating, structuring,underwriting anddistributing syndicatedloans on behalf ofborrowers seeking toraise capital

1. AsiaMoney Best Banks Awards 2014 – Best Domestic Debt House Australia
10

Global Loans & Advisory is growing a profitable andgeographically diverse business
Global Loans & Advisory Income byGeography

Global Loans & Advisory Income$mLoan Prod

Spec Finance$m

Corp Adv

Aus/NZ

2,000

2,000

1,500

1,500

1,000

1,000

500

500

0

0
FY11

FY12

FY13

2H13

21%

79%

1H14

30%

76%

FY11

Global Loans & Advisory is building a higher
quality loan book
Probability of Default Weighted Average Customer
Credit Rating Trend

24%

APEA

70%

FY12

FY13

31%

33%

69%

67%

2H13

1H14

Asian exposures are on average lower thanthose against Australian clients
Average drawn amount per customer group$m

AUSTRALIA

6+
55=
5+
44=
4+
33=
3+

APEA

40
30

May-1449%
Mar-14

Dec-1345%
Sep-13Jun-13Mar-13

Sep-12

Jun-12

51%

55%

43%

40%
Mar-1236%

Dec-11

Sep-11

May-14Mar-140
Dec-13

Sep-13Jun-13Mar-13

Dec-12

Sep-12

Jun-12Mar-12

Dec-11

Sep-11

Jun-11Mar-11

Dec-10

Sep-10

10

57%

60%

64%

Dec-1220

11

Global Loans & Advisory is leading with its expertise todrive adjacent revenue opportunities
Almost half of the Project Finance deals financed in Asia by ANZ now include
an advisory role

AUD 361,000,000

AUD 251,400,000

INVESTOR AWARDSBEST BANK AWARDSBANK OF THE YEAR

Financial Advisor

Mandated Lead Arranger

ANZ #1 MLA IN ASIA PAC
AND#1 BOOKRUNNERBEST DEBT HOUSE
AUSTRALIABANK OF THE YEAR –ASIA PACIFICADVISOR TO CONTINENTAL WINDPARTNERS & GE ON THEIR 100%
EQUITY DIVESTMENT AND
PARALLEL DEBT FINANCING OF THE
BOCO ROCK WIND FARMCONSTRUCTION AND TERMFACILITIES FOR THE 113MW BOCO
ROCK WIND FARM

2013
USD 787,000,000

2013

2012 - 2013

2014

2013

2013

2013

USD 787,000,000

IFR ASIA AWARDSINFRASTRUCTURE
INVESTOR AWARDS

AUSTRALIA / NEW ZEALAND
LOAN HOUSE OF THE YEARINFRASTRUCTURE BANK OF THE
YEAR IN ASIA PACIFIC

2013

2013

Financial Advisor

Mandated Lead Arranger

ADVISOR TO CNOOC, BG, CHINA
LNG, TEEKAY LNG AND BW GASFOR THE FINANCING OF THE
CHINESE LNG SHIPPING PROJECTTERM LOAN FACILITIES FOR THE
PROCUREMENT OF
4 CHINESE BUILT LNG VESSELSTO BE CHARTERED BY BG

2013 - 2014

2014

12

IIB’s strategic priorities have clear implications for
Global Markets & Loans over the coming two years
IIB STRATEGICPRIORITIESKEY AREAS OF FOCUS FOR GLOBAL MARKETS &LOANSConnecting more
Customers by
ProvidingSeamless Value• Capitalising on regional trade and investor flows to connect producers
with consumers• Adoption of the “originate to distribute” model in order to distribute risk
from Corporate clients to Investor clients• Development of digital channels to facilitate client self service and amore efficient client on-boarding process.

Delivering Leading
Products throughInsights• Enhancing the credit origination, trading and distribution platform
across the capital markets business to fully leverage the Asian franchise• Providing integrated financing, risk management and treasury productsolutions for Corporate clients• Building Asian product expertise for Investor clients globally

Intensifying Balance
Sheet Discipline• Improving interlock with Relationship Banking to drive cross-sell andcapture higher ROE opportunities• Managing to client returns objectives• Active tail management

Scaling & Optimising
Infrastructure• Ongoing enhancement of front office pricing, risk management andvaluation platforms• The automation of middle and back office processes to deliver anincrease in Straight Through Processing (“STP”) rates• The implementation of a new Global Loans Management System

13

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 ofany particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding ourintent, belief or current expectations with respect to ANZ’s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions andrisk management practices. When used in this presentation, the words “estimate”, “project”,“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ
and its management, are intended to identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the datehereof. Such statements constitute “forward-looking statements” for the purposes of the UnitedStates Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to
publicly release the result of any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit

www.anz.com
or contact
Jill Craig
Group General Manager Investor Relations

ph: (613) 8654 7749 fax: (613) 8654 9977

e-mail: jill.craig@anz.com

ANZ ASIA
INVESTORTOUR 2014
AUSTRALIA AND
NEW ZEALAND
BANKING GROUP
LIMITED
23 JULY 2014

ALAN HUSE
MANAGING DIRECTOR
Global Transaction Banking

Trade and Supply Chain is part of our Global Transaction
Banking business
International & Institutional
Banking

Customer
Segments
4

1

Business Execution& Performance

Global Products

GlobalRelationshipBanking

8

6

Business
Performance
Management

Global Markets
and Loans

Enablement

Finance
9

Risk

2

International
Banking

5

10

7

HR
3

Retail Banking
Asia Pacific

GlobalTransaction
Banking

Credit &CapitalManagement

11

Operations &Technology

2Market landscape is changing towards higher Asian and Chinese tradeflows, Rise in Emerging Corporates and Open Account usage
Asia Trade Flows1

Asia Pacific Trade revenue pool2

Growth in Intra Asia, Aus-Asia andChina trade flows

$b

+6%
56
34

Intra-Asia
2000-10: +12%
2011-20: +14%

2011

2020

Includes Trade Financing for Corporates and FI Refinancing
CHINA
HONG KONG

Changing market landscape

INDIA
SINGAPORE

Aus & NZ–
Asia/Pacific2000-10: +14%
2011-20: +5%• Increasing intra-Asia Trade flows and tradecorridors

INDONESIA• Heightened corporate focus on working capitalmanagement (across Trade, Cash, FX)

AUSTRALIA
NZ• China‟s commodity demand will increasingly outpace
its supply, while ASEAN supply will remain high forcoal and LNG• India‟s commodity demand has just started while
China is only half way to peaking• Australia/New Zealand to Asia-Pacific Trade to growat >5%

1. Source: ASEAN RIEDS, ANZ Research, ABS, SNZ, 2014
2. Source: BCG, 2012

• Growing complexity of supply chains andimportance of commodities• Higher usage of open account• Growth through megatrends in middle class,liberalised world trade, Free Trade Agreements• Regulatory pressures

3

Our strengths comprise the super-regional franchise, consistent productproposition, strong risk management and global platform
Strengths and points of differentiation
Strong heritage in trade in home markets• Trade has been a core business at ANZ for decades• We have been leveraging our reputation, experience

Strong „on the ground‟ presence
Scale business with 1000+
Transaction Banking FTE across
28 countries
UKand leadership in our home markets of Australia and
New Zealand to build out our regional business

USA

CHINA

Genuine Regional Franchise•

Consistent and Superior Product Proposition• Across all markets with trade operations support via•

hub and spoke model
Highly skilled trade operational support

Strong risk management• Framework with portfolio and transactional controls at

Strong Corporate Risk Analysis
Capability• Online Trade portal provide consistent execution forour customers globally

AUSTRALIA

Product capability build across segments
Documentary Trade• Documentary trade

Guarantees

STF
SCF

5%
21%

3%

(including open account)contributes majority of therevenue• Strong growth of 45% in

global and country levels

Global platform

HONG KONG

SINGAPORE• Currently servicing over 6,000 customers and 56,000
documentary credits annually across 28 markets
Trade team in every single location that makes thedifference – „the dots on the map count‟

Efficient Hub & Spoke
Operational Model

71%

Current Revenue Mix(1H14)

Supply Chain Finance(SCF) and Structured
Trade Finance (STF) since2011 expected to continue

4Trade Finance solutions are core to client needs and include
Documentary Trade, Supply Chain, Guarantees and Structured Trade
Product Offering„Typical‟ Trade transaction flow

ImporterDocumentary
Trade• LCs, Collections, Trade loans
including refinancing for
Financial Institutions (FI)Payment

Supply Chain
Finance• Receivables & Payables Finance

Guarantees• Financial guarantees,
Performance Bonds, Bid Bonds

Sales
Contract

Exporter
Shipment of
Goods

Payment

Payment Process
LC, Collection

Exporter‟s
BankImporter‟sBank

Why clients use Trade Finance

Structured
Trade
Finance Liquidity management for large corporates anddownstream

 Risk management
 Process improvement• Inventory FinanceCorporate
Trade

FI
Trade

ClientImporter/ExporterBank

Nature oftransaction

Financing trade,
Risk management

Financing Bank
client, withvisibility ofunderlying trade

funding source for smaller customers

 Financing supply chains upstream and• Commodity Finance: Preshipment / Performance Based5

Trade is attractive as it is short tenor with high visibility,
deepens customer relationships and drives cross-sell
Short tenor / Transaction
visibility
Tenor profile of the Funded Trade
Portfolio of $31b (Mar-14)

91-180days

Driver of cross-sell income1• Driver of Lead bank relationship• Cements deeper client

1H14: $1 of Trade income = $0.96
of Cross-Sell into Cash & Markets1

relationships as trade flow
management is deeply alignedwith their strategic agenda<30 days>180 days
6%

Customer relationships

24%• Helps deepen client wallet throughother Transaction Banking
products such as Payments andCash Management

30%
40%

$1.96

31-90
days

$1.00

• Builds entry barrier forcompetition• Potential clients at the other end
Short tenor and visibility
into underlying trade flows
lowers risk

$0.96

of a trade transaction• Builds insights into clientsbusiness

Trade
IncomeMarkets
Products& Cashcross-sellCombined
IncomeImportance to ANZThe Trade and Supply Chain business is strategic to ANZ as it enables us to leverage and build on
the regional client franchise for businesses across the bank

1. Trade clients using Markets and Payments & Cash Management Products. Global Markets products include FX, Commodities and CapitalMarkets6

Trade has been an important part of ANZ‟s Super
Regional strategy with increasing success from Asia
Increasing Revenue share from Asia$m

Strong growth in Global Asset Volumes

Australia / New Zealand: +7% CAGR FY10-13

Funded Asset Value$b

APEA: +30% CAGR FY10-13

35

614
488

278

409

663

30

359

241

168

153
226

336

31

25

298

262

29

15
10

365
206

22

20

17
11

5
0

FY10

FY11

FY12

FY13

1H14

Sep-10

Sep-11

Sep-12

Sep-13Mar-14

Trade & Supply Chain represents ~ 40% of overall Transaction Banking revenue
APEA:• Majority of the revenue driven by the traditional documentary trade business backed by funded assets• Our Super Regional Strategy gives us the ability for deeper trade penetration in Asia
Australia / New Zealand:• Majority of the revenue is contributed by Letters of Credit and Guarantees on an unfunded basis
7

We hold a strong position against competitors as aregional Trade Bank
Our competitive edge Dominant position in Australia/New
Zealand and associated tradecorridors

Closing the gap to Top 4 Global Banks in
Asia
Large Corporate Trade Finance Survey Asia 1
2011

47

2013

43

 Related expertise and brand35

commodity trade flows

36

37

35
31

 Superior operational capability

24

delivering insights in addition toprocessing

20

11

 Regional presence to support bothsides of the transaction

 Delivered an integrated global portal

HSBC

SCB

Citi

Deutsche

ANZ% of respondents with a Trade Finance relationship(Survey held every two years)

1. Source: Greenwich Associates 2013 Large Corporate Trade Finance Survey, Asia. Excludes Australia, Indonesia. Heavier weightage of
respondents from India and Korea would have positioned ANZ lower than otherwise

8

The future of Trade business lies in driving strategicclient relationships
Traditional Trade(Transactional Client Engagement)“New” Trade(Strategic Client Engagement)

Many banks, especially the domestic ones have thisview

ANZ will continue to engage with clients at both ends of the
trade including Cross Sell of Cash and Markets productsBank‟s Wallet

Lost Wallet
Goods andfunds

ImporterSellers

Goods andfunds

Anchor Buyer

Buyer Risk
Liquidity

Trade

Exporter

ANZ Transactive
Trade (Portal)

Exporters
Bank

ImportersBank

CaptureTrade/FX/Cash wallet

CaptureTrade/FX/Cash wallet9

Supply Chain Finance: Building strategic relationshipwith clients at both ends of the trade transaction
Sample Supply Chain Finance transaction (Payables Finance)

Suppliers

Supplier 1

Customer & ANZ enter
into a Payables Service(Buyer) Agreement

2 Supplier review
invoices and selectinvoices for early
payment

1 Buyer uploads accepted
invoices to ANZ electronic
platform

Supplier 2Buyer
3 ANZ purchases
invoices selected
for early payment

Supplier 3

ANZTransactive
Trade (Portal)/ FileActive(Host-to-Host)

4 Buyer pays ANZ on
agreed invoice terms on
maturity date

Each Supplier & ANZ
enter into a Payables
Service (Supplier)
Agreement

10How to win: Leverage on our franchise and scale, provide
holistic solutions and ensure comprehensive risk management• Drive a multi geographic, segment, product approach to serve

FranchiseScalecustomers across the Super-regional franchise• „End to end management‟ of client needs• Tight alignment with coverage teams and ANZ‟s client strategy• Continue to expand our scale with efficient operational capability• Single global digital channel for Cash, Trade and Markets to provide aseamless experience to customers across products• Understand clients‟ trade flows, supplier relationships, operational insights

Solutions &Insights

across Trade & Supply Chain, Cash, FX, Structured Trade Finance• Operational insights in addition to processing capability• Build new product capability across RMB, BPO (ANZ is the First
Australian Bank)

Risk
Management• Ensure complete and comprehensive risk analysis on underlying trade andcounterparties with portfolio and transactional controls at global andcountry levels

11IIB‟s strategic priorities have clear implications for Trade& Supply Chain over the coming two years
IIB STRATEGICPRIORITIESKEY AREAS OF FOCUS FOR TRADE & SUPPLY CHAIN• Connect customers to their counterparties: Exporters toConnecting more
Customers by
ProvidingSeamless Value

Delivering Leading
Products throughInsights

Intensifying Balance
Sheet Discipline

Scaling & Optimising
Infrastructure

importers as we follow and support our customer‟s trade flows• Offer seamless transaction capability for customers through our•Transactive platform
Continue Transaction Banking Product Simplification initiatives: Shorten paperwork, days of processing Enable quick and easy onboarding of new customers• Deliver country and operational risk insights through our „on-theground‟ resources• Penetrate deeper into Supply Chain Finance through insights onanchor-supplier relationships as well as achieve win-win forclients through more efficient capital management with STF• Manage returns at overall client level to ensure any balance

sheet lending is supported with high value products• Increase number of clients with meaningful revenue in Trade &Cash along with active tail management• Leverage the super regional Operational Hub & Spoke model•

keeping cost efficiencies
Increase volumes in flow products with the help of operational
insights while processing trade documents and underlying details

12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 ofany particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding ourintent, belief or current expectations with respect to ANZ‟s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions andrisk management practices. When used in this presentation, the words “estimate”, “project”,“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ
and its management, are intended to identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the datehereof. Such statements constitute “forward-looking statements” for the purposes of the UnitedStates Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to
publicly release the result of any revisions to these forward-looking statements to reflect events orcircumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit

www.anz.com
or contact
Jill Craig
Group General Manager Investor Relations

ph: (613) 8654 7749 fax: (613) 8654 9977

e-mail: jill.craig@anz.com