Investor Discussion Pack
Graham Hodges
Deputy Chief Executive Officer
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Overview and strategy

ANZ has established a strong business foundation
A clear company wide focus on our super regional strategy:• Organised our business around three key geographies and our customers p. 4-18
• Maintaining strong businesses in our home markets:• Australia

p. 28-48• New Zealandp. 76-85• Investing for strong organic growth in Asia

p. 49-60• A redefined and clear focus in our global institutional businessp. 61-75• A strong capital and funding position

p. 19-27

Additional information:• 2011 Financial Result

p. 101-113• Risk Managementp. 86-100

3

ANZ is structured by Geography & Segment

Asia Pacific, Europe & America (APEA)
Retail(including
partnerships)

WealthCommercial

Institutional

Australia
Retail

WealthCommercial

Institutional

New Zealand
Retail

WealthCommercial

Institutional is a global business
4

Institutional

Coherent strategy – driving competitive advantage

Geographic opportunity• Footprint - exposure to Asia‟s more rapid growth• Growing financial services requirements• Regional connectivity• Strong domestic markets
and businesses

Building Super Regional
capabilities

Leading
Super
Regional
Bank• Bench strength/international talent• Innovative product capability• „Throw and catch‟ capability and culture• Enabling technology andoperations hubs

• Global core brand, regional reach• Governance and risk management

Cross-border customer focus• Regional customer insights• Resources, agribusiness, infrastructure• Trade and investment flows• Migration/people flows, education
5

Delivering Super Regional performance momentum
OUTPERFORM
AND TRANSFORM
OUTPERFORM
 Move from a presence to areal business in Asia

RESTORE– 14% of Group Earnings– Beachhead in Greater China,
SE Asia, India, Mekong Institutional growth Maintain strong domestic
franchises

 Stronger risk and governanceprocesses

 Increased management
bench strength Increased internationalbanking experience Create hub foundation

 Balance sheet and capitalmanagement

2007-2009

Realise fullpotential of Super
Regional aspiration
Capturing value:• To Asia
OUTPERFORM• Within Asia
• From Asia

 Improving balance sheet
composition
 Improved funding diversity

2009-20106

2011-2017

Super Regional - driving long term growth anddifferentiated returns
Forecast GDP growth1 (% p.a, 2011-14)

UK
2.3%

Denotes two way merchandise trade flow3(2009)

FDI inward flow2 (USDb, 2009)

KR
4.0%

EU
1.6%

2

CN
78
8.7%
Asia-Europe
Trade: US$1.0trn

IN
8.5%
TH
4.5%

Intra-Asia
Trade:$1.6trn

MLY
5.0%
SG
4.6%

35

JP
1.6%

12

TW
5.1%

3

HK
5.0%

48

VN
7.1%

8

5
PHI
4.6%

2

PNG
5.0%

0.4

US
2.7%

Asia-US
Trade: US$0.8trn

Pacific-Asia4
Trade: US$6bn

1

17

IND
5.9%

5

AUS
3.2%

23

Aus/NZ-Pacific5
Trade: US$6bn

Aus/NZ-Asia
Trade: US$235bn
NZ
0.2
2.9%

Source: 1. Global Insight; 2. Bloomberg; 3. WTO; 4. IMF; 5. ABS and Statistics NZ.

7

Super Regional connectivity provides a competitive
advantage
Growth in trade flows and direct investment between Asia
and Australia is tracking at 11% and 26% pa respectively
Surplus savings

There is approximately$75b in direct foreign
investment into Australia
from the Asian region
Commodity
consumers

Migration &Investment

Commodity
producers

Natural resources account for ~$125b or ~65%
of Australian and New Zealand exports to Asia

Linked through flows of trade,
capital and population
Key focus is to bridge gaps
across the region: Asia
generates surplus liquidity,
Australia and NZ generate hardand soft commodities
42% of our Corporate* clientsdepend on Asia for more than
25% of their business

Soft commodities account for ~$25b or ~12% ofAustralian and New Zealand exports to Asia

* Represents ANZ‟s Australian based clients with annual turnover of $40-400m
Sources: Australian Bureau of Statistics (international direct investment positions, 2006-09), Trade Map (exports and8
imports, 2007-2010)

Realising the full potential of Super Regional
2017
Aspiration

APEA sourced revenue to drive
25% - 30% of Group profit

Expanded view ofopportunity in
APEA• The more mature our business, the greater our opportunities• Increasing our footprint, customers and access to trade, liquidity

Domestic
outperformance• Regional connectivity will deliver additional revenue into

Centres of
Excellence• Hubs provide a lower and more flexible cost base – access

Focussedtechnology
investments• Technology roadmap focused on customer facing (e.g. internet

and investment flows

Australia, New Zealand, Asia and the Pacificdeeper pools of talent, provide better service with lower riskbanking, goMoney) and cross-border systems (e.g. FX, CashManagement)

9Realising the full potential of Super Regional
2017
Aspiration

APEA sourced revenue to drive
25% - 30% of Group profit• Continue to build depth in international management andPeoplebanking experience• Well defined succession planning• Remuneration and incentives aligned to delivery of strategy andmanagement of risk

Risk
Management• Risk management as a core competency– Increased expertise across the risk function– Comprehensive set of asset writing strategies– Product and segment expertise – focus on sectors we know
• Customer driven rather than product focused• Lower balance sheet intensity

Financial
Management• Greater balance sheet diversity• Reduced reliance on interest income• Funding flexibility
10Growth levers - organic, partnerships and M&A

Continued Focus on Organic Growth
Leveraging Super Regional connectivity
Increasing productivity

Focus on core customers

Managing the value of ANZ‟sPartnerships

Selective M&A opportunities• Delivering access to attractive markets/segments• Linking partnership customers to ANZ‟sinternational network• Actively managing the portfolio to
optimise strategic positioning• Dislocation in global markets continuing
to create opportunities• Consistent M&A disciplines – on
strategy, delivers value, executable11

Emerging differentiation• Super Regional strategy giving us greater exposure to Asia‟sgrowth• Building blocks in place via both acquisition and investment incapability• Developing stronger customer propositions• Driving productivity gains from our hubs
• Integrating the Super Regional strategy into all our businesses

12Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Balance Sheet Management

Group loans and deposits
Group net loans and advances(including acceptances)Group customer deposits
Growth Rates

$b

450

Growth Rates

FY08

FY09

FY10

FY11

12%

16%

14%

15%

$b

450

400

400

350

350

300

300

250

250

200

200

150

150

100

100

50

50

0

0
Sep 07

Sep 08

Sep 09Retail

Sep 10

Sep 11

Sep 07

Commercial

14

FY08

FY09

FY10

FY11

16%

0%

9%

7%

Sep 08

Sep 09Institutional

Sep 10

Sep 11Customer deposits by geography

200

Australia (AUDb)

New Zealand (NZDb)

APEA (USDb)

Growth Rates

Growth Rates

Growth Rates

FY08

FY09

FY10

FY11

FY08

FY09

FY10

FY11

FY08

FY09

FY10

FY11

10%

16%

9%

11%

5%

1%

0%

4%

49%

49%

68%

40%

Sep
08

Sep
09

Sep
10

Sep
11

Sep
08

Sep
09

Sep
10

Sep
11

Sep
08

Sep
09

Sep
10

Sep
11

180

160
140
120
100
80
60
40

20
0
Sep
07

Retail1

Sep
07

Commercial

1. Includes Wealth
15

Sep
07

Institutional

Customer deposit composition by segment
Group deposits by segment(AUDb)

Deposits compositionSep 2011

297
257

Group

39%

18%

41%

2%

47%

1%

233

124
110

Australia

102

31%

21%

54
46

APEA

47

98

80

Sep 09Sep 10Wealth

77%

23%

117
New Zealand

19%

29%

45%

Sep 11RetailCommercial

16

Institutional

7%

Net loans and advances by geography

FY07

300

Australia (AUDb)

New Zealand (NZDb)

APEA (USDb)

Growth Rates

Growth Rates

Growth Rates

FY08

FY09

FY10

FY11

14%

0%

9%

6%

Sep
08

Sep
09

Sep
10

Sep
11

FY07

FY08

FY09

FY10

FY11

12%

(1%)

(1%)

(3%)

Sep
08

Sep
09

Sep
10

Sep
11

FY07

FY08

FY09

FY10

FY11

large

(2%)

57%

44%

Sep
08

Sep
09

Sep
10

Sep
11

250
200
150

100
50
0
Sep
07

Retail1

Sep
07

Commercial

1. Includes Wealth
17

Sep
07

Institutional

Lending composition by segment
Group lending composition
by segment (AUDb)

Lending compositionSep 2011

397
369
346

202

185

Group

23%

Australia

19%

85

17%

63%

82%

1%

18%

87

71

79

91

Sep 09Sep 10

Sep 11

Wealth

1%

54%

215

APEA
86

22%

New Zealand 7%

RetailCommercial

18

54%

Institutional

37%

1%

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

TreasuryANZ well capitalised and positioned to transition to Basel III
Basel II

Basel II

Basel III – Common Equity Tier 1~14.9%

11.9%

10.1%

12.1%

12.1%

10.5%

10.9%

Proposed
APRA
Basel
III#

7% minimum
including buffer
applicable from
Jan-16

Basel IIIfully
harmonised
~9.5%
~8.7%

~7.4%

~9.5%
CommonEquity Tier 1
surplus
over
7.0%

~7.5%

~7.0%

CapitalBuffer
2.5%
8.0%

8.5%

Mar-11

Common Equity Tier 1~11.4%

8.5%
Minimumtarget4.5%

4.5% minimum

Sep-10~14.0%

Sep-11Hybrids

Common Equity
Tier 1
Deduction(Insur,banking,assoc, ELvCP)

Higher RWA
Charges(credit risk) *Dividend
accrualAPRA Basel III

Tier-2* Excludes Basel 2.5 Market & Securitisation Risks and any Basel 3 liquidity changes# Still subject to discussion paper feedback

20

10%/15%threshold insur,
assoc, DTA(inc. DTA on CP)& other items

RWA: IRRBB& mortgage
LGDs & otherSep-11 Basel III
Full Int'nl
Alignment

Sep-11 FSA

Solid organic capital generation continues to underpin thestrong Common Equity Tier 1 position
Capital Position (Common Equity Tier 1 Ratio)~11.4%
2.13%~9.5%(0.83%)(0.43%)

8.05%
Portfolio growth & mix
Risk Migration
Portfolio data review
Non-credit RWA

8.52%(0.33%)(0.07%)

Other(4)

Investments

51bp decrease +15.8b7bp increase-1.3b
2bp increase-0.5b
1bp decrease+0.4b

Net organic up 54bp

Up 47bp

Sep-10NPAT(1)Dividend/DRP RWA movement(2)(3)

Sep-11

Sep-11 Basel III(5)(1) Underlying NPAT. (2) Includes prior period under-accrual of DRP. (3) Includes impact of movement in Expected Loss versus
Eligible Provision shortfall. (4) Includes OnePath Insurance Business‟ retained earnings, Asian Banking Associates‟ retained
earnings, Non-Core NPAT items, Capitalised Costs and Software, FX, Net Deferred Tax Assets, Pensions, MTM gains on own nameincluded in profit (5) Ratios based on full Basel III international alignment.
21

Sep-11 FSA

Tier 1 position strengthened significantly with recent CPS3
issuance and solid organic capital generation
Capital Position (Tier 1 Ratio)~14.0%
2.13%~11.7%(0.83%)

10.10%

Portfolio growth & mix
Risk Migration
Portfolio data review
Non-credit RWA(0.57%)(0.33%)

0.51%

10.94%

Hybrids

Sep-11(0.07%)

65bp decrease +15.8b8bp increase-1.3b
2bp increase-0.5b
2bp decrease +0.4b

Net organic up 40bp

Up 84bp

Sep-10NPAT(1)Dividend/DRP(2)

RWA
movement
(3)

Other
(4)

Investments

Sep-11 BaselIII(5)(1) Underlying NPAT. (2) Includes prior period under-accrual of DRP. (3) Includes impact of movement in Expected Loss versus Eligible
Provision shortfall. (4) Includes OnePath Insurance Business‟ retained earnings, Asian Banking Associates‟ retained earnings, Non-Core
NPAT items, Capitalised Costs and Software, FX, Net Deferred Tax Assets, Pensions, MTM gains on own name included in profit (5)Ratios based on full Basel III international alignment including 10% reduction in current portfolio of Tier 1 hybrids.
22

Sep-11 FSA

Reconciliation of ANZ‟s capital position under Basel III
ANZ capital ratios under a Basel III fully harmonised approach :CommonEquity Tier 1

Tier 1

Total Capital

APRA Sep-11 Basel II

8.5%

10.9%

12.1%

Plus: dividend not provided for (net of DRP)

0.5%

0.5%

0.5%

Less Investments in ADI and overseas equivalents

-0.4%

-0.4%

0.0%

Less Investments in ANZ insurance subs including OnePath

-0.4%

-0.4%

0.0%

Less Expected losses in excess of eligible provisions

-0.2%

-0.2%

0.0%

Other

-0.1%

-0.1%

-0.1%

-

-0.2%

-0.4%

Estimated increase in RWA1

-0.4%

-0.5%

-0.6%

APRA Sep-11 Basel III discussion paper

7.5%

9.6%

11.5%

10% allowance for investments in insurance subs and ADIs

0.8%

0.7%

0.6%

up to 5% allowance for deferred tax asset

0.2%

0.2%

0.2%

other capital items

0.2%

0.2%

0.3%

Mortgage 20% LGD floor and other measures

0.6%

0.7%

0.7%

IRRBB RWA (APRA Pillar 1 approach)

0.2%

0.3%

0.4%

Sep-11 Basel III fully aligned

9.5%

11.7%

13.7%

Less 10% reduction of existing hybrids and sub debt securities

1.

Includes credit counterparty but excludes Basel 2.5 Market & Securitisation Risks and any Basel III Liquidity changes

23

ANZ has a well diversified funding profile with an increasing
weighting to customer funding
Maintained low levels of shortterm wholesale funding

Strong Funding Composition
Short Term Wholesale
Funding

Customer Funding

Term Debt < 1 year Residual
Maturity

Shareholders equity & Hybrid
debt

3%

Term Debt > 1 year Residual
Maturity

12%

1%
2%
6%

22%

17%
5%

7%

15%

12%

12%

6%

6%

16%

12%

3%
1%

55%

58%

61%
18%

7%

8%

8%

9%

Sep 08

Sep 09Sep 10

Sep 11APEA CDs

Equity/Offshore short-term CP
Hybrids
8% Domestic CDs

Well diversified term wholesalefunding portfolio

14%

50%

Gross Interbank, Other

Offshore PPs (Multi ccy
incl. HKD,SGD,RMB)

3%

Japan (¥)

5%

UK & Europe (€,£,CHF)

6%

North America(USD, CAD)
Domestic (AUD, NZD)

24

Stable term debt issuance, portfolio costs increasing
Portfolio term funding costs expected toincrease further due to current market
volatility

Stable term funding profile
A$B

3m BBSW

30

Issuance

Forecast Portfolio funding
costs based on current
market levels

180bp

Maturities

160bp

25

140bp
20

120bp
100bp

15

Forecast Portfolio funding
costs based on market
levels as at 1H11

80bp
60bp

10

40bp
5

20bp

Government Guarantee

Sub Debt

FY11 includes $2.4bn of pre-funding from FY10
All numbers are at Group Level25

Sep-14

Sep-13

Sep-12

Sep-11

Sep-10

Sep-09Sep-08

Sep-07

Sep-05

FY16+

FY15

FY14

FY13

FY12

FY11

FY10

FY09

FY08

Senior Debt

Sep-060bp

0Total liquid assets exceed TOTAL offshore wholesale debt
portfolio
Strong liquidity position ($b)

ANZ Total
Offshore
Wholesale Debt
securities
19.9

10.2

3.3

60.2

66.7

71.4

Sep 09Sep 10

Sep 11

62.2

34.7

20.1

Sep 0719.4

8.1

Sep 08

Prime Liquidity Portfolio

Other Eligible & Highly Liquid Securities

Long-term

Composition of prime liquid asset portfolio ($71.4b)Class 1

Class 2

Class 3$31.3b

$9.4b

$30.7

Government/Semi Govt./Govt.
Guaranteed bank paper, NZ cash
With RNBZ, supernational paper

Bank or Corporate
paper rated AA or
betterInternal RMBS

Priority of use
26

Sep 11
Short-term

Hedging has lessened the impact on earnings of the stronger $A
Earnings Composition by Region& Average Translation Rates% Group
Underlying
ProfitExchange
Rate

100%

1.40

90%

1.30

80%

EPS Impact
Inclusive of Hedging
0.7%

-0.9%

1.20

70%
60%

1.10

50%

1.00

40%

0.90

30%
10%

0.70

0%

0.60
2H09

1H10

2H10

1H11

New Zealand (LHS)

Australia (LHS)

AVG AUD/USD (RHS)

FY11 YoY• Hedge profits more than halved the negative
impact of AUD strength on FY11 earnings.

• FY12 hedges are in place to cover ~80% of USD(inclusive of other significant currency
exposures), and ~40% of NZD exposures.

2H11

APEA (LHS)

-1.2%

-2.6%

2H11 HoH

0.80

20%

Unhedged• At current levels (AUD/USD 1.04, AUD/NZD

1.30) FY12 FX expected to adversely impact
FY12 EPS by ~0.3% (inclusive of hedges)• Each 5% appreciation of the AUD would

AVG AUD/NZD (RHS)

negatively impact FY12 EPS by an additional
~0.9%

27

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Australia Division

Australia Division – Consistent customer focus and wellestablished market positioning driving solid results
1.

Delivered customer propositions targeted at
key segments aligned to our Super Regional
Strategy• New banking services for affluent customers• Improved process for NZ customers opening
accounts in Australia• Customer referral agreements with Shanghai Rural
Commercial Bank (SRCB) and AmBank• Introduced multi-lingual capabilities to more than
2,700 ATMs (9 languages)

2.

Driving customer growth and improving
productivity and efficiency• Leveraging Super Regional advantage and franchise
strength across Retail, Commercial, Wealth andInstitutional• Improving efficiency by centralising andstandardising administration functions

3.

Successful implementation of technology andinnovation initiatives• Rolled out integrated mortgage origination platform• Expanded functionality of GoMoney for BPAY
payments (~420k customers & ~26% of all online
traffic)• Launched Multi-currency Travel Card in May 11(~55k cards sold with a value of $220m)• Launched OneAnswer Frontier – a 'fee for service'(commission free) investment platform• Term Deposits now available on OneAnswer• EasyProtect and 50+Life insurance products solddirectly via anz.com and branches
29

Pro forma Profit before credit &income tax
$m
5,000

482 Wealth

4,000

1,680 Commercial

3,000
2,000

4,003

4,431

4,673

2,511 Retail

1,000
0
FY09

FY10

FY11

FY11 bybusiness

Lending & deposit growth
(YOY)

20%

18%

15%
10%

13%
7%

5%

5%
0%
Retaillending

Retaildeposits

Commercial Commercial
lending
deposits

Australia Division – Financial performance
Pro forma
Growth Rates

Pro forma NPAT movement – FY11 v FY10$m

Revenue

395
8

5%

2%

FY11

2H11

145
113

2,717

FY10

4%

Net
Interest

1%
2H11

Profit Before
Provisions
5%
FY11

69

Up 2%

Expenses

FY11

2,777

Expenses

ProvisonsTax and
OEI

FY11

Pro forma NPAT movement – 2H11 v 1H11
$m

117
1,445

75

2%
2H11

Other
Income

53
12

1,332

14
Up 8%

Provisions
19%
1H11

FY11

Net
Interest

Other
Income

-28%

2H11
30

Expenses

ProvisonsTax andOEI

2H11Australia Geography – Balance sheet and funding
Balance sheet management strategy

Significant improvement in loan todeposit ratio• A well managed balance sheet supports sustainablelending and revenue growth• We aim to: Continually improve the composition of deposits inline with Basel 3 expectations - type, tenor andsegment to fund core assets
 Reduce the funding gap and therefore reliance on
short term wholesale debt
 Continually improve capital efficiency

$b

%

300

200

250

175

200

150

150

125

100

100

Outcome• Loan to deposit ratio has improved to 156% in FY11
from 186% in FY08
• Improved quality of deposit base: Strong proportion of deposits from Household
segment (Household deposits as % total deposits
up from ~39% in Sep 08 to ~41% in Sep 11)1
 Household customer deposit growth above market
rates (1.5x system for the year1)• Market share for traditional banking products
improved from 12.5% in Sep 10 to 13.0% in Sep 112

Sep 08

Sep 09Sep 10

Sep 11• Net gain of 113k transaction account customers

Net loans and advances incl. acceptances• Launch of Term Deposits on our Wealth platform
provides additional customer contact and allows
customers to better manage their funds

Customer deposits

1. Source: APRA Banking Statistics
2. Roy Morgan Research

Loan to Deposit Ratio (RHS)

31

Australia Geography – loans and deposits
Net loans and advances(including acceptances)
$b

300.0
250.0

246.4

247.1

269.2

• Lending up 6% YOY and 2% HOH• Mortgages up 7% YOY and 3% HOH growing at
1.2x system1 YOY

285.0• Commercial up 5% YOY and 4% HOH

200.0

 Business Banking up 10% YOY and 4% HOH

150.0

 Small Business Banking up 12% YOY and 9%
HOH

100.0

 Regional Commercial Banking flat YOY and up
4% HOH50.0

0.0
Sep 08

Sep 09Sep 10• Institutional up 5% YOY and 1% HOH

Sep 11

Customer deposits• Deposits up 11% YOY and 9% HOH$b• Focus on core bank customers

250.0
200.0
150.0

132.7

153.5

164.8

• Retail up 13% YOY and 6% HOH

183.2• Commercial up 18% YOY and 7% HOH
 Business Banking up 17% YOY and 5% HOH

100.0 Small Business Banking up 22% YOY and 11%
HOH

50.0

 Regional Commercial Banking up 17% YOY and
4% HOH0.0
Sep 08

Sep 09Sep 10

Sep 11• Institutional up 5% YOY and 16% HOH

1. Source: APRA Banking Statistics and RBA data
32

Australia Division – Net Interest Margin
Net Interest Margin

Margin strategy• ANZ is focused on profitable growth in key
segments using a service led approach

2.80%
2.53%

2.60%

Outcome• YOY NIM down 2 bps
 Improved asset margins and reduced relianceon wholesale funding largely offset byincreased deposit competition and negative
asset mix impacts

2.59%

2.57%

FY10

FY11

2.41%
2.40%
2.20%
2.00%
FY08

FY09

NIM movement 2H11 vs. 1H11
bps

• HOH NIM down 2 bps

257.9

 Asset repricing benefit offset by increased
funding costs and price competition fordeposits

0.2

4.6
256.2

1.3

 Costs of funds impact on variable rate bookpronounced in 4Q

1.4

3.8

1H11

33

Funding & Funding
Asset Mix
Costs

Deposits

Assets

Other

2H11

Retail – ANZ value proposition: “easy and empowering”
Superior customer service

Priorities
Strong brandDeeperrelationships
withCustomers

Simple to dobusiness with

Capabilities• Position ANZ as the most “easy and empowering bank” forcustomers• Strategic marketing campaigns – “We live in your world.”• Be the bank of choice for target customer segments:
 Affluent
 Migrant
 Young money
 Over-50s
 ANZ Staff• Tailored offerings and better processes• More specialists (migrant teams, retirement bankers, etc.)• Ability to open Australian accounts in other countries (e.g.
New Zealand and China)• Simplified products, processes and policies making banking
easier for customers and staff• Channels aligned with customer trends• Reconfiguring branch network – more efficient customer
Multi-channel
sales & service

friendly footprint, more technologically advanced (e.g.
Smart ATMs, cash recyclers, video conf.), more sales andadvice oriented (e.g. engagement desks, Client Advisors)• Single front-end platform (iKnow) will deliver a seamlesscustomer experience across all channels• Extending functionality of online and mobile platforms inline with customer expectations
34

Retail – Strategy delivering results
Customer deposit composition

FY11 v
FY10

2H11 v
1H11

Income6%2%

Expenses

4%

2%

80%

Movement

100%

Profit Before Provisions

7%

3%

60%

Net loans & advances incl. acceptances

7%

3%

40%

Customer deposits

13%

6%

20%

13%

11%

30%

33%

57%

56%

Sep 09Sep-10

Sep-11

Term deposits

Savings

Transaction

16%
39%

46%

0%

Using a combination of short & long-term
strategies to drive growth• Focused on growing share of wallet in key customer
segments through a distinctive value proposition of
being the most easy and empowering bank
• Competitive in the market on price without being theprice leader

Cost to income (CTI) ratio
46%
45%

Outcome• Revenue growth of 6% YOY• Improving CTI – 43.8% in FY11 from 44.6% in FY10

44%

• Peer leading customer satisfaction and improving
share of wallet

43%• Strong growth in deposits - up 13% YOY and 6%
HOH

42%
1H10

• Mortgages FUM up 7% YOY and 3% HOH
35

2H10

1H11

2H11

Retail - Focused on profitable growth and market share
With MFI Customer Satisfaction again
approaching 80%...

… and Peer leading Customer Advocacy
Net Promoter Score1,3(%) MFI Customers1
80

78
76
74
72
70
Sep-09Mar-10

Sep-10Mar-11

Sep-11

Sep-09Mar-10

Sep-10Mar-11

Sep-11… purchase intention for ANZ home loans is up … and share of wallet growth outperforms
YOY and HOH
domestic peers(%) Home loans trial intention230(%) Share of wallet – Traditional Banking1
65

25

60

20

55

15

50

10

45

Sep-09Mar-10Peer 1

Sep-10Peer 2Mar-11

Sep-11

Sep-09Mar-10

Sep-10Peer 3

1. Source: Roy Morgan Research
36
2. Source: Australian Retail Brand Monitor
3. "Net Promoter Scoresm is a service mark of Bain & Company, Inc., Satmetrix Systems, Inc. and Mr. Frederick Reichheld"

Mar-11

Sep-11

Retail – Mortgages
Dynamic Loan to Valuation Ratio

Portfolio Statistics% Portfolio

Total Number of Mortgage Accounts

832k

Total Mortgage FUM$170b% of Total Australia Region Lending60%% of Total Group Lending

43%

60%
50%
40%

13% of Portfolio>80% LVR

30%
20%
10%
0%

Owner Occupied Loans - % of Portfolio
Average Loan Size at Origination

63%

Average Dynamic LVR of Portfolio

48%

61-75%

Sep-09$231k

Average LVR at Origination% of Portfolio Ahead on Repayments1

0-60%

64%

9%

First Home Owners - % of New Lending

8%

81%-90%

Sep 10

Sep 11Mortgage Portfolio by State(Sep 2011)28%

NSW & ACT
16%

37%First Home Owners - % of Portfolio

76-80%

10%

19%

37

VIC
WA

27%

1. One month or more ahead of repayments. Excludes funds in offset accounts.

QLD

OTHER

91%+

Retail – Becoming the bank of choice for Asia Region
customers
Customer Focus

Capabilities

Outcome1• Chinese customers able to open Australia & China accounts
with one application

Simpleprocesses• Improved process for NZ customers (15 min process)• Visa Debit card available on arrival

600% increase

new accounts opened by NZ
customers since process
streamlined from Dec-10• Fee free international money transfers2• Global Retail Referral Tool
Tailoredproducts &network forcustomerneeds• International Banking Services (IBS) branches increased
from 19 to 47 branches from Jan to Jul-11• Online multilingual application forms• Significant mortgage and credit card policy enhancements

47 IBS Branches(19 branches Jan-11)• Dedicated email and phone contacts• Advertising in targeted countries and segments• Banking in Australia Seminars• Representation at appropriate Expos1.
2.

new online accounts sinceApril launch ofmovingtoaustralia.anz.com

to better suit customers moving to Australia and insurance
proposition under development• New website “Moving to Australia”
Understand ofbanking inAustralia~5,800(~160% increase in
online sales)

400+ in-branch
specialists withlanguage capability

Results as at September 2011
ANZ offers fee free international money transfers to customers with a 1+1 student and parent account in Australia and China

38

Retail – Delivering customer propositions targeted at
key segments aligned to our Super Regional Strategy
Moving to Australia website(Online)• Launched April 2011
• Simplified multilingual content
 English
 Chinese Korean• Multilingual Online forms• Online content including
LifeGuides, country guides, etc.

• Complements Concierge modelInternational Banking
Services branches(Branch)• Increased from 19 to 47
branches• 47 targeted branches supportedby over 400 Banking Specialists
with language capability• Supported by bilingual marketing
material and in-branchcampaigns• Dedicated support resources toassist in sales coaching forsegment• Supports Global Retail Referrals
Tool

39

Concierge model(Phone)• Launched August 2011
• Multilingual account opening
service• High-touch point of contact forcustomers• FX and International Money
Transfer Specialists• Arrange Visa Debit Card pick up
on arrival• Based on successful model in
ANZ New ZealandRetail – Strong momentum in Affluent program driven
by new capabilities and services
Principles driving performance - easy and empowering

Customer Focus

Capabilities• Whole customer relationship taken into account in financial
Customerknowledge

product assessment• Front line system for customers designed to capture all

Outcome (5 months)1~4,700
Customers onboarded

customer interactions

Accessibility to
Wealth advice• Introduction of a 30 minute Wealth Health Check• New capability for Wealth advisers that takes into accounttime poor customers• Dedicated customer managers
Customerengagement• Referral processes between Financial Advisers, Mobile
Lenders, Home Investment Lending Managers andbranches for specialist support• Email communication the #1 method of daily liaison withcustomers from their dedicated customer manager

Customerliaison~790
Wealth Health Checks• First meeting with specialists face to face
• Dedicated Practice Manager to guide customers throughmortgage process

1. Results from May 2011 to October 201140

Average advice fee$1510 (up~90%), averagerisk premium$2260 (up ~70%)~$480mMortgage FUM
referred~Average size ofreferred Mortgages
more than double
retail average

Commercial overview
FY11 v
FY10

2H11 v
1H11

Income6%

4%

Expenses

6%(2%)

Profit Before Provisions

6%

7%

Net loans & advances incl. acceptances

5%

4%

Customer deposits

18%

7%

Movement

Net loans & advances (incl.
acceptances) by business
Regional Commercial
Banking

28%

Business Banking
30%

Small BusinessBanking

34%

Esanda8%Strategic focus• Drive customer growth through leveraging:

Net loans and advances incl.
acceptances & deposits

 ANZ‟s Super Regional capabilities and footprint ANZ‟s strengths in Markets, Trade Finance andCash Management and Agriculture and Natural
Resources sector expertise$b50

 Retail, OnePath and Esanda‟s distribution
network

40
30• Improve efficiency and productivity throughcentralising and standardising administration
functions and enhanced use of offshore hubs.

45.7

43.0
32.1

%
140

47.8
33.7

39.7
130

20

120

10

Outcome0• Income up YOY and HOH, strong deposit growthand improving asset volumes

110
Sep-09Sep-10

Sep-11

Net loans and advances incl. acceptances (LHS)
Customer deposits (LHS)
Loan to deposit ratio (RHS)• NIM up YOY reflecting strong transaction accountgrowth.
41

Commercial – super regional advantage
Our super regional platform and ANZ
core capabilities are driving cross-sell
and new-to-bank acquisition

Cross-border referrals
29%
increase

500

Super regional platform• ANZ is the only bank able to connect Commercial
customers across Asia, New Zealand and Australia
via a network that spans:250

 1,200+ branches
 ~270 business centres0 ~3,000 Commercial frontline staff

1H11• The value of this connectivity is evidenced by a 29%
growth in cross-border referrals HOH

Cross-Border Cash Capability:
ANZ Transactive

ANZ strengths• To further enhance our super regional offering we‟releveraging ANZ‟s market leading capabilities in:• Web-based Cash Management platform withcross-regional capabilities

 Trade finance:#1 in market share and #1 incustomer experience1

1.
2.

2H11

 Markets: „Best FX House in Australia‟2• Enables complete regional visibility overaccounts, control over all accounts and financial
information

 Cash Management: ANZ Transactive cross-bordercash capability• Provides comprehensive range of payment
solutions to track local and overseas payments

Institutional customer share and Institutional customer experience; source East & Partners
AsiaRisk 201042

Commercial - Business banking
Building momentum, creating capacity
to grow

FY11 lending book composition by
key segments
Property• Growing the balance sheet through a focus on
acquiring larger customers and improved share ofwalletRetail33.8%

Manufacturing

10.3%• Leveraging super regional connectivity and offering
new services to customers (e.g. trade finance in
RMB)

Wholesale Trade

3.1%

Business Services

5.1%
15.1%

7.3%

• Introduced “ANZ OneSwitch” to make it easier forcustomers to switch their banking to ANZ via a
simplified application and fulfilment process

7.4%
8.7%

• Enhanced frontline skills and capabilities via sales
leadership and coaching initiatives

Construction
Accommodation
Heath & Community Services

9.2%

Other

Net loans and advances incl.
acceptances & deposits• Improved frontline productivity and capacity
through continued centralisation of admin-related
tasks

$b
18

Outcome16• Lending up 10% YOY, with a 35% increase YOY in
average new-to-bank deal size

1412

• Strong growth in deposits (17% increase YOY)

%
125

16.2
14.7

14.5
12.1

13.8

115

11.8

10

110
Sep-09Sep-10

Sep-11

Net loans and advances incl. acceptances (LHS)
Customer deposits (LHS)
Loan to deposit ratio (RHS)
43

120

Commercial - Regional Commercial banking
Capitalising on opportunities for growthand supporting customers in need
Regional Commercial1• Leveraging bank-wide sector expertise in Resources
and Infrastructure to identify and capture
Commercial opportunities within major projects, e.g.
contractors and suppliers.
Agribusiness2• Leveraging bank-wide Agribusiness expertise tocapture farmgate business• Increased products per customer in the acquired
Landmark customer portfolio by 60%• Supported customers impacted by natural disasters
through the „Seeds of Renewal‟ program, providing
assistance to 40 separate community programs

Outcome• Despite unprecedented climatic conditions and othermacro-level impacts, RCB 2H11 PBP grew 6%• Tight cost management led to positive revenue
growth exceeding cost growth YOY• Lending flat YOY but up 4% in 2H11
• Strong deposit growth HOH (4%) and YOY (17%)

FY11 lending book by key
segments
Agriculture

Retail

13.8%

55.1%

Property Services
Construction

3.5%
5.2%

Hospitality

5.5%

Manufacturing

8.0%

8.8%

Other

Net loans and advances incl.
acceptances & deposits
FY10 benefited fromLandmark acquisition andinternal resegmentation

$b
20
15
10

13.6

13.5
10.5
6.8

%
160

9.2

150
10.8

140
130
120

5

110

0

100
Sep-09Sep-10

Sep-11

Net loans and advances incl. acceptances (LHS)
Customer deposits (LHS)
Loan to deposit ratio (RHS)

1. Non metro Small Business and Business Banking customers
2. Farmgate customers
44Commercial - Small Business banking (SBB)
FY11 lending book composition by
sectorLeveraging ANZ distribution networks
and enhancing customer experience• Acquiring new-to-Commercial customers by tapping
into the distribution networks of OnePath, Esanda
and Retail‟s affluent segment

Retail22.2%

Construction
Business Services• Enhanced our innovation offering via the launch of“Business Insights”, the relaunch of SB Hub andpartnering with Xero (online accounting solution)

12.5%

21.3%

Manufacturing
Property Services

10.0%

Wholesale Trade

4.9%• Improved productivity through the roll out of SBB
Assist: elimination of admin tasks from frontline
staff – 10,000 frontline hours saved

Hospitality

6.1%
9.3%
6.7%6.9%

Transport & Storage
Other

Net loans and advances incl.
acceptances & deposits

Outcome• ~16k net new customers in FY111, with improved
customer satisfaction

%
30

$b
20

• Product cross sell up 15% in FY11 (e.g. asset
finance, commercial cards, wealth, etc.)

15• Deposits up 22% YOY

11.2

10

• Lending up 12% YOY• PBP up 10% HOH and 15% YOY

5

3.3

14.9

12.1

25
3.3

3.7

0

20
Sep-09Sep-10

Sep-11

Net loans and advances incl. acceptances (LHS)
Customer deposits (LHS)
Loan to deposit ratio (RHS)
1. Metro customers only. As at August 201145

Commercial - Esanda
Esanda is the market leader invehicle finance and a prime sourceof new-to-bank customers

Esanda lending composition byassets (Sep 11)• Largest player in the dealer vehicle financemarketVehicles14%
86%• Market leading credit processing speeds (under
15 minutes to process new applications)

Equipment
finance• Rich source of new-to-bank consumer andCommercial customers:
 ~110k contracts settled per year

Esanda lines of business ~75% of customers have no existing
relationship with ANZ
 ~80% of auto finance customers are
consumers and small business clients• Provider of equipment finance products offeredthrough ANZ

Dealer(Auto
Finance)• Auto finance and insurance products
offering to dealerships and consumers• National presence and capability acrossmetro and regional• Relationships with over 200 dealer
groups and over 700 car dealerships• ~300,000 active finance contracts• Over 9k deals written per month1

ANZ
Asset
Finance• ANZ asset finance offering to commercial
and corporate banking clients• Offering include hire purchase, chattel
mortgage, finance lease facilities, etc.

 Leverages Esanda‟s skills and technology
platform
 Fully integrated into ANZ‟s Commercial andCorporate distribution networks.

1.

Average Consumer & Commercial contracts per month over FY11 through the Dealer channel

46

Wealth (OnePath superannuation, Investments &Insurance and ANZ Private)
In-force annual premium growth

Strategic focus• Improving management bench strength appointed new
management; Distribution & Advice - Paul Barrett
 Superannuation & Investments - Craig Brackenrig
 CRO - Edith Pfister CFO - John Frechtling Well advanced search for new MD Wealth• Develop products to suit simple super environment• Improve penetration of bank customers through branches andanz.com• Complete roll out of new client service model to ANZ Private• Actively adapt to regulatory change agenda• Deliver service & functionality enhancements to front end
systems

Business Performance• NPAT down 16% YOY and 15% HOH driven by revenue
impacts from volatile market conditions• Negative investor sentiment given poor equity markets
impacted OnePath FUM and E*Trade, FUM down 8% YOY and
10% HOH• Annual in-force premiums up 12% YOY and 6% HOH• Growth in retail insurance income was offset by higher
general insurance claims due to catastrophic weather events• Expense growth (+3% YOY) due to higher levels ofinvestment in strategic projects coupled with somerestatements and one-offs• Lapse rates below industry average during 2011.
47

$M
1,600
1,500
1,400
1,300
1,200
1,100
Mar 10

Sep-10Mar 11

Sep 11Retail insurance lapse rates(Rolling 12 months)
13.5%
13.0%
12.5%
12.0%
11.5%
11.0%
Sep-10Dec-10Mar-11

Jun-11

Sep-11

Wealth – Progress against strategic priorities
Priorities
Step change in
ANZ customer basepenetration

Capitalise onopportunities

Leverage
combined wealthbusiness

Progress• Life insurance launched on anz.com ($3.4m premiums) and 50+ productthrough branches ($0.7m premiums)• Launched Affluent “Wealth Health Check.”• Further increase MyAdvice (phone advice) volumes which doubled YOY• Capturing fee-for-service inflows on OneAnswer Frontier ($400m FUM1)• Maintain momentum in Retail life insurance, sales increased 29% YOY• Wealth business (previously INGA, ANZ Private and ANZ Investment andInsurance businesses) now integrated – next steps to improve penetration ofbroader customer base and drive further efficiency.

• Automate key customer and adviser transactions to improve speed and accuracy –Enhance corecapabilities for
future growth(60% of retail life insurance business coming through electronically)• Significant transformation of insurance claims management experience• Service and functionality enhancements to the OneAnswer investment platform(including online switches, improved super to pension transfer process and term
deposits with ~$200m FUM since 1 Sept)• Managing within a constrained environment – prioritised investment spend andProductivity

improving cost efficiency• Focus on centralising and standardising processes and back of house functions.

1. As at 30 September 201148

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Asia Pacific, Europe & America(APEA) Division

Asia Pacific, Europe & America Division (APEA) building a leading super regional bank
APEA achieved another year of significant growth in
FY 2011…
•••

Revenue increase of 22%
NPAT growth of 20%
Customer deposit growth up by 40% ($18b) and lending
growth up by 44% ($12b)

•
•
•

•

37% CAGR
1,870

2,556

2,091

1,184

…while continuing to execute our longer termorganic growth strategy…
•

APEA Division Revenue(USD m)15%

716

Balanced business - growth in selected
geographies, segments and products– APEA Retail grew to 36% of APEA total revenue– APEA Institutional contributed 26% of Global
Institutional revenue in FY11
Connectivity - across the network, and increasingly intra
Asia – intra-Asia revenue up 40% in 2011
Investment discipline – finding investment dollars fromcost savings
Balance sheet strength - improving the deposit base andcredit quality – greater than 50% CAGR in loans anddeposits over the last three years
Brand recognition – Institutional and Commercial
recognition more than doubled from 2010

8%
FY07

1

%

FY08

FY09

FY10

FY11

APEA Contribution to Group Revenue

APEA Division Net profit after Tax(USD m)739

31% CAGR
543

617

393
253

…and completing our acquisitions successfully•

RBS Integration – all phases completed by FY11, resulting
in USD130 million of savings over 4 years from 2010

FY07

1

FY08

Underlying
1. Includes Europe and America results not included in originally reported figures
50

FY09

FY10

Pro Forma

FY11

APEA Division financial performance strengthened, despite
markets trading headwinds in the second half
Pro forma NPAT movement – FY11 v FY10
USDm
617

163

168

127

7
61
314

739
90

Up 20%
FY10Net
Interest

Other
IncomeEx-Global Markets

Markets
Sales

Markets
Trading

Expenses

Provisions

Tax and
OEI

FY11

42

353

Tax andOEI

2H11

Global Markets

Pro forma NPAT movement – 2H11 v 1H11
USDm
386

41

23

11
59

64

27

Down 9%
1H11Net
Interest

Other
IncomeEx-Global Markets

Markets
Sales

Markets
TradingGlobal Markets

51

Expenses

Provisions

Revenue is growing in key strategic geographies
customer segments and products

Key Achievements

Customer Segments

Products

Franchise Markets• Greater China, Indonesia,
Singapore, Greater Mekong and thePacific

Institutional

Institutional• Natural Resources • Financial• Agriculture
Institutions• Infrastructure• Commercial• CashManagement• TradeNetwork Markets• Europe and America, Japan, Korea
and India

Retail & Wealth

FY 2011 Revenue Growth1

Strategic Priorities

Geographies

•
•
•
•

• Affluent• Emerging
Affluent
50%

Taiwan127%

Retail Asia Pacific

India

115%

Private Bank Asia

82%

Agriculture

Hong Kong

68%

Natural Resources

33%

48%

Infrastructure

33%

Indonesia

43%

FIPS

35%

1:

•
•
•

Refocused Retail & Wealth business on
Affluent and Emerging Affluent
Launched Commercial segment, buildingon RBS acquisition
Deepened industry specialisation in
Natural Resources, Agriculture andInfrastructure2010 and 2011 underlying FX adjusted, excludes partnerships

52• Investments• Deposits

Investments& Insurance
CashManagement

85%

Singapore

Locally incorporated and establishedoperations hub in China
Commenced operations in India andopened 1st branch in Mumbai
Offshore RMB services launchedCompleted RBS integration across 6
geographies

Retail & Wealth

34%

China

• FX &
Commodities• Global CapitalMarkets

•

•

48%
59%

Trade Finance

51%

Markets Sales

41%

Global CapitalMarkets Sales•• Insurance

77%

Cash platform on track for delivery in
Singapore and Hong Kong
Expanded Markets and FI sales
distribution, and substantially
improved position in league tables fordebt capital markets in Asia
Expanded wealth product menu andproduct specialists menu in Retail &WealthConnectivity is a key differentiator for ANZ, driving
revenue growth across the network
Intra Asia connectivity becoming
increasingly important

APEA Cross-Border Income1(AUD m)864

801• ANZ‟s Asian business intra region cross-borderrevenues expanded –up 40% YOY• Macro concerns in Europe and America curtailed
cross-border income from these markets• Trade transaction volume increased 58% YOY and
25% HOH• RMB cross-border trade approval in Hong Kong
with about 1,000 corporate customers having
already booked offshore RMB transactions• Offshore customers represent 35% of the ourRetail Banking customer base in Singapore andHong Kong

Intra-APEA

109

40%

153

Australia/NZ
692

711

FY10

FY11

Institutional• Expanding footprint in China, India, Dubai, London, and New York, while
continuing to develop key markets of Indonesia, Singapore, Hong Kong andJapan

Retail & Wealth• Framework implemented to capture Retail connectivity in the region has
resulted in a 10 fold increase in cross-border referrals HoH

Partnerships• Partners leverage on ANZ‟s core capabilities in Australia and other markets
for customer referrals and connectivity
 e.g. SRCB and AMMB customers moving to Australia can open ANZAustralia accounts prior to arriving in Australia

1:2010 and 2011 translated at constant FX rates

53

Growth has driven diversification across APEA as Asia
Retail and Northeast Asia have expanded
APEA segments percentage of Group revenue FY07 vs FY11
15%
2%
4%

8%
Partnerships & Other
Asia Retail
Pacific Retail1%1%Institutional & Commercial

4%

2%

2%

7%

FY07

FY11

APEA geographies percentage of Group revenue FY07 vs FY11
15%
2%
5%

8%
Europe & North America
North East Asia

2%
1%

South East Asia

2%

Pacific

3%

2%

FY07

FY11

6%

54

Tight cost disciplines and improving efficiency are
helping to fund front-line investment
Improving efficiency• Focused on reducing enablement/back-office costs
while continuing to invest in revenue-generating
capabilities
Enablement Centralisation ProgramOperational efficiency initiatives
Reduced ~230 FTE in Enablement
Reduced ~130 FTE in Retail & Wealth andPrivate BankAPEA FTE(including contract employees)~12,100~11,900

Investing to grow revenue generating
capabilities• Build-up of front-office and support staff, continued
investment in systems, distribution and branding:Increased ~160 staff for Commercial andInstitutional businesses
Initiated Global Investment Program to build
core banking, cash management, trading andsales capabilities
New Branches opened in India, China, Dubai and
PNG
Additional cost synergies achieved inacquired RBS businesses• Restructure of the Retail Business• Alignment with Affluent Strategy away from Mass
Market
1. Asia Retail underlying (excluding Pacific Retail & Private Bank Asia)

2010

SupportRetailMarkets

Institutional
ex-Markets

Asia Retail Cost to Income1
Revenue
Expenses
Cost to Income Ratio

USDm

1,000
100%

89%

81%

500

0
FY09

55

FY10

FY11

2011

Increased net funding while improving the credit
quality of loan portfolio and growing the balance sheet• Significant Volume growth• Self Funding• 75% Net Loans & Advances <1 year duration
Customer Deposits
USDb
70
60

Net Loans & Advances(incl. acceptances)

APEA Institutional Risk Grade profile
by Exposure at Default

63
53% CAGR

50

63%

45
51% CAGR

4030• Credit Quality Improving

27

63%

AAA-BBB
67%

38

BB+~BBBB-

26
17

20
10
0

Sep 09 Sep 10 Sep 11 Sep 09 Sep 10 Sep 11
RetailBBB-

Institutional
56

>BB-

15%

15%

13%

14%

10%

6%
4%

4%
4%

5%
3%

Sep 09Sep 10

Sep 1115%

Brand awareness has significantly improved across allof our customer segments
Brand awareness1 across Hong Kong, Singapore and Taiwan
Average Percentage, 2010-2011

2010
2011

75
69
62
53

34

Affluent

Emerging
Corporates

1. Includes both Prompted and Spontaneous awareness, arithmetic average across all three markets
2. Based on ANZ Brand Health Tracker study 2010, Hall & Partners
3. Based on ANZ Brand Campaign Tracking 2011, Hall & Partners
57

29

Institutional

23

Integration of acquired RBS businesses into ANZ wascompleted in October 2011
Completed complex integrationin 6 Asian markets

Building a larger and more capablebank on the integrated business

Effective management of a complex
integration• 6 markets• 1.8 million customers• 6,500 Staff• 54 Branches• 4 different business segments: Retail &Wealth, Private Bank, Commercial &Institutional

Enhanced frontline• New frontline pricing tools• Enhanced channels• New risk & sales governance• New call centres
New Platforms• New credit cards platforms• New core banking – Institutional/ Commercial• New general ledger• New payments platforms• New risk feeds• New regulatory reporting

Realising real value from acquisition• ~USD$130m in Cost Saving projected over 4
years from FY10 to FY13
• Renegotiated/reviewed 3,500 suppliercontracts• Integrated new revenue platforms (across
Retail, Wealth and Private Bank)

Commercial presence & more scale tobusiness• Consolidated and built 3 new data centres• 1,200 new systems interfaces built• 6,200 standard desktops replaced / rebuilt• 800 standard servers replaced / rebuilt

58

APEA Institutional: Executing to a clearly articulated
strategy
Revenues up 29% YoY as customer franchise
strengthens

Customer numbers continue to growInstitutional Asia Client Numbers1

Targeting sectors aligned to global strengths and withsignificant regional growth prospects• Natural Resources• Agribusiness• Infrastructure• Financial Institutions
Increasing geographic significance• APEA contributed 26% of Global Institutional revenue in
FY11• Asia revenues grew 38% FY11
• New Institutional branch builds in India and Middle East
Building diversified product revenue with reduced
reliance on Trading• Significant growth in revenue in Trade Finance (51% YOY)
and Cash Management (59% YOY)
• Ongoing investment in Transaction Banking cash platform• Global Markets product expansion and platform
development
Growing client base and deepening relationships• Asia customers grew 33% FY11
• Maximising network flows with client revenues within APEA
up 40%
1. Excludes Commercial
2. Excludes markets trading and amortisation impact of annuity business

59+41% CAGR

1,400
1,050

750
550
350

FY07

FY08

FY09

FY10

FY11

Institutional Client revenue growing2(AUD m)+47% CAGR

169

206

61
166

294

375

FY07

FY08

FY09

Other Client Revenue

349
232
514
FY10

708

FY11

Market SalesAPEA Retail: Growth in wealth driving businessexpansion in Asia
Customer growth despite portfolio
repositioning

Substantial repositioning of Mass to
Affluent / Emerging Affluent

Customer Numbers („000s)• Revenue up 18% amidst repositioning and volatile market
conditions• Growth in Wealth Management revenue contribution - upfrom 14% to 22%• Significant CTI improvement - 8% in Asia retailunderlying, 2% overall pro forma• Channel expansion – mobile banking roll out in Fiji and
Taiwan

+51%
2,450

2,500

FY10

FY11

1,100

FY09

Building Revenue (USDm)
+34%
347

Growing Signature Priority Banking(SPB) proposition

342

290

• Presence in 10 markets (6 Asian markets and 4 markets in
the Pacific) up from 6 in 2010
• Monthly SPB customer acquisition growth of 29%• Average product holding per customer increased by 14%

FY07
Pacific

FY08
Asia

Loans & Deposits

Expanded product suite

60

2

FY09
FY10
FY11
Pro Forma Adjusted

Growing Funding Base

USDb

• Launched mortgage offering in Singapore, Taiwan andIndonesia• Expansion in Wealth Management product offering - 400
mutual funds, 25 bancassurance products, 450 Exchange
Traded Fund‟s

930

786

4

3

6

8
4

FY07
FY08
FY09
Net Loans & Advances

14

12
5

7

FY10
FY11
Customer Deposits

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Institutional Division

Institutional – executing to a clearly articulated
strategy• Targeting sectors with existing strength andsignificant regional growth prospects• Natural Resources• Agriculture• Infrastructure

Institutional Division
Underlying Net profit after Tax ($m)
1,895

35% CAGR

1,778• Increasing geographic diversification• APEA 26% of Institutional revenue FY11 (20% FY10)• Asia revenues grew 38% FY11

1,430

• Diversifying product range and reduced reliance on
lending• Trade finance revenue up 29% YOY• FX revenues up 22% YOY• Cash management revenue up 13% YOY

771• Grow client base and maintain strong relationships• Acquired 1,300 new relationships, growing client base
8% YOY• Asia Pacific client base grew 15% FY11
• Ranked first in terms of overall institutional relationships
and lead bank relationships across Australia and New
Zealand (combined across both markets as measured byPeter Lee Associates)• Improving risk profile of business• Net impaired assets down 27% YOY
62

FY08

FY09

FY10

FY11

Institutional – Financial Performance
Pro forma NPAT movement – FY11 v FY10
$m
1,733

186

47

484

120

1,895
82

309

284
Up 9%

FY10

Net
Interest

Other
IncomeEx-Global Markets

Markets
Trading

Markets Sales

Expenses

ProvisonsTax and
OEI

FY11

65

867

Tax andOEI

2H11

Global Markets

Pro forma NPAT movement – 2H11 v 1H11
$m
1,024

22

41
48

14
296

51
Down 15%

1H11

Net
Interest

Other
IncomeEx-Global Markets

Markets
Trading

Markets Sales

Global Markets

63

Expenses

ProvisonsIdentified priority sectors where we have existing
strengths to build upon
Priority Sectors

Priority Products

Natural Resources• In target sub-segments – minerals & mining, oil &gas, primary processing, primary services andcommodity trading.
• Focused on capturing Australia/NZ – Asia/Pacifictrade supply and demand chain flows.
• Lead bank to sector in Australia and growing
Asia/Pacific franchise offering opportunity to assist
both producers and consumers

Cash Management• A leading provider of cash management andworking capital solutions in Australia and NZ via
ANZ Transactive, the first trans-tasman internet
banking platform• Continued build and roll-out of Asian CashManagement capability across 11 countries
Trade• Provides trade finance and supply chain solutions to
our customers that manage risk and liquidity andsupport a deepening of customer relationships.
• ANZ is the leading trade and supply chain bank inAustralia and NZ, delivering superior sales andservice underpinned by a global proposition withteams on the ground in 28 countries.

Agriculture• Clear emphasis on customers with flows into andwithin the Asia Pacific region.
• Focused on providing markets, working capital andsupply chain solutions.
• A particular focus on cotton, coffee, cocoa, grains
and oilseeds, sugar, dairy and protein.

FX & Commodities• Building on our strong Australian and New ZealandCorporate businesses to expand into Asiancurrencies and clients• Emphasis on building a high-frequency global flow
and trading Corporate and Institutional business infour hubs, and on growing our business withFinancial Institutions (which account for ~90% of
all global FX volumes)

Infrastructure• Target customers and investors operating in power& utilities, roads, rail, airports, ports, water, waste
and social infrastructure.
• Primary focus is to support customers in the Asia
Pacific region whilst remaining dominant inAustralia and New Zealand.
• Continue to position as infrastructure specialists.
64Benefits emerging through growth in priority sectors
and products
Institutional Division
Client revenue growth FY11 vs FY10
Institutional Division

Natural Resources

Agribusiness

Growth has been achieved through:• A global specialised relationship model offering
industry expertise and a broader product proposition
has seen priority sectors achieve superior growth10%• Natural Resources - Asia revenues up ~40% withsignificant increases in Markets and Trade products• Agribusiness - Asian revenues up ~80%, again withsignificant increases in Markets and Trade products

18%• Infrastructure - predominantly growth in Australianrevenue from large domestic infrastructure projects
augmented by a lift in Asian revenue momentum.

14%

Infrastructure• Trade – 29% revenue growth reflects continued
increase in client relationships. ANZ maintains aleading position in the Australian and New Zealandtrade markets and growing presence in Asia which
now represents over 50% of total trade revenue.

25%

Trade

29%

• Over 85% of growth in our FX business occurred in
APEA due to better penetration of our client
base, product diversification and a focus on Financial
Institutions clients

FX & Commodities

28%• In Australia, our share of Australian FX turnoverincreased from 6.3% at the end of September to
11.8% in September (as measured by the RBA)

Cash Management• The only bank offering a trans-tasman cash
management platform, with Singapore and Hong
Kong to be added to system the by end of 2011

13%

65

More diverse, self funded loan growthInstitutional Lending and Deposits$b
50

Net Loans & Advances(incl. acceptances)$13b Growth YOY$bCustomer Deposits

100

75.6

78.7

10

97.7

91.2

30
22

20

117.4

120

39

40
30

$20b Growth YOY

Institutional Trade Lines
Funded & Unfunded0
Sep 0979.8

Australia

80
$b
60

Sep 10APEA

New Zealand

Asia Funded Trade Lines
11

12
10

40

7

8
6

20

4

Sep 113

20

0

Sep 09

Sep 09 Sep 10 Sep 11 Sep 09 Sep 10 Sep 11
Australia

APEA

New Zealand66

Sep 10

Sep 11Investment in the strategy
Majority of FY11 cost growth relates to investment in de risking andsupporting immediate and longer term growth initiatives
36

$m

2,001

130

• Back / middle office FTE• Risk management systems• Payments infrastructure• Productivity initiatives• Process automation

69

1,717

49

• Cash management
platform• Markets FX engine• Pricing tools• Salary CPI• Reduce Back / Middle Office FTE• Customer systems• Markets technology

FY10

Run theBusiness• Frontline FTE
Markets sales, Relationship Managers

Strengthen
the Business

Investing fornear-term
results

67

Investing for
longer-term
results

FY11

Productivity focus evident in near term cost growth
Initiatives in train to maintaincost trajectory

Institutional Operating Expenses
Growth Pro Forma HOH
9.7%
6.3%

Process automation and enhancement• Enhanced markets operations platforms andprocesses• Automation of data processing capabilities
to reduce manual intervention

5.3%

-0.3%
1H10

$m

2H10

1H11

Increased utilisation of regional hubs
• Operations streams are now managed as
global functions throughout Australia, New
Zealand and Asia

2H11

Institutional Operating Expenses
Quarterly Trend

Streamlining regional and global
enablement support• Creating opportunities to shareregional/functional resources andinfrastructure• Aligning business and support structures tofuture business requirements

550
500
450
400
350
300
250
200
1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11
68

Improved credit quality
Institutional risk grade profile
by exposure at default

Institutional net impaired assets
by size and as % NLA
$m

% NLA

4,000

6.00%

3,500

5.00%

3,000

60%
4.00%

2,500

63%

68%

AAA-BBB
BBB-

2,000

BB+~BB-

3.00%

BB-

1,500

2.00%

17%

>BB-

17%

1,000

16%
1.00%

500
0

0.00%

Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11
Institutional net impaired assets% NLA (RHS)
69

12%

11%

5%
5%

4%
5%

Sep 09Sep 10

10%
3%
3%
Sep 11Diversification of client base and revenues
Institutional client base

Revenue mix1

No. ofClients
8,000

7,464
6,924
6,382

19%

22%

6,000
20%
4,000

18%

26%

21%

24%

18%

11%

36%

39%

41%

2009

2010

2011

2,000

0
2009

Australia

Asia Pacific2010

Europe

2011

US

NZ

Global Loans

Markets Trading

Markets Sales

Transaction Banking

Other

70

1. Underlying basis

Cash management business delivering connectivity
Significant progress made in 2011

ANZ Transactive trans-tasmansites and usage• Connecting our customers‟ transaction banking needs

across Australia and New Zealand is a key differentiator.

• Customers can perform a range of cash management

activities through a single internet channel:
 Record number of multi-country Cash Management
mandates won in 2011 Strong growth in the number of paymenttransactions processed in Asia via internet
channels

Active
Sites
4,500

80

4,000

70

$b

3,500

60

3,000

50

2,500
40

• Over 7,800 clients have been on-boarded to ANZ

2,000

Transactive to date: 3,923 clients on-boarded to ANZ Transactive

30

1,500

Trans-Tasman solution in Australia and New
Zealand20

1,000

 3,909 clients on-boarded to ANZ Transactive Asia
• We will continue to add functional enrichments, with theplanned rollout of the enhanced ANZ Transactive
platform to 11 key Asian markets:

500

10

0

0
Sep-10 Singapore and Hong Kong enhancements to occur
in November 2011

Dec-10Mar-11

Jun-11New Implementation
Migrated from ANZ Online
Monthly Transaction Volume

 Remaining 9 key Asian markets will be brought
online by 2013

71

Sep-11

Global Markets Performance
Strategy to increaseclient flow revenues is delivering

Global Markets revenue
pro forma FX adjusted$m• Revenue down 11% YOY and 31% HOH due todifficult macro conditions in traded risk and balance
sheet management• Trading and balance sheet related revenues were
down 36% YOY and 70% HOH• A strong Markets sales performance across all
geographies and products has partially offset lower
trading revenues with sales revenues growing 13%
YOY

2,500

• The Commodities business doubled 2010 revenues
with strong trading and sales performance• Australian results were impacted by balance sheet
and trading revenues, including a widening of credit
spreads on the Australian liquidity portfolio

1,752

1,563

1,500
1,000
500
0
FY09

• APEA sourced revenue was up 25% YOY driven by
expansion of capabilities throughout the region• The FX business continued to expand in the second
half 2011 with a 7% uplift in FX sales revenue HOH

2,011

2,000

Sales

FY10

FY11

Trading & Balance Sheet

Global Markets revenue QOQ
$m

Sales

Trading & Balance Sheet

300
200
100

0
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

72

Global Markets product offering
Global Markets delivers innovative
product solutions through specialist
teams operating across the Asian region

Fixed Income• Interest rate risk hedging for clients• Pricing and risk management of credit
instruments• Management of the bank‟s liquidity
portfolios and Trading of position risk

Global Markets revenue mix

6%

40%

10%

10%

30%

42%

• Foreign exchange risk management
Foreign
Exchange&
Commodities

advice and products for clients• Commodity price risk advice andmanagement• Commodity derivatives (eg. gold, soft
commodities and energy)

73

FY09

Fixed Income

57%
43%

• Origination and distribution of credit
Global CapitalMarkets

Global CapitalMarkets
Foreign Exchange& Commodities

49%

products• Corporate and Financial Institutions
sourced listed and unlisted Bonds• Syndicated Loans• Securitisation

Other

FY10

FY11

Sales, trading and balance sheet revenue
Global markets business focussed on client
driven risk management and trading activity
Also management of ANZ‟s own liquidity andbalance sheet risk management• Direct client flow business on core products
Sales
Revenuesuch as Fixed Income, FX, Commodities andDebt Capital Markets (DCM)• Continued growth in FY11 through continued
focus on client acquisition• Growth of client flows in APEA

Global Markets revenue
composition (pro forma)

22%

Trading
Revenue

28%
19%

33%

• Trading represents management of positions
taken as part of direct client sales flow andstrategic positions• Trading in the rates and credit product, inline with balance sheet trading• Difficult trading conditions particularly in Q4
with both domestic and global
macroeconomic volatility

16%

21%

65%
45%

51%

• Management of interest rate risk for the loan
Balance Sheet
Revenueand deposit books• Management of the bank‟s liquidity position• Impacted in Q4 by the widening of credit
spreads on semi government bonds to swap
hedges with market movements taken at
Fair Value through the Profit and Loss
74

FY09
Sales

FY10
Trading

FY11
Balance SheetGlobal Capital Markets - becoming a leading Asia Pacificcapital markets specialist
Achieved a number of milestones in 2011

Corporate and frequent issuer bonds
league table rankings• A number of first in offshore RMB/CNH market
 Joint Lead Manager for First offshore bond for an
Australian bank
 Joint Lead Manager for First offshore bond for a
Japanese corporate• Joint lead manager for ANZ's first syndicated loan for a
Chinese sovereign entity• Completed ANZ's First Korean securitisationtransaction• Arranged the first syndicated loan by a foreign bank in
Vietnam• Fastest execution of a secured bond transaction in
Singapore Market YTD

Category

Rank

#
Deals

AmountArranged

Australia (ex-self led)

1

57

AUD11.5b

New Zealand (ex-self led)

130

NZD2.0b

SGD

3

11

SGD1.4b

Asia Pacific ex-Japan

8

102

USD12.2b

Source – Bloomberg as at end 3Q11

Loan syndications mandated arranger
league table rankings

Extended leading position in domestic markets• No. 1 bond issuer in Australia with 19% market share
YTD 2011

Rank

#
Deals

AmountArranged
USD

Asia-Pac ex-Japan1

182$18.6b

Deepened our presence in Asia

Australia1

81$11.3b• Increased cross border deals across Asia with greater
distribution into Europe and America

Asia

10

77

$4.7b

• Grew APEA GCM revenue 77% FY11

Source – Thompson Reuters as at end 3Q11

• No. 1 bond issuer in New Zealand with 49% market
share YTD 2011

75

Category

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

New Zealand Businesses

New Zealand Businesses - simplification & efficiency
Simplifying the business• Have simplified the management structure• Progressing with process and product simplification

Profit before provisions1
NZDm• Moving to one IT system
Improved customer and employee engagement• Increasing customer satisfaction – up 3% YOY for
both ANZ and NBNZ

1,493
1,445

• Improved staff engagement scores

1,317

1,326

FY09

FY10

• External recognition (awarded the two best banking
brands New Zealand‟s Sunday Star-Times Canstar
Cannex Bank of the Year Award)• Research indicates strong awareness of ANZ's
sponsorship of the 2011 Rugby World Cup andincreased overall ANZ brand awarenessManaging for changed conditions• Cost focus – aiming to be the most efficient bank in
New Zealand with lowest CTI• Return focus – profitable growth, improved ROE,
margin management• Risk focus – manage to the changed economic
settings
1. FY08 Underlying; FY09-FY11 Pro Forma

77

FY08

FY11

New Zealand Businesses – financial performance
Pro forma
Growth Rates (NZD)
Revenue

Pro forma NPAT movement – FY11 v FY10
NZDm

585

5%

299
24

149

147

6

1%

FY11

904

2H11

Up 55%

Expenses
0%

FY10

-2%
FY11

2H11

Profit before
Provisions

13%

Net
Interest

Other
IncomeExpenses

ProvisonsTax and
OEI

FY11

Pro forma NPAT movement – 2H11 v 1H11
NZDm

6

14

3

453
2%

2

451

Tax and
OEI

2H11

21
FY11

2H11

Flat

Provisions
21%

1H11
-58%

FY11

Net
Interest

Other
Income2H1178

Expenses

Provisions

New Zealand Businesses - balance sheet management
Net Interest Margin

Retail3.00%• Mortgages – have held share in the <80% LVR
market and taken a more conservative
approach to growth in >80% LVR segment

2.50%• Deposit strategy focussed on growing better
quality at call and savings accounts (up 15%
YoY)

2.00%
1.50%
1H09 2H09 1H10 2H10 1H11 2H11

• A disciplined approach to pricing on term
deposits also achieved a margin improvementof 15-20bps on term deposit portfolio

Commercial• Continued strong Dairy sector pay-outs driving
deleveraging in the Agri sector• 1.4x system lending growth in BusinessBanking• Continued working with customers to achieve
more sustainable debt levels resulting in a
reduction in the level of impaired loans.
• A focus on credit quality has seen a reduction in
Commercial and Agri net impaired assets of
26% HOHNet Loans & Advances(incl. acceptances)

Customer Deposits

NZDb
100

88.3

88.4

86.8

80
60

48.3

51.1

50.2

40
20
0
Sep 10 Mar 11 Sep 11 Sep 10 Mar 11 Sep 11
Retail79

Commercial

WealthSimplification program progressing well with good
progress made in 2011

New
OperatingModel• New regional management approach that simplifies decision making
across all businesses• Merged Commercial and Agri businesses to ensure an integrated focus
right across the agribusiness sector• Made Business Banking a stand alone business focussed on the needs ofsmall business customers• Simplified product set (reducing retail products from 140 to under 100)
Simpler
Product and
Fee Structure• Over 380,000 customers migrated to end state products with minimal
negative feedback• Now easier for customers to transact across both the ANZ and NBNZ
networks• Expenses down 2% YOY• Improved staff engagement
A Stronger
Business• Increased levels of customer satisfaction• Additional productivity gains available in 2012 and 2013 from move to asingle platform• An FY11 after tax charge of NZD111m has been taken outside underlying
earnings with respect to this programme80Super Regional capabilities provide real differentiation
Leveraging our Super Regional capabilities
•
•
•
•
•

Migrant Banking – on track to exceed 10,000 new customers through migrant banking channel this year
Wealth – migrant investor program targeting high net worth investors
First major New Zealand bank to have Chinese Renminbi (RMB) trade settlement deal capability
Set up first full payments and cash management implementation between ANZ New Zealand and ANZ China
Only New Zealand bank to structure Export Credit Agency funding, with over NZD200m of deals

Investing to further strengthen capabilities••••

Now have 61 retail branches with dedicated Chinese and Indian specialists
Established multilingual call centre with Mandarin, Cantonese, Korean and Hindi capabilities
Asian specialist team in Private Bank business managing 1,200 clients and NZD2b in assets
Launched ANZ Transactive, the first trans-Tasman internet banking platform for Institutional andCommercial customers• Cross-border connectivity - established single points of contact (“Asia desk”) for intra-region customer
referrals

Providing leadership on New Zealand‟s growing opportunities with Asia
• Partnerships with Education New Zealand and Ministry of Ethnic Affairs to support migrants• Supporting linkages with India through partnerships with the India business forum and joining the NZ Prime
Minister's recent trade delegation to India• Business Banking China tour provided 25 delegates the opportunity to build connections in the Chinese market

81Retail & Wealth - simplifying our business to makebanking easier for customers and staff
Simplification initiatives undertaken acrossbusiness• Re-engineering processes to allow frontline staff tospend more time with customers• Progressing optimisation of product portfolio with 140
products reduced to under 100 products to date
• Opened new branches in key locations around
Auckland
Program already yielding results• Productivity gains from simplification drove flat cost
growth FY11 and a 3% reduction in costs 2H11
• Increased retail customer satisfaction to record levels• Contact Centre recognised as the best in financial
services in NZ at the CFM Contact Centre Industry
awardsCustomer satisfaction at
historic highs1
85% 90%85% 90%89% 91%

3Q09

3Q10

3Q11

ANZ

NBNZ

OnePath KiwiSaver FUM
NZDm
2,500

Wealth position continues to strengthen• OnePath #1 in the Retail Managed Funds market• Awarded the Morningstar KiwiSaver Fund Manager of
the Year – KiwiSaver is NZ‟s primary retirementsavings initiative• Divested non-core property businesses• Insurance profitability improved – favourable claims
experience and reduced lapse rates
1

Source: Nielsen Consumer Finance Monitor

82

2,100
1,700
1,300
900
500
Sep-09Mar-10

Sep-10Mar-11

Sep-11

Commercial & Agri – unlocking value by bringing
segments closer together
Managing for a lower growth environment• Disciplined management of risk, balance sheet and expenses

Lending Composition
By Segment

Enhanced customer focus• Unrivalled coverage, with customers having access to more
relationship managers in more locations than any other bank
• Continued investment in frontline efficiency and training toenhance relationship skills• Customer satisfaction stable in a highly competitiveenvironment• Supporting customers through the economic cycle via
customer forums and thought leadership, e.g. Viewpoint
papers; Economy in 5 courses; Better by Design partnership;
Farming for Profitability sessions• Working with customers to assist them in achieving moresustainable debt levels

Agri

45%

49%

Commercial
UDC

6%

Dairy Milk Payout/Price$ per kg

83

8.00
6.00
4.00
2.00
2011

2010

2009

2008

2007

2006

2005

2004

2003

0.00
2002

Leveraging Super Regional connectivity• By connecting customers to our Super regional network we aredifferentiating ourselves in the New Zealand market, examples
include: Connecting a South Island Agri client to ANZ Indonesia
who provided insights on the local market and assisted in
facilitating new trade into Indonesia
 Linking a commercial client to ANZ teams in Fiji andAustralia and assisting expansion into new markets
 Introducing wine production clients to the ANZ China
team and help them commence distribution into thelucrative Chinese market.

Business Banking – ANZ has a compelling growth
proposition in Small Business
Small Business a significant partof the NZ economy

Strong performance in FY11
• Maintained #1 market share position• Customer satisfaction improved from 87% to 88%1

90% of NZ businesses employ
5 or fewer staff2• Lending growth 1.4x system• Staff engagement lifted from 60% to 70%

No employees• Profit improvement from increased revenue andreduced costs

1-5

21%

Increased coverage of small business customers

69%

10-19

• More Business Bankers in branches and in a greaternumber of locations

20+• Small Business workshops – attended by 5,000
customers• Launch of the ANZ Biz Hub, a market leading online
customer site supporting small business• Assisted more than 4,500 customers in the last two
years with our business start-up package (providing
business advice and a transactional account, fee-freefor one year)• High growth potential with low risk as majority oflending is mortgage based

Good growth in both marginand volume
110

Index
1H10
=100

84

NIM

Net Loans & Advances

105

100
1H10

1 Source: TNS Business Finance Monitor Sep 2011
2 Source: NZ Department of Statistics Feb 2010

6-9

2H10

1H11

2H11

New Zealand Businesses - credit quality
Total impaired assets

Total provision charge
NZDm

NZDm

400

2.25%

351

247

165

200

2.06%

2,215
1.92%

531

600

2.47%

2,020

98

119

0
1,809

-200
1H09

1,718
1.25%

2H09 1H10 2H10 1H11
IP Charge
CP Charge

2H11

90+ Days arrears
0.70%

1.20%

1,132

0.80%

631

Mortgages
Commercial
Rural

0.40%
Mar 09

Sep 09Mar 10

Impaired Assets

Sep 10Mar 11

Sep 110.00%

IA as % GLA

2007

85

2008

2009

2010

2011

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

Risk Management

Provision Charge and Impaired Assets
Total Provision Charge(IP charge by Division, total CP charge)

New Impaired Assets
by Division
$m

$m

1,800
1,600

1,435

4,000

1,621

3,600

3,500

1,400

3,000

1,200

1,098

2,500

1,000
722

800

3,126

3,035

2,319

2,436
1,824

2,000

660

600

551

1,500
1,000

400
200

500

0

0
1H09

-200
1H09

2H09

Institutional

1H10

2H10

1H11

Australia Division

2H09

1H10

2H10

1H11

2H11

2H11
NZ Businesses

87

APEA ex-Institutional

CP charge

Individual Provision Charge
Individual Provision Charge
by Segment

Individual Provision Charge
composition

$m

$m

2,000

2,000
1,500
1,000
500
0
-500
-1,000

1,800
1,600
1,400
1,200

1,531
1,283

1H09

1,062

New

1,000
800
600

1,531

762

594

609

2H09

Increased

1,062

1H10

$m
2,000

200

500

0

0

1,531

1H09

Australia

88

594

609

2H10

1H11

2H11

Writebacks & Recoveries

1,283

1,062

1,000

1H09 2H09 1H10 2H10 1H11 2H11
Institutional
Commercial
Consumer

762

Individual Provision Charge
by Region

1,500

400

1,283

2H09

1H10

762

2H10

New Zealand

594

609

1H11

2H11

APEA

Collective Provision Charge
Collective Provision Charge by Source
$m

$m
(96)

331

36

(40)

65

CP Charge by Division 2H11

80

(58)

(74)

(42)

29

29

Australia

New
Zealand

Institutional

APEA& Other

60
40
20
0
-20
-40
-60
-80
-100
-120
1H09

2H09

Lending Growth

1H10

2H10

1H11

2H11

Economic Cycle & Concentration

89

Risk Profile

Portfolio Mix

Collective Provision Charge
Collective Provision Charge by Source
Risk Impact

Lending
GrowthPortfolio
Mix

Cycle &
Concentration

Total

Australia Division

20

42

(6)

(14)

42

Institutional

(29)

65

(14)

12

34

New Zealand

(35)

(6)

(1)

(47)

(89)

APEA & Group Centre

(47)

29

1

37

20

Total

(91)

130

(20)

(12)

7

2H11

Risk Impact

Lending
GrowthPortfolio
Mix

Cycle &
Concentration

Total

Australia Division

(1)

26

(6)

(93)

(74)

Institutional

(20)

36

1

12

29

New Zealand

(8)

(5)

(1)

(28)

(42)

APEA & Group Centre

(27)

17

2

37

29

Total

(56)

74

(4)

(72)

(58)

FY11

90

Credit Risk Weighted Assets
Credit Risk Weighted Assets
Movement FY11 v FY10

Total Credit Risk Weighted Assets
$b

$b
257.8
248.8
229.8

Mar 09

Sep 09

233.5

233.2

0.5

233.5

220.4

Mar 10

Sep 10Mar 11

1.3

15.8

Sep 10

Sep 1191

GrowthData
Review

248.8
1.3

FX
ImpactRisk

Sep 11

Impaired Assets
Gross Impaired Assets
by Size of Exposure

Gross Impaired Assets by Type$m$m

Impaired Loans

NPCCD

8,000

Restructured

6,000

8,000

4,000

7,000

6,561 6,561

6,000

5,595

5,595

6,561

6,561

6,221

5,581

4,158

2,000

6,221

0

5,581

Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11> $100m$10-$99m< $10m

5,000

4,158

New Impaired Assets by Segment

4,000

$m

4,000

3,000

3,000
2,000

3,600
3,035

3,126

2,319

2,000

2,436

1,824

1,000

1,000

0

0

1H09 2H09
Institutional

Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11

92

1H10 2H10
Commercial

1H11 2H11
RetailWatch & Control Lists and Risk Grade Profiles
Group Risk Grade profile byExposure at Default

Watch & Control List
Index
Mar 2009= 100

Watch List by Limits
Watch List by No. Groups
Control List by Limits
Control List by No. Groups

6%

6%

6%

6%

6%

9%

9%

9%

8%

8%

13%

13%

13%

12%

12%

59%
13%

59%
13%

58%
14%

60%
14%

61%
13%

80

13%
59%

13%
59%

14%
58%

14%
60%

13%
61%

60

13%

13%

13%

12%

12%

40

9%

9%

9%

8%

8%

20

6%

6%

6%

6%

6%

0

Sep 09Mar 10

Sep 10Mar 11

Sep 11

180
160
140
120
100

Mar 09

Sep 09Mar 10

Sep 10Mar 11

AAA to BBB

Sep 1193

BBB-

BB+ to BB

BB-

>BB-

Commercial Industry Exposures
Finance & Insurance
80

16%

Property Services
80

14%

14%
60

12%
8%
6%

20

4%

10%

60

10%
8%

40

6%
4%

20

2%
0

12%

60

10%
8%

40

6%
4%

20

0%
Sep 10 Mar 11 Sep 11

Wholesale Trade

Other Commercial Exposures

40
20

Exposure at Default ($b) (LHS)0

Sep 10 Mar 11 Sep 1160

Sep 10 Mar 11 Sep 11

2%

0%

80

0%

% in Non-Performing (RHS)

4%0

Agri, Forestry & Fishing
12%

14%

2%

Sep 10 Mar 11 Sep 11

14%

6%

20

0%

80

8%

40

2%
0

80

12%

60

10%
40

Manufacturing

0

14%

140

24%

12%

120

20%

10%

100

8%

80

6%

60

4%

40

2%

20

4%

0%

0

0%

Sep 10 Mar 11 Sep 11% of Group Portfolio (RHS)
94

16%
12%
8%

Sep 10 Mar 11 Sep 11

Australia 90+ Day Delinquencies
Australia Retail 90+ day delinquencies

1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
Sep 07

Sep 08

Sep 09Sep 10

Sep 11

Total Mortgage Portfolio

NSW & ACT Mortgages

QLD Mortgages

VIC Mortgages

WA Mortgages

Total Credit Cards

Australia Division90+ day Delinquency Balance ($m)

Mortgages have low loss rates
Individual Provision Loss Rates

2,000

FY09

FY10

FY11

Group

0.79%

0.52%

0.31%

Australia Region

0.87%

0.51%

0.30%

Australia Mortgages

0.03%

0.01%

0.02%

1,500
1,000
500
0
Sep 10Mortgages

Mar 11

Sep 11Other Lending95Australia Mortgages
Dynamic Loan to Valuation Ratio

Portfolio Statistics% Portfolio

Total Number of Mortgage Accounts

832k

Total Mortgage FUM$170b% of Total Australia Region Lending60%% of Total Group Lending

43%

60%
50%
40%

13% of Portfolio>80% LVR

30%
20%
10%
0%

Owner Occupied Loans - % of Portfolio
Average Loan Size at Origination

64%

0-60%

Sep-09$231k

Average LVR at Origination

63%

Average Dynamic LVR of Portfolio

48%% of Portfolio Ahead on Repayments1

37%

First Home Owners - % of Portfolio

9%First Home Owners - % of New Lending

8%61-75%

76-80%

81%-90%

Sep 10

Sep 11Mortgage Portfolio by State(Sep 2011)28%

NSW & ACT
16%
10%

19%

96

VIC
WA

27%

1. One month or more ahead of repayments. Excludes funds in offset accounts.

QLD

OTHER

91%+

Australia Commercial
Australia Commercial 90+ day delinquencies
3.00%
2.50%
2.00%

Business Banking

Regional Commercial Banking

EsandaSmall Business Banking

1.50%
1.00%
0.50%

0.00%
Sep-07

Sep-08

Sep-09

Regional Commercial Banking
90+ day delinquencies
3.00%

RCB Total

Agri

Other Commercial

Business Banking

28%

2.00%
1.50%

30%
34%

1.00%
0.50%
0.00%
May-10

Sep-10Jan-11

May-11

Sep-11

Australia Commercial Lending Mix

2.50%

Jan-10

Sep-10

Sep-11
97

8%

Regional Commercial Banking
EsandaSmall Business Banking

New Zealand businesses
Total Impaired Assets

Total Provision Charge
NZDm

NZDm

400

2.25%

351

247

165

200

2.06%

2,215
1.92%

531

600

2.47%

2,020

98

119

0
1,809

-200
1H09

1,718
1.25%

2H09 1H10 2H10 1H11
IP Charge
CP Charge

2H11

90+ Days Arrears
0.70%

1.20%

1,132

0.80%

631

Mortgages
Commercial
Rural

0.40%
Mar 09

Sep 09Mar 10

Impaired Assets

Sep 10Mar 11

Sep 110.00%

IA as % GLA

2007

98

2008

2009

2010

2011

Credit Intermediation Trades
Position as at 30
September 2011

Life to Date

No.

Notionalpurchased
protection
principal
amount(USDm)Mark toMarket(USDm)

Credit Riskon
Derivatives(USDm)

Credit Riskon
Derivatives(AUDm)

Notional
Principal
Amount on
corresponding
Sold Protection(USDm)

AA+/Aa3

2

1,911

206

64

66

1,423

BB/Ba1

1

3,100

262

62

63

3,100

Withdrawn Rating /No rating

3

3,729

314

66

68

3,729

Other costs1

-

-

-

303

314

Position 30
September 2011

6

8,740

782

495

511

8,252

Position 31 March
2011

6

8,888

458

443

461

8,400

Counterparty Rating

1. Other costs are cumulative life to date costs which include realised losses relating to restructuring trades to reduce risks which were unhedged due todefault by the purchased protection counterparty and realised losses on termination of sold protection trades. It also includes foreign exchange hedging
losses.

99

Credit Intermediation Trade Portfolio• Cumulative Credit Risk on Derivative expense for theCredit Intermediation Trade portfolio as at 30/9/2011 was$511m (up $50m from 31/3/2011)

Credit Intermediation Trades
AUDb

USDb

3.5

12

3.0

• Recent volatility and uncertainty in European andAmerican markets have lead to an increase in MtM andCVA compared to March 2011. Credit markets havewidened accordingly as governments struggle to reign insovereign debt and stimulate financial growth.

10

2.5

• ANZ‟s European sovereign debt exposure to the PIIGS iszero, with minimal exposure (less than 1%) to financial
institutions in these countries.

8• The total notional value of the sold protection outstanding
was USD 8,252m (31/3/11 USD 8,400m).

2.0

6• There have been no trade maturities, or unwinds during
the 2HY. Notional value reductions are attributable to
CLO amortisations for trades that are past their respective
reinvestment periods and exchange rate movements.

1.5
4

1.0

• The CDO portfolio has experienced 2 credit events in theunderlying reference entities in the last 6 months.

2

0.5
0.0

• ANZ has strong levels of protection under the soldprotection trades with weighted average attachment
points of:0 ~ 15% for the 12 CDO‟s

Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11

 ~ 32% for the 6 CLO‟sMark to Market AUD(LHS)• ANZ has USD 8,740m in bought protection outstanding
including approximately USD 488m of bought protection
for which ANZ has no remaining underlying sold protection
exposure.

LTD Credit Valuation Adjustment AUD (LHS)
Notional Sold Exposure USD (RHS)

100

Investor Discussion Pack

AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
November 2011

2011 Financial Result

Overview of financial performance
2011
$m

%

Underlying Profit

5,652

+12%

Operating Income

16,812+7%

Expenses

7,718

+11%

Provisions

1,211

-33%

Statutory Net Profit After Tax

5,355

+19%

EPS (cents)

218.4

+10%

140

+11%

Net Interest Margin

2.46%

-1bps

Customer deposits

296,753

16%

Net loans and advances1

397,285

8%

Dividend per Share (cents)

All figures other than Statutory Net Profit after Tax and Dividend are presented on an underlying basis.
1. Including acceptances1022011 Full Year$m

Performance FY11 v FY10
524

5,025

4,501

283

609

5,652
265

3%

5,355
297

33%

Up 12%Up 19%

FY10
Statutory
Profit

Non-Core
FY10
ProfitProvisions Tax & OEI
FY11
Non-Core
Items
Underlying
BeforeUnderlying
Items
ProfitProvisions
profit

FY11
Statutory
ProfitPerformance 2H11 v 1H11
1H11
Statutory
Profit

Non-Core
Items

1H11
Underlying
ProfitProfit
BeforeProvisions

Provisions

2,664

154

2,818

(124)

109

Down 3%

Down 17%103

Tax & OEI

2H11
Underlying
Profit

Non-Core
Items

2H11
Statutory
Profit

31

2,834

143

2,691

Up 1%

Up 1%

Impact of trading income and provision trends 2H11$m

Performance 2H11 v 1H11
2,818

248

109

31

Down 17%

Down 3%

Provisions

Tax & OEI

2,834

76
296
Down 70%

Up 3%

Up 2%

Up 1%
1H11
Underlying
ProfitTrading
IncomeIncomeex-Trading

Expenses

Performance FY10 v FY112H11Underlying
ProfitFY10Underlying
ProfitTrading
IncomeIncomeex-Trading

Expenses

Provisions

Tax & OEIFY11Underlying
Profit

5,025

(337)

1,367

(747)

609

(265)

5,652

Down 36%

Up 9%

Up 11%

Down 33%

Up 13%Up 12%Up 8%
Pro Forma

104

Trends September Quarter 2011
Trading Income weaker than expected

Lower provision charge

$m
Sales

300
250
200
150
100
50
0

Trading & Balance Sheet

328
223

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11
3Q11

Higher recoveries & write-backs driven by
Institutional division

4Q11

Release of collective flood provision takenin 1H11

253
200
(10)
(48)

3Q11

3Q11

4Q11

105

4Q11

Adjust for acquisitions & FX – The Pro Forma Numbers
Growth FY11 v FY10 – Underlying & Pro forma
Revenue

Ex-Trading
6.5%

Profit before
Provisions

Expenses

10.7%

Pro Forma

Underlying

Pro Forma

12.7%

Underlying

Pro Forma

7.0%

5.2%

Underlying

12.5%
Ex-Trading

8.2%

7.6%

Net Profit after Tax

3.2%

2.9%

Underlying

Pro Forma

Growth 2H11 v 1H11 – Underlying & Pro forma
Revenue

Profit before
Provisions

Expenses

Net Profit after Tax

Underlying

Pro forma

Underlying

Pro forma

Underlying

Pro forma

Underlying

Pro forma(0.6%)(0.8%)

2.0%

2.4%(2.7%)(3.4%)

0.6%(0.1)%

Ex-Trading

2.9%

Ex-Trading

3.3%

106

Divisional overview
Net Profit after Tax (Pro Forma)
2H11 v 1H11

2H11

HOH

FY11

YOY

Australia Division (AUD)

1,445

8%

2,777

2%

APEA (USD)

353

(9%)

739

20%

Institutional (AUD)

867

(15%)

1,895

9%

NZ Businesses (NZD)

451

0%

904

55%

Profit Before Provisions (Pro forma)
2H11 v 1H11

2H11

HOH

FY11

YOY

Australia Division (AUD)

2,361

2%

4,673

5%

APEA (USD)

491

(9%)

1,030

17%

Institutional (AUD)

1,314

(17%)

2,905

(8%)

NZ Businesses (NZD)

755

2%

1,493

13%

1H11

2H11 Increase

2H11 Decrease107

Net Interest Margin
Movement 2H11 v 1H11 (bps)
247.2

3.8
2.5

1.0

244.2

4.5
3.4

280.9

2.4

280.3

Down 0.6 bps ex-markets
Down 3.0 bps

1H11

Funding&
Asset Mix

Funding Costs

Deposits

AssetsOther

Markets

2H11

Movement FY11 v FY10 (bps)
FY10

Funding &Asset Mix

Funding Costs

Deposits

AssetsOther

Markets

FY11

247.4

2.8

(3.4)

(7.8)

16.3

(1.1)

(8.5)

245.7

Down 1.8 bps
273.9

Up 6.7 bps ex-markets

108

280.6

Net Interest Margin
Net Interest Margin 2H11 v 1H11
Australia Division

Net Interest Margin
ANZ Group ex-markets
Australia Division
NZ Businesses
APEA ex-markets
Institutional ex-markets

Institutional
ex-Markets
8.4%

2.7%

Down 2bps

Down 17bps

3.50%
3.30%
3.10%

-0.8%

VolumeMarginNew ZealandBusinesses (NZD)

-5.4%

2.90%

Margin2.70%

APEA Division
ex-Markets (USD)

2.50%

Volume2.30%
Up 6bps

21.9%

2.10%

Down 36 bps

2.5%

1.90%
1.70%

-1.5%
VolumeMarginVolume-12.2%
Margin

1.50%
1H10

109

2H10

1H11

2H11

Operating Expenses
Operating Expense Growth Pro Forma HOH
Group Operating Expense growth
5.5%
New ZealandBusinesses
Institutional

0.7%

2.2%

Australia
Division

Group

4.1%

6%

4%

New ZealandBusinesses

5%
2%

3%
1%

1%

0%

1.9%

2.4%

Australia Division

1.0%

Institutional

1.3%

1.2%
0.3%

Group Centre

-5%

0.1%

APEA exInstitutional

APEA
Institutional
20%

19%

1.6%

0.4%
10%

1.0%

0.9%

APEA
ex-Institutional

13%
8%

6% 5%

10%

0.3%
-0.7%

2H10

1H11

-0.4%
-4%

2H10

2H11
110

1H11

2H11

Continue to invest for future growth and productivity
Operating Expense Growth
Pro Forma FY11 v FY10

421

64

269

83

7,718
251

7,132

• Risk management systems• Payments & IT infrastructure• Back & middle office FTE• Frontline FTE in Institutional & APEA
• Institutional cash management platform
rollout, Global Markets systems• Investment in regional support hubs
• Operational process transformation• Super Regional Sourcing program• Regional support hubs
• New Zealand simplification• RBS, One Path and Landmark integration synergies
FY10

Running theBusiness

Infrastructure
Upgrade &Compliance

Investment for
Growth111

Productivity
Investment

Realisedproductivity
Benefits

FY11

Credit quality is improving
Total Provision Charge

New Impaired Assets
$m

$m

1,800
1,600

1,435

4,000

1,621

3,600

3,500

1,400

3,000

1,200

1,098

2,500

1,000
722

800

3,126

3,035

2,319

2,437
1,842

2,000

660

600

551

1,500
1,000

400
200

500

0

0
1H09

-200
1H09

2H09

Institutional

1H10

2H10

1H11

Australia Division

2H09

1H10

2H10

1H11

2H11

2H11
NZ Businesses

112

APEA ex-Institutional

CP charge

Collective Provision Charge & Management Overlay
Economic Cycle & Concentration(Management) Overlay BalanceCollective Provision Charge
Lending Growth
Risk Profile
Portfolio Mix
Cycle & Concentration (Management Overlay)$m
500

Additional natural
disaster overlay

$m
600

500

400
400

300
200

300

100
0

200

-100
-200
-300

100

Total charge
$8m

0
Sep09

-400
1H09 2H09 1H10 2H10 1H11 2H11
113

Mar10

Sep10

Mar 11Natural Global
Sep 11
Disasters Volatility

The material in this presentation is general background information about the Bank‟s activities current at thedate 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 theinvestment objectives, financial situation or needs of any particular investor. These should beconsidered, with or without professional advice when deciding if an investment is appropriateThis presentation may contain forward-looking statements including statements regarding our intent, belief
or current expectations with respect to ANZ‟s business and operations, market conditions, results ofoperations and financial condition, capital adequacy, specific provisions and risk 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 United States
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 or circumstances after thedate 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