Net Interest Margin trends For personal use only Net Interest Income 2H12 v 1H12 Net Interest Margin Group Ex-Markets Australia Division Down 7bps Up 4 bps ANZ Group ex-markets 4.2% 4.9% Australia Division 1.8% NZ Businesses IIB Division ex-Markets 3.50% -2.5% Volume Margin Volume Margin 3.00% New Zealand IIB Ex-Markets Businesses (NZD) Down 33bps Down 7 bps 2.50% 7.4% 2.9% 2.00% -2.5% -10.3% 1.50% Volume Margin Volume Margin 1H11 2H11 1H12 20
Outlook - Continuing to execute our super regional strategy For personal use only Income Growth Return on Equity FY11 FY12 16% 7% 6% 19.6% 16.2% 15.5% 15.6% 15.1% 13.3% 3% Australia / New Zealand APEA FY07 FY08 FY09 FY10 FY11 FY12 Operating Expense Growth Dividend 15% Full Year Dividend Dividend Payout Ratio (RHS) 65.3% 11% 65.0% 64.1% 64.1% 4% 145 140 126 102 FY10 FY11 FY12 FY09 FY10 FY11 FY12 21
For personal use only 12 FULL YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 25 October 2012 Investor Discussion Pack Additional Financial Information
Adjustments between statutory profit and underlying profit For personal use only 2H12 FY12 $M $M Statutory profit 2,742 5,661 Adjustments between statutory profit and underlying profit Gain on sale of Visa shares (224) (224) New Zealand Simplification programme 59 105 Acquisition related adjustments 13 41 Treasury shares adjustment 26 96 Economic hedging - fair value (gains)/losses 207 229 Revenue and net investment hedges (gains)/losses 10 (53) Capitalised software impairment 220 220 NZ managed funds impacts - 1 Non continuing businesses (15) (65) Total adjustments between statutory profit and underlying profit 1 296 350 Underlying profit 3,038 6,011 1. Refer to pages 75 to 84 of the ANZ Consolidated Financial Report Dividend Announcement and Appendix 4E for an analysis of the reconciliation of statutory profit to underlying profit 23
Net Interest Margin (NIM) movement summary For personal use only Basis points (bps) Group Divisions Regions Australia Division NZ Businesses IIB Division Australia NZ HOH YOY HOH YOY HOH YOY HOH YOY HOH YOY HOH YOY Starting NIM 235 242 245 259 266 252 195 209 251 259 247 235 Funding & Asset Mix -2 1 -1 -2 3 7 -8 -11 -3 -1 2 6 Funding Costs -2 -8 5 -3 -2 -15 -11 -7 -2 -6 -1 -10 Deposits -11 -10 -16 -14 -9 1 -4 -7 -12 -11 -9 2 Assets 9 6 18 10 4 13 -7 -15 13 7 3 12 Other -1 2 -2 -3 -3 4 -3 0 -1 -1 -3 2 Movement excl. Global -7 -9 4 -12 -7 10 -33 -40 -5 -12 -8 12 Markets Markets 0 -2 0 0 0 0 14 16 2 2 0 -4 Total Movement -7 -11 4 -12 -7 10 -19 -24 -3 -10 -8 8 Ending NIM 228 231 249 247 259 262 176 185 248 249 239 243 Some small variances to the detailed NIM pages exist as a result of rounding 24
NIM – Divisional Trends For personal use only Net Interest Income 2H12 v 1H12 Net Interest Margin Group Ex-Markets Australia Division ANZ Group ex-markets 4.9% 4.2% Australia Division Up 4 bps Down 7 bps 1.8% NZ Businesses IIB Division ex-Markets 3.50% -2.5% Volume Margin Volume Margin 3.00% New Zealand IIB Ex-Markets Businesses (NZD) 2.50% 7.4% Down 33 bps 2.9% Down 7 bps 2.00% -2.5% -10.3% 1.50% Volume Margin Volume Margin 1H11 2H11 1H12 25
NIM – Group For personal use only NIM movement 2H12 v 1H12 bps 235 9 228 2 2 1 0 11 Ex-markets down 7 bps Including markets down 7 bps 1H12 Funding & Funding Costs Deposits Assets Other Markets 2H12 Asset Mix Key drivers of movement Funding & Relative increase in Transaction Banking and lower growth in cards Asset Mix Funding Costs Lower returns on invested capital, wholesale funding costs stabilised in the half Strong competition for deposits in Australia and NZ and an increase in proportion of term Deposits deposits, particularly in Australia and IIB Asset repricing benefits in Australia and New Zealand, partially offset by increased pricing competition Assets in Global Loans 26
NIM – Group For personal use only NIM movement FY12 v FY11 bps 1 242 2 6 231 8 2 10 Ex-markets down 9 bps Including markets down 11 bps FY11 Funding & Funding Costs Deposits Assets Other Markets FY12 Asset Mix Key drivers of movement Funding & Reduced reliance on wholesale funding offset by growth in Transaction Banking and lower growth in Asset Mix Cards Funding Costs Lower returns on invested capital and higher wholesale funding costs Deposits Effects of strong competition for deposits primarily in Australia Asset repricing benefits in Australia and New Zealand, partially offset by increased pricing competition Assets in Global Loans 27
NIM – Australia Division For personal use only NIM movement FY12 v FY11 bps 259 10 2 247 3 3 14 Down 12 bps FY11 Funding & Funding Costs Deposits Assets Other FY12 Asset Mix NIM movement 2H12 v 1H12 bps 18 249 5 245 2 1 16 Up 4 bps 1H12 Funding & Funding Costs Deposits Assets Other 2H12 Asset Mix 28
NIM – New Zealand Division For personal use only NIM movement FY12 v FY11 bps 262 4 7 13 252 1 15 Up 10 bps FY11 Funding & Funding Costs Deposits Assets Other FY12 Asset Mix NIM movement 2H12 v 1H12 bps 3 266 2 4 259 3 9 Down 7 bps 1H12 Funding & Funding Costs Deposits Assets Other 2H12 Asset Mix 29
NIM – International & Institutional Banking Division For personal use only NIM movement FY12 v FY11 bps 209 185 16 11 7 0 7 15 Ex-markets down 40 bps Including markets down 24 bps FY11 Funding & Funding Costs Deposits Assets Other Markets FY12 Asset Mix NIM movement 2H12 v 1H12 bps 195 14 176 8 11 4 7 3 Ex-markets down 33 bps Including markets down 19 bps 1H12 Funding & Funding Costs Deposits Assets Other Markets 2H12 Asset Mix 30
NIM – Australia Geography For personal use only NIM movement FY12 v FY11 bps 259 249 1 2 7 6 1 11 Ex-markets down 12 bps Including markets down 10 bps FY11 Funding & Funding Costs Deposits Assets Other Markets FY12 Asset Mix NIM movement 2H12 v 1H12 bps 251 248 13 3 1 2 2 12 Ex-markets down 5 bps Including markets down 3 bps 1H12 Funding & Funding Costs Deposits Assets Other Markets 2H12 Asset Mix 31
NIM – New Zealand Geography For personal use only NIM movement FY12 v FY11 bps 2 12 243 6 4 235 2 10 Ex-markets up 12 bps Including markets up 8 bps FY11 Funding & Funding Costs Deposits Assets Other Markets FY12 Asset Mix NIM movement 2H12 v 1H12 bps 2 247 1 3 239 0 9 3 Ex-markets down 8 bps Including markets down 8 bps 1H12 Funding & Funding Costs Deposits Assets Other Markets 2H12 Asset Mix 32
Balance Sheet – Customer Lending & Deposits For personal use only Net Loans & Advances Customer Deposits (incl. Acceptances) $b $b Loan / Deposit Ratio 450 450 180% 167% 400 400 160% 350 350 140% 130% 300 300 120% 250 250 100% 200 200 80% 150 150 60% 100 100 40% 50 50 20% 0 0 0% Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Australia APEA New Zealand Group LTD Ratio (RHS) 33
Balance Sheet – Composition by Geography For personal use only Customer Lending 1 by Geography Customer Deposits by Geography APEA APEA APEA Commercial Australia Retail & Wealth Retail & Wealth & Institutional Institutional 2% 14% 5% APEA Commercial 19% & Institutional 8% Australia Australia Commercial Institutional APEA APEA 12% 17% New Zealand 7% 11% 24% Retail & Wealth New Zealand Australia 8% Retail & Wealth Other New New Retail 3% Zealand Zealand Australia 18% 10% New Zealand New Zealand 16% 5% Australia 71% Commercial Commercial Australia 60% 13% 3% 1% Commercial New Zealand New Zealand Institutional Institutional 43% 30% Australia Retail Mortgages Australia Retail 1. Customer lending represents Net Loans & Advances including acceptances 34
Balance Sheet – Composition by Division For personal use only Customer Lending 1 by Division Customer Deposits by Division 25% 43% 44% 57% 17% 1% 12% 1% Australia Australia International & Institutional Banking International & Institutional Banking New Zealand New Zealand Global Wealth & Private Banking Global Wealth & Private Banking 1. Customer lending represents Net Loans & Advances including acceptances 35
Balance Sheet – Composition by Segment For personal use only Customer Lending 1 by Segment Customer Deposits by Segment New Zealand Australia Australia Commercial Institutional New Zealand Commercial Commercial 17% 10% 12% 5% New Zealand Retail & Wealth Commercial Australia Australia 7% 14% 13% Institutional Institutional 22% Commercial APEA APEA 18% 19% Institutional Retail & 39% 2% Commercial Wealth Institutional Retail & 23% APEA New Zealand 8% 8% Wealth Retail & Wealth Institutional Retail & Wealth 3% New Zealand 55% 43% 1% Institutional New Zealand 5% Institutional APEA Retail & Wealth 30% 46% Australia Australia Retail & Wealth Retail & Wealth 1. Customer lending represents Net Loans & Advances including acceptances 36
For personal use only 12 FULL YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 25 October 2012 Investor Discussion Pack Treasury
Balance Sheet strengthening has been a consistent focus For personal use only Strong Capital Position Increased Liquid Assets AUDb 115 10.8% 10.1% 75 7.7% 38 8.8% 8.0% 5.9% Sep 08 Sep 10 Sep 12 Sep 08 Sep 10 Sep 12 Basel 2 Tier 1 Ratio Basel 2 Common Equity Tier 1 Strengthened Funding Profile Diversified Term Debt Portfolio 13% 10% 14% 13% 13% 22% 6% 5% 12% 7% 21% 16% 26% 41% 14% 31% 33% 61% 57% 50% 23% 35% 28% 8% 8% 26% 7% Sep 08 Sep 10 Sep 12 Sep 08 Sep 10 Sep 12 Short Term Wholesale Funding Customer Funding Term Debt < 1 year Residual Maturity Domestic North America Europe Asia Shareholders equity & Hybrid debt Term Debt > 1 year Residual Maturity 38
ANZ is in a strong capital position For personal use only $11bn of shareholders‟ equity Capital levels are well positioned used to strengthen capital ratios (CET1) Basel 3 AUDb 40 Minimum 10.0% 9.8% Capital Capital 9.5% 9.3% 11 Requirement Strengthening Business Capital 8 Growth 2.5% Conservation 21 Buffer 8.0% 7.8% 7.5% 7.3% CET1 Minimum 4.5% Sep-07 Sep-12 Mar 11 Sep 11 Mar 12 Sep 12 Jan 16 APRA Basel 3 Internationally Harmonised Basel 3 Capital Management Agenda Capital strengthening phase is largely complete • Discount applied to Dividend Reinvestment Plan removed for the 2012 Final Dividend • Continuing focus on capital allocation and optimisation • 39
Solid organic capital generation underpins strong Basel 3 CET1 position For personal use only Capital Position (APRA Basel 3 Common Equity Tier 1) 10.03 2.03 (0.70) 0.28 8.02 (0.27) (0.03) 7.47 (0.76) Portfolio growth: 38bp decrease Risk Migration (incl EL vs EP): 2bp increase Portfolio data review: 5bp increase Non credit RWA 3 : 39bp decrease Up 55 bps Sep-11 APRA Underlying NPAT (1) RWA Usage (2) Non RWA Dividends (net DRP) Capital Initiatives and Divestments (5) Other (6) Sep-12 APRA Sep-12 Internationa Basel 3 Business Usage (4) Basel 3 Harmonised B3 1. Underlying earnings net of pref shares. 2. Includes impact of expected loss versus eligible provision shortfall 3. Includes Operational model risk (22bps). 4. Includes capital retention of deconsolidated entities, capitalised software (before write off) and other intangibles. 5. Includes external refinance of OnePath Australia and sale of shares in VISA Inc. 6. Net FX, Non-Core NPAT items, net deferred tax assets and AFS reserve. 40
Reconciliation of ANZ‟s capital position under Basel 3 For personal use only ANZ capital ratios: Basel 2 to Basel 3 CET1 Tier-1 Total Capital Sep-12 APRA Basel 2 8.8% 10.8% 12.2% Dividend not provided for (net of DRP) 0.5% 0.5% 0.5% Investments in ADI and overseas equivalents -0.4% -0.4% 0.0% Investments in ANZ insurance subs including OnePath -0.3% -0.3% 0.0% Expected losses in excess of eligible provisions -0.2% -0.2% 0.0% Other 0.0% -0.1% -0.1% 10% reduction of existing hybrid and Tier 2 securities 0.0% -0.2% -0.4% Estimated increase in RWA 1 -0.4% -0.4% -0.5% Sep-12 APRA Basel 3 8.0% 9.7% 11.7% 10% allowance for investments in insurance subs and ADIs 0.7% 0.7% 0.7% Up to 5% allowance for deferred tax asset 0.2% 0.2% 0.2% Other capital items 0.2% 0.2% 0.2% Mortgage 20% LGD floor and other measures 0.5% 0.6% 0.6% IRRBB RWA (APRA Pillar 1 approach) 0.4% 0.4% 0.5% Sep-12 Internationally Harmonised Basel 3 10.0% 11.8% 13.9% 1. Includes credit counterparty but excludes any Basel 3 liquidity changes. 41
Well diversified funding profile with a low reliance on offshore short term wholesale debt For personal use only FY12 Lending growth fully funded Strengthened Funding Profile Offshore by deposit growth Commercial Paper only 2% AUDb of total funding (USD13b) 31.1 13% 13% 14% (30.3) 18% 22% 28.3 6% 6% 5% 5% 12% 12% 7% 16% (22.9) 15% 14% (15.9) 60% 61% 57% 54% 50% 9.3 0.4 9% 8% 8% 8% 7% Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 1 Term Debt Issuance & debt net of Deposits Loans Maturities Short Term Inter-Bank Liquids Other Term Equity Short Term Wholesale Customer Funding Funding Term Debt < 1 year Residual Shareholders equity & Hybrid debt Maturity Term Debt > 1 year Residual Maturity 1. Excludes unfunded documentary credit acceptances 42
FY13 term funding well progressed, already one third complete For personal use only Consistent term wholesale funding Growth in term wholesale funding requirement portfolio costs moderating AUDb 3m BBSW 160bp 30 Actual portfolio cost Issuance Maturities 140bp Forecast portfolio cost based on 25 current market levels Indicative annual 120bp issuance volumes 20 100bp 80bp 15 60bp 10 40bp 5 20bp 0 0bp FY08 FY09 FY10 FY11 FY12 FY13 FY13 FY14 FY15 FY16 FY17 FY18+ Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Senior Unsecured Government Guaranteed Covered Bonds Subordinated Issuance since 1-Oct-12 43
Recent issuance has been well diversified supporting a sustainable wholesale debt portfolio For personal use only Term Debt Issuance Term Debt Outstandings Weighted avg. Weighted avg. tenor : 4.0 yrs tenor : 4.7 yrs 10% 12% 13% 13% 13% 6.6yrs 24% 18% 21% 26% 30% 41% 68% 3.9yrs 35% 35% 31% 33% 30% 23% 4.2yrs 41% 35% 34% 28% 28% 32% 26% Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 FY08 FY12* Domestic North America Europe Asia AUD/NZD Foreign Currency - Senior Unsecured/Subordinated Foreign Currency - Covered Bonds *Excludes FY13 pre-funding 44
Lower structural funding gap provides funding flexibility For personal use only ANZ Westpac NAB CBA Loan – Deposit Ratio (%) 130% 158% 152% 141% Loan – Deposit Gap ($b) 100 186 165 156 Australia Household Funding Gap ($b) 112 193 124 171 ANZ has built a sustainable balance sheet Australian Household Funding Gap AUDb Having the lowest wholesale funding • 200 requirement enables ANZ to : Reduce reliance on offshore short term • funding markets 150 Limit benchmark issuance in offshore • markets Maintain a consistent & sustainable funding • 100 program Provide flexibility in issuance timing • Stable AA category credit ratings across all • 50 major rating agencies despite ongoing bank 2007 2008 2009 2010 2011 2012 ratings downgrades ANZ Westpac NAB CBA Source: APRA (Aug 12) and latest bank published financial statements 45
Liquid assets of $115b provides a high level of coverage and significantly exceeds total offshore debt outstanding For personal use only 115 AUDb Liquidity portfolio exceeds total FY13 wholesale debt maturities and entire offshore debt portfolio 91 38 81 75 75 31 19 15 31 13 9 62 62 47 35 Sep 10 Sep 11 Sep 12 Wholesale Debt Total Offshore Securities Debt Securities Maturing in FY13 Internal RMBS Offshore Short Term Debt Private Sector Securities & Gold Offshore Term Debt Cash, Government & Semi-Government Securities 46
Hedging has negated the impact on earnings of sustained $A strength For personal use only FY12 Earnings Composition by Currency EPS Impact from Hedging Non AUD & NZD 0.8% 20% Hedges in place for ~50% FY13 TWD earnings MYR PGK 0.4% Other IDR CNY USD AUD 62% -0.1% NZD 18% -0.4% Hedges in place for ~60% FY13 earnings 2H12 HOH FY12 YOY Inclusive of Hedging Unhedged 47
For personal use only 12 FULL YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 25 October 2012 Investor Discussion Pack Risk Management
Credit quality in line with expectations For personal use only Credit Quality Trends Provision Charge Collective provision Charge $m • The provision charge of $1.25 billion was Individual Provision Charge Total Provision Charge as % Avg. net Advances broadly in line with last year, albeit the mix of 2,000 1.60% 1,750 1.40% collective and individual provisions differed 1,500 1.20% 1,250 1.00% • ANZ remains appropriately provided for with 1,000 0.80% 750 0.60% the total provision coverage ratio at 1.78% 500 0.40% 250 0.20% and the collective provision ratio at 1.08% 0 0.00% -250 -0.20% • Gross impaired assets reduced 7% YOY and 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 3% HOH • New impaired assets declined 22% HOH Impaired Assets • All divisions saw HOH decreases in new $m impaired assets with the exception of Gross Impaired Assets New Impaired Assets 7,000 Australia, with increases predominantly in 6,000 regional agri-business 5,000 • Increased individual provisions reflected losses 4,000 associated with two large single names. 3,000 Management overlays have been released in 2,000 relation to these movements as the rest of the 1,000 portfolio is now less concentrated 0 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 49
Exposure composition by Geography and Asset Class For personal use only Exposure at Default by Geography Exposure at Default by Basel Asset Class (Sep 2012) (Sep 2012) Corporate & Sovereign Singapore Specialised Lending Pacific Hong Kong 4% Bank Residential Mortgage 1% Americas 3% UK Other South & QRR Other retail 3% East Asia Europe 1 3% New 3% Other North 37% Asia & Zealand East Asia Pacific 16% 13% 2% 10% 5% 3% Australia 7% 65% 39% 1. Inclusive of exposure booked to large multi-nationals doing business in Asia-Pacific 50
Control Lists and Risk Grade Profiles For personal use only BB+ and lower rated exposures by Control List Exposure at Default Control List by Limits Control List by No. Groups Index Sep 2008 = 100 29% 28% 300 27% 250 26% 200 24% 150 23% 100 50 13% 13% 0 12% 12% Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 12% 11% Group Risk Grade profile by Exposure at Default 9% 9% 8% 8% 7% 8% 59% 58% 60% 61% 61% 62% 13% 14% 14% 13% 15% 14% 6% 6% 6% 6% 5% 13% 13% 5% 12% 12% 12% 11% 9% 9% 8% 8% 7% 8% 6% 6% 6% 6% 5% 5% Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 BB+ to BB BB- <BB- AAA to BBB BBB- BB+ to BB BB- <BB- 51
Continued improvement in Credit RWA rate For personal use only Exposure at Default and Credit Risk Weighted Assets Exposure at Default ($b) Credit Risk Weighted Assets ($b) CRWA / EAD (%) 658 47% 630 615 45% 564 552 550 522 512 42% 42% 41% 40% 40% 39% 258 255 249 250 234 233 230 220 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 52
Risk Weighted Assets For personal use only Total Risk Weighted Assets Total Risk Weighted Assets ($b) Movement FY12 v FY11 ($b) Market & Operational Risk Weighted Assets 8.5 300.1 5.6 6.0 280.0 Credit Risk Weighted Assets 300 285 280 45 264 264 Sep 11 Credit Risk Market Operational Sep 12 35 31 Risk Risk 1 249 31 31 Total Risk Weighted Assets 29 Movement by Division FY12 v FY11 ($b) 300.1 2.2 0.2 10.0 280.0 7.7 255 250 249 234 233 220 Sep 11 Australia IIB NZ GWPB Sep 12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 1. Driven by improvements to operational risk capital model 53
Credit Risk Weighted Assets For personal use only Credit Risk Weighted Assets Credit Risk Weighted Assets ($b) Movement FY12 v FY11 ($b) 14.2 Credit Risk Weighted Assets 254.9 248.8 (1.7) (2.8) Collective Provision as a % of CRWA (3.6) 1.38% 1.35% 1.36% 1.32% 1.28% 1.20% 1.06% 1.08% Sep 11 Growth Data FX Risk Sep 12 Review Impact 258 255 250 249 234 233 230 Credit Risk Weighted Assets 220 Movement by Division FY12 v FY11 ($b) 1.4 0.1 0.4 254.9 4.2 248.8 Sep 11 Australia IIB NZ GWPB Sep 12 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 54
Impaired Assets by Division For personal use only New Impaired Assets Net Impaired Assets $m $m 3,500 6,000 3,126 4,969 3,000 5,000 4,685 4,504 2,436 2,500 2,335 2,319 3,884 4,000 3,629 3,423 2,000 1847 1,824 3,000 1,500 2,000 1,000 1,000 500 0 0 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 1H10 2H10 1H11 2H11 1H12 2H12 Institutional Australia New Zealand Other Institutional Australia New Zealand Other 55
Gross Impaired Assets For personal use only Gross Impaired Assets by Size of Exposure Gross Impaired Assets by Type Impaired Loans NPCCD Restructured > $100m $10-$99m < $10m $m $m 8,000 8,000 7,000 7,000 6,561 6,561 6,561 6,561 6,221 6,221 6,000 6,000 5,581 5,581 5,343 5,343 5,196 5,196 5,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 56
Individual Provision Charge For personal use only Individual Provision Charge Individual Provision Charge by Segment composition $m $m 1,062 1,200 912 1,500 762 609 717 594 1,062 1,000 1,000 500 912 0 762 -500 800 717 1H10 2H10 1H11 2H11 1H12 2H12 609 594 New Increased Writebacks & Recoveries 600 Individual Provision Charge by Region $m 400 1,062 1,200 912 1,000 762 717 800 609 594 200 600 400 200 0 0 1H10 2H10 1H11 2H11 1H12 2H12 1H10 2H10 1H11 2H11 1H12 2H12 Institutional Commercial Consumer Australia New Zealand APEA 57
Collective Provision Charge For personal use only Collective Provision Charge by Source $m 500 (96) 331 36 (40) 65 (58) (152) (226) 400 300 200 100 0 -100 -200 -300 -400 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Lending Growth Net Economic Cycle & Concentration Risk Profile Portfolio Mix 58
Collective Provision Charge by Source For personal use only Lending Portfolio Economic Cycle & FY12 ($m) Risk Impact Total Growth Mix Concentration Australia Division 10 53 (22) (79) (38) International & (198) 90 10 (201) (299) Institutional Banking New Zealand Businesses (6) 4 (1) (42) (45) Global Wealth & Private (3) 1 1 0 (1) Banking Division Other 0 0 0 5 5 Total (196) 148 (12) (318) (378) Lending Portfolio Economic Cycle & 2H12 ($m) Risk Impact Total Growth Mix Concentration Australia Division 1 30 (13) (44) (27) International & (27) 38 3 (198) (184) Institutional Banking New Zealand Businesses 5 6 (1) (29) (19) Global Wealth & Private (1) 0 0 0 (1) Banking Division Other 0 0 0 4 4 Total (22) 74 (11) (267) (226) 59
Collective Provision Balance For personal use only Management overlay balance movement Collective Provision Balance ($m) 2H12 v 1H12 ($m) Modelled CP Charge Management overlay 862 3,500 44 3,000 2,500 597 6 198 29 2,000 1,500 1,000 500 0 1H12 Australia IIB NZ Other 2H12 1H10 2H10 1H11 2H11 1H12 2H12 60
Impaired Asset Concentration For personal use only Impaired Assets Concentration Impaired Assets Concentration by number of Customers by value of Impaired Assets Exposures >$10m Exposures >$10m 3% 3% 3% 4% 3% 4% 2% 4% 22.4% 23.9% 11% 26.7% 19% 16% 31.1% 20% 11.4% 4.7% 16.3% 11.2% 31.3% 27.4% 17.6% 28.3% 82% 78% 76% 72% 42.2% 38.8% 37.3% 29.4% Sep 10 Sep 11 Mar 12 Sep 12 Sep 10 Sep 11 Mar 12 Sep 12 10-50m 51-100m 101-200m >200m 10-50m 51-100m 101-200m >200m 61
Total lending exposures by Industry Sector For personal use only Exposure at default (EAD) % in Non Category EAD as a % of group total Performing Sep-11 Sep-12 Sep-11 Sep-12 Consumer Lending 43.6% 41.0% 0.3% 0.3% Finance, Investment & 15% 14.5% 14.9% 0.3% 0.5% Insurance 8% Property Services 7.1% 7.5% 1.9% 1.6% 6% Manufacturing 5.9% 6.0% 1.9% 1.2% Agriculture, Forestry, 4.5% 4.5% 4.4% 3.9% 5% Fishing Government & Official 4% 4.4% 4.2% 0.0% 0.0% Institutions Wholesale trade 3.2% 3.9% 0.8% 0.6% 4% 41% Retail Trade 2.6% 2.9% 0.7% 0.9% 3% 2% Transport & Storage 2.1% 2.3% 0.7% 3.2% 2% 2% Business Services 1.8% 2.0% 1.1% 0.9% 2% 2% Electricity, Gas & Water 6% 1.7% 1.8% 0.0% 0.2% Supply Construction 1.6% 1.7% 4.5% 1.4% Resources (Mining) 1.5% 1.6% 0.1% 0.2% Other 5.5% 5.7% 0.1% 0.1% 62
Manufacturing For personal use only Risk Rating Profile Total Exposure by Geography (EAD) (% of EAD) $b 40 30 20 42% 10 48% 57% 0 Sep-10 Sep-11 Sep-12 APEA Australia New Zealand 22% Exposure Mix by Geography (EAD) 26% 17% 30% 11% 14% 16% 13% 41% 43% 49% 14% 9% 10% 48% 43% 35% 3% 5% 3% 1% Group Australia APEA Sep-10 Sep-11 Sep-12 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 AAA to BBB BBB- BB+ to BB BB- <BB- APEA Australia New Zealand 63
Resources For personal use only Resources Total Committed Exposure (EAD) Resources Exposure by Geography (EAD) $b 12 10 8 6 13% 4 23% 2 0 Sep 10 Sep 11 Sep 12 Australia Non-Australia 18% Resources Exposure by Geography (EAD) 18% Includes Iron Ore 7% 5% Australia 15% 28% New Zealand 62% Asia 18% Oil & Gas Coal Metal Ore Mining Services Europe, America, Pacific & Other Other 64
Commercial Property Credit Exposure For personal use only Commercial Property Exposure Commercial Property Exposure by Sector: Australia GLA by Region $b 35 8.0% Offices 28% 30.0 30.0 Retail 29.3 7.8% 28.2 30 27.8 Residential 26.1 3.4 3.4 0.8 3.1 28% 1.1 7.6% 25% Industrial 1.0 25 6.1 4.9 5.0 5.8 5.0 Tourism 5.2 7.4% 14% 2% 20 Other 3% 7.2% 15 Exposure to REITs, Listed Property 7.0% Companies and/or their subsidiaries 21.7 21.6 21.3 21.3 20.8 10 19.9 6.8% Exposure to 5 REITs, listed 6.6% Other property Commercial 68% 32% companies 0 6.4% Property and/or their Sep-08 Sep-09 Sep-10 Sep-11 Mar-12 Jun-12 subsidiaries Australia New Zealand APEA As a % of Group GLA's 65
Australia 90+ day delinquencies For personal use only Australia Retail 90+ day delinquencies Total Mortgage Portfolio NSW & ACT Mortgages QLD Mortgages VIC Mortgages WA Mortgages Total Credit Cards 2.0% 1.5% 1.0% 0.5% 0.0% Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Australia Commercial 90+ day delinquencies 3.0% Business Banking Regional Commercial Banking Esanda Small Business Banking Total Commercial 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 66
Australia Division - Commercial For personal use only Exposure at default (EAD) Commercial Australia Security Cover by industry sector (%) 13.5% 5.8% 8.4% 42% 42% 43% 46% 16.5% 49% 5.7% 4.9% 4.1% 15.9% 2.0% 24% 23% 23% 3.3% 27% 1.3% 26% 17.9% 11% 10% 11% 0.6% 10% 5% 5% 5% 10% Property Services Agriculture, Forestry & Fishing 4% 4% 19% Retail Trade Business Services 19% 18% 13% 11% Construction Manufacturing Wholesale Trade Accommodation, Cafes & Restaurants Sep-10 Mar-11 Sep-11 Mar-12 Aug-12 Health & Community Services Transport & Storage <40% 40%-59% 60%-79% Finance & Insurance Mining 80%-99% >100% Other 67
Australia Division – Mortgages For personal use only Portfolio Statistics Dynamic Loan to Valuation Ratio Total Number of Mortgage Accounts 848k % Portfolio Portfolio >90% LVR Total Mortgage FUM $182b 60% = 5% (Sep-12) 50% % of Total Australia Region Lending 60% 40% 30% % of Total Group Lending 43% 20% Owner Occupied Loans - % of Portfolio 63% 10% 0% Average Loan Size at Origination $262k 0-60% 61-75% 76-80% 81%-90% 91-95% 95%+ Average LVR at Origination 64% Sep 10 Mar 11 Sep 11 Mar 12 Sep-12 Average Dynamic LVR of Portfolio 52% Mortgage Portfolio by State (Sep 2012) % of Portfolio Ahead on Repayments 1 49% First Home Owners - % of Portfolio 9% First Home Owners - % of New Lending 8% 29% NSW & ACT 16% QLD Mortgages have low loss rates VIC 10% Individual Provision Loss Rates 19% WA 1H10 2H10 1H11 2H11 1H12 2H12 Group 0.62% 0.42% 0.32% 0.31% 0.36% 0.43% Other 26% Australia Mortgages 0.02% 0.01% 0.01% 0.03% 0.03% 0.02% 1. One month or more ahead of repayments. Excludes funds in offset accounts. 68
New Zealand Businesses For personal use only Net impaired assets Total provision charge NZDm NZDm 1.89% 351 400 300 165 119 98 1.63% 200 102 89 1.49% 100 0 1.34% 1.31% -100 1H10 2H10 1H11 2H11 1H12 2H12 1.09% IP Charge CP Charge 1,669 90+ Days arrears 1,442 1,298 1,165 1,153 1 Mortgages Commercial Rural 1.20% 985 0.80% 0.40% Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 0.00% Net Impaired Assets NIA as % GLA 2007 2008 2009 2010 2011 2012 1. Spikes in 2012 Commercial 90 day delinquencies are primarily due to internal classifications rather than any deterioration in underlying credit quality. 69
For personal use only 12 FULL YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 25 October 2012 Divisional Performance Australia Division
We‟re transforming the business to adapt to the changed banking environment For personal use only Domestic challenges ANZ Response Initiated productivity agenda focused on „right - Meeting changing customer expectations sizing‟ the business and reducing cost to serve • Customers want: • Expenses down 1% HOH Greater mobility and flexibility around their • Despite slowing revenue environment, we‟ve banking maintained CTI at ~40% to 41% since FY09 Better customer experience Disciplined management of pricing, discounting Greater understanding of their needs and and balance sheet composition targeted offerings • Self funding the loan book • Focus on service and empowering our customers Greater need for productivity rather than be a price leader • Slower volume environment increases the need for simple products and processes to lower the cost to Implemented customer segment strategy serve targeting high value customer segments in both Retail and Commercial Increased competition for liquidity • Grown share of wallet and increased market share in traditional banking • Post FY08, deposits have increased from approximately 50% to 61% of funding • Above system growth in household and business lending and household deposits Challenging macro-economic dynamics Launched the “Banking on Australia” investment • Slower economic growth leading to lower credit program growth • Simplifying the way we do business • Weaker consumer confidence • Branch Network Reconfiguration • Margin erosion (i.e. increased funding costs) • Digital and mobile channels lower cost to serve and create additional revenue opportunities Increased regulation • Improving sales effectiveness and lowering cost to • Changing capital requirements serve in our Commercial business • Higher compliance costs • Investing in customer understanding & insight to improve targeting 71
We are making good progress on our strategic agenda For personal use only 1. Targeting high-value customer segments with Retail Traditional Banking Market Share 1 tailored banking propositions • Market share gains in traditional banking, affluent and (%) Market share – Traditional Banking household deposits and lending ANZ Peer 1 Peer 2 Peer 3 • Continuing to grow share of wallet and focusing on 16 23 2 2 higher value retail and commercial segments 1 22 1 15 2. Leveraging our super-regional strengths 21 14 • The only Australian bank with the ability to connect customers across Asia, New Zealand and Australia 13 • Becoming the bank of choice for migrant customers 12 3. Good traction on the Banking on Australia agenda 11 • 46 new look branches to be completed by end of 2012 10 as part of 5 year branch refurbishment program Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Aug-12 • Roll out of Cisco videoconferencing to 44 rural and remote branches by end of 2012 • ANZ goMoney continues to be a recognised leader in Retail Traditional Banking Share of Wallet 1 mobile banking applications • (%) Share of Wallet – Traditional Banking Launched ANZ FastPay - processes same day credit and debit card transactions using an iPhone or iPad 65.0 ANZ Peer 1 Peer 2 Peer 3 4. Achieving market recognition • 60.0 Awarded Money Magazine‟s Bank of the Year and Home Lender of the Year and Capital CFO‟s Business Bank of the Year 55.0 5. Delivering strong 2H12 and FY12 outcome • Underlying profit up 10% HOH and 4% YOY 50.0 • Positive Jaws in 2H12 and FY12 with expenses down 1% HOH 45.0 • Net interest margin recovery in 2H12 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Aug-12 • Credit quality sound in both Retail and Commercial 1. Source: Roy Morgan Research: Aust Pop‟n aged 14+, rolling 12 months, Trad Banking Consumer Market (Deposits, Cards & Loans), Peers: CBA (excl Bankwest), NAB, Westpac (excl Bank of Melbourne & St George) 72
Australia Division – Financial performance For personal use only Australia division: Underlying profit 1 Retail: Underlying profit 1 $m $m 1,385 1,417 1,475 1,500 3,000 1,000 815 730 2,492 692 660 2,297 2,390 2,500 500 0 2,000 FY10 FY11 FY12 1H11 2H11 1H12 2H12 Commercial: Underlying profit 1 1,500 1,305 1,268 1,187 1,134 $m 1,000 1,500 973 1,017 912 1,000 500 538 531 486 442 500 0 0 FY10 FY11 FY12 1H11 2H11 1H12 2H12 FY10 FY11 FY12 1H11 2H11 1H12 2H12 1. Statutory profit is adjusted to exclude certain non-core items to arrive at underlying profit 73
Australia Division – Financial performance For personal use only Underlying NPAT movement – FY12 v FY11 $m 9 53 142 2,492 45 57 2,390 Up 4% FY11 Net Other Expenses Provisons Tax and FY12 Interest Income OEI Underlying NPAT movement – 2H12 v 1H12 19 $m 22 176 1,305 48 51 1,187 Up 10% 1H12 Net Other Expenses Provisons Tax and 2H12 Interest Income OEI 74
Australia Division – Net Interest Margin For personal use only • Net interest margin has declined since Net Interest Margin 1H10, primarily impacted by: $m % Deposit margins adversely impacted by increased competition for deposits driven by 3,700 2.65 regulatory and funding requirements 3,600 2.60 Deposit mix impact with increasing customer preference for term deposit and on-line 3,500 offerings 2.55 Increased average cost of term wholesale 3,400 funding 2.50 3,300 • 1H12 margins negatively impacted by widening of short term wholesale spreads, which have 2.45 improved in 2H12 3,200 2.40 • 2H12 operating income up 6% and NIM up 4 3,100 bps driven by tighter margin management offset by increased funding costs, in particular 3,000 2.35 deposit costs remain elevated 1H10 2H10 1H11 2H11 1H12 2H12 • Pressure on margins likely to continue in FY13, however ongoing margin management is Revenue (LHS) NIM (RHS) expected to offset headwinds 75
Australia Division - Building greater productivity into our business For personal use only Strategy Australia Division Cost to Income Ratio (%) • Sustainable cost reduction through strategic transformation and simplification initiatives Digital online and mobile channels 48% Branch network reconfiguration Peer High Product simplification and improvement 46% Automation of manual processes Right-sizing our enablement functions for the current environment 44% Peer Average Better alignment of organisational structures between individual businesses Use of regional support hubs 42% ANZ Average • While at the same time generating additional ANZ revenue streams through a broader range of sales and servicing activities via digital and retail 40% Peer Low distribution channels and cross-sell Outcomes 2012 Note: Seasonality in ANZ 1H cost growth 38% due to annual salary • Implemented initiatives to deliver productivity increases savings via task elimination & automation, process improvement, better workforce management and improved queue management 36% • Absorbed a 14% increase in volumes and tasks for 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Australian Operations in FY12 while maintaining SLA‟s and reducing costs by 4% • Monthly customer complaints down 4% in FY12 76
Australia Division – Operating Income and Expenses For personal use only Operating income movement FY12 v FY11 $m 265 426 7,118 12 6,967 553 Up 2% FY11 Volume Asset Pricing Funding Costs Other FY12 Operating expenses movement FY12 v FY11 $m 60 2,893 35 39 2,836 Up 2% FY11 Personnel Projects & Other FY12 Restructuring 77
Australia Division – Operating Income and Expenses For personal use only Operating income movement HOH $m 226 3,658 18 105 115 3,531 163 8 3,460 156 12 Down 2% Up 6% 2H11 Volume Asset Pricing Funding Other 1H12 Volume Asset Pricing Funding Other 2H12 Costs Costs Operating expenses movement HOH $m 39 1,456 1,437 12 1,427 22 7 8 3 Up 2% Down 1% 2H11 Personnel Projects & Other 1H12 Personnel Projects & Other 2H12 Restructuring Restructuring 78
Retail – Delivering a distinctive customer proposition and transforming the distribution network For personal use only 1. Delivering tailored offerings across banking Household Lending Growth 1 targeting high value customer segments • Customer segment strategy focusing on Young Indexed Mar 2010 = 100 Money, Professionals and Executives, Affluent 50+, International and Small Business owners 140 ANZ CBA NAB WBC • Traditional Banking market share up 0.6% to 130 13.7% (12 months to Aug 2012) 2 • Affluent Traditional Banking market share up 0.7% 120 to 14.9% (12 months to Aug 2012) 2 110 • Above system growth in household lending (1.2x system) and household deposits (1.2x system) 100 2. Transforming the distribution network through 90 branch reconfiguration and development of Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Aug-12 mobile and digital capabilities • Reconfiguring the distribution network, including Household Deposit Growth 1 branches, to deliver improved customer experience and cost efficiency Indexed Mar 2010 = 100 • Developing online and mobile digital channels to meet customer expectations for greater mobility 140 ANZ CBA NAB WBC and flexibility around their banking 130 3. Delivering a distinctive Retail customer proposition through greater understanding of 120 customer needs and targeted offerings 110 • Investing in analytic capabilities to drive greater customer insight and better 100 address customer needs 90 • Delivering targeted customer offers aligned to customer needs and preferences Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Aug-12 • Simplifying products and processes to make things easier for our customers and people 1. Source: APRA 2. Source: Roy Morgan Research: Aust Pop‟n aged 14+, rolling 12 months, Trad Banking Consumer Market (Deposits, Cards & Loans), Peers: CBA (excl 79 Bankwest), NAB, Westpac (excl Bank of Melbourne & St George)
Retail – Financial performance For personal use only Underlying NPAT movement – FY12 v FY11 $m • Net interest income increased by 2% YOY through 4 36 83 growth in mortgage lending and margin management, partially offset by the impact of 1,475 declining deposit margins and higher funding costs 27 38 • NIM reduced by 12 bps due to increasing deposit costs 1,417 • Expense growth was contained to 2% with the impact of annual salary rises, inflation and project investment Up 4% being offset by productivity initiatives • Provision expense was down 9% driven by improved FY11 Net Other Expenses Provisons Tax and FY12 delinquency trends in the mortgages portfolio and the Interest Income OEI release of surplus collective provisions Underlying NPAT movement – 2H12 v 1H12 $m • Net interest income increased by 10% in the half 5 20 primarily due to margin improvement and above 175 815 15 system growth in household lending 60 • 1% reduction in costs for the second half with benefits emerging from productivity program 660 • NIM improved by 4bps in the half due to management of pricing, discounting and balance sheet composition Up 23% • Provision expense reduced by 8% due to improved 1H12 Net Other Expenses Provisons Tax and 2H12 delinquency trends and the release of surplus Interest Income OEI collective provisions 80
For personal use only Retail – Balance Sheet $b 180.7 Sep 11 189.4 Mar 12 Customer Lending 3.6 Mortgages Consumer 0.5 cards & Unsec. Lending 0.2 Other 192.7 Sep 12 81 $b 87.3 Sep 11 91.9 Mar 12 Customer Deposits 1.0 Mortgage Offset 4.7 Deposits 0.1 Other 97.6 Sep 12
Retail – Branch network reconfiguration: improving customer experience and lowering cost to serve For personal use only • A new branch design with sales capabilities Re-defining the retail customer aligned to changing customer demand experience with technology • Becoming centres of advice for complex customer enabled, open plan branches… needs, as everyday transaction numbers decline • Greater access to specialists through use of in- branch video conferencing facilities Roll out of Cisco videoconferencing to 44 rural and remote branches by end of 2012 • Branch footprint designed to maximise sales capability and incorporate new technologies Reduce excess space in our branch property portfolio by approximately 36% Branch: York & Market, Sydney 25% reduction in property expenses expected over time New • 800 „next generation‟, deposit taking ATMs to be generation rolled out to branches commencing June 2013 intelligent allowing 24/7 access to many traditional teller ATM‟s with services greater • Providing access to simple wealth products to functionality meet customer needs Initial rollout to 200 branches by end of 2012 82
Retail – Right sizing our branches and increasing sales capability For personal use only • A circa 5 year program, 46 branches to be completed in Calendar 2012 • Align our branch footprint to changing customer demand and improve productivity (more complex activities performed in branch, better customer discussion facilities, etc.) • Right sizing our branches, improving the proportion of usable floor space (significant reduction in back of house space requirements) and moving to a more flexible layout • In tandem with an improving online and digital offering Example of improved space utilisation Metro/ Suburban Branch Net lettable area ↓ c.40% Back of house requirement ↓ c.70% Consulting room and sales points ↑ Branch: Booragoon, Western Australia 83
Retail – Developing new channels in line with shifting customer preferences For personal use only • Growing customer preference for self-service Intuitive next generation channels with digital transactions accounting for online platforms… more than 64% of all ANZ transactions processed • Generating additional revenue streams through greater functionality and cross-sell opportunities while lowering the cost to serve • ANZ goMoney a recognised leader in mobile banking applications Over 780,000 registered users 30 million transactions totalling $17 billion conducted in the past 12 months (Sep 2012) Available on up to 5 simultaneous devices Android version launched in September 2012 … and peer -leading mobile • Enhanced Internet Banking functionality allows platforms customers to do more of their banking without the involvement of branches or call centres Includes travel notifications, adding Cardholders, eStatements 359 million transactions totalling $600 billion have been conducted over the past 12 months (Sep 2012) • Trialling ANZ mobile wallet using NFC technology on Android devices 84
Retail – Mortgages For personal use only Portfolio Statistics Dynamic Loan to Valuation Ratio Total Number of Mortgage Accounts 848k % Portfolio Portfolio >90% LVR Total Mortgage FUM $182b 60% = 5% (Sep 12) 50% % of Total Australia Region Lending 60% 40% 30% % of Total Group Lending 43% 20% Owner Occupied Loans - % of Portfolio 63% 10% 0% Average Loan Size at Origination $262k 0-60% 61-75% 76-80% 81%-90% 91-95% 95%+ Average LVR at Origination 64% Sep 10 Mar 11 Sep 11 Mar 12 Sep-12 Average Dynamic LVR of Portfolio 52% Mortgage Portfolio by State (Sep 2012) % of Portfolio Ahead on Repayments 1 49% First Home Owners - % of Portfolio 9% First Home Owners - % of New Lending 8% 29% NSW & ACT 16% QLD Mortgages have low loss rates VIC 10% Individual Provision Loss Rates 19% WA 1H10 2H10 1H11 2H11 1H12 2H12 Group 0.62% 0.42% 0.32% 0.31% 0.36% 0.43% Other 26% Australia Mortgages 0.02% 0.01% 0.01% 0.03% 0.03% 0.02% 1. One month or more ahead of repayments. Excludes funds in offset accounts. 85
Retail – Mortgages by channel For personal use only • Strengthening the sales capability of our Sales mix network as part of the Banking on Australia program • New automated mortgages platform largely rolled out across the network 45% 49% 49% • Broker originated mortgages remain an 51% 54% 54% important channel and deliver a high 63% proportion of new-to-bank and affluent customers Portfolio mix 55% 54% 56% 58% 57% 59% 61% 62% 51% 51% 49% 46% 46% 37% 46% 43% 44% 42% 41% 38% 39% 2H09 1H10 2H10 1H11 2H11 1H12 2H12 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Broker Proprietary Broker Proprietary 1. Source: APRA 86
Commercial – Leveraging our regional footprint and growing the customer base For personal use only 1. Growing through customer acquisition and increased cross-sell Cross-sell income • Focusing on acquiring new-to-bank customers Strong cross-sell revenue growth Targeting trading businesses with more complex, cross-regional needs 24% increase 786 Acquired 30k net new clients in FY12 712 636 • Enhancing product and distribution propositions +12% to increase cross-sell opportunities Institutional cross-sell revenue up 25.1% YOY +3% Mortgages cross-sell revenue up 12.6% YOY FY10 FY11 FY12 Investment and insurance cross-sell revenue Product cross-sell revenue from other ANZ businesses ($m) up 27.7% YOY • Increased lending and deposit FUM by 9% YOY Awarded Business Bank of the Year 2012 2. Leveraging our regional footprint and capabilities to meet customer needs Based on performance against • Working closely with customers to provide better the following criteria: connections across the region • Relationship management • Increased cross border referrals by 40% YOY • Advice 3. Improving productivity and customer • Deal execution experience • Client satisfaction • Market share and penetration • Streamlining processes to provide more time Business Bank of the Year with customers • League table positions AFR Capital CFO Awards 2012 • Investing in online and mobile platforms to deliver convenient and innovative banking solutions 87
Commercial – Capitalising on our super regional capabilities For personal use only 1. Increased client awareness of our super Cross-border referrals regional strengths and upskilled staff • Demonstrated our leading renminbi (RMB) 579 69% increase capabilities to 700 customers and staff across 6 505 states 431 • Up-skilled 600 frontline staff across 5 cities and 342 provided 80 bankers with hands-on experience in key Asian markets 2. Better connecting our customers across the region • Increased cross-border referrals by 69% since 1H11 and 40% YOY 1H11 2H11 1H12 2H12 • Developed a standard global credit framework and principles providing customers with agile Sources of cross-border referrals and timely cross border credit 3. Recognised by government entities for our leading capabilities across Asia Asia New Zealand • Chosen by Victorian Government Trade Mission 31% 19% to provide participants with local insights on doing business and banking with China and Other India 5% 4. Extending markets and trade product Pacific capability to our medium and small business 1% clients Australia • Trade Finance revenue generated by 44% Commercial clients up 20% YOY • Global Markets revenue generated by Commercial clients up 40% YOY 88
Commercial – Improving productivity and customer experience For personal use only • Enhancing frontline sales productivity by simplifying processes and systems to provide more time with customers ANZ OneSwitch has simplified • Simplified customer on boarding with ANZ customer OneSwitch - 1 form, 1 signature, 1 week, 1 onboarding point of contact 649 applications • Using technology to enhance customer since launch experience and offer greater control On site needs analysis via tablet technology ANZ Fastpay – „on the go‟ merchant transactions via iPad or iPhone Intelligent use of technology driving ANZ Transactive mobile app - „on the go‟ improved customer experience banking app for business customers • Engaging with customers through social media platforms (Twitter, LinkedIn and the Small Business Hub) • Fostering innovation by assisting prospective small business owners fast-track their development („ANZ Innovyz START Program‟) Using tablet technology to Creating applications to deliver enhance sales process convenient banking solutions 89
Commercial – Financial performance For personal use only Underlying NPAT movement – FY12 v FY11 $m • Net interest income up 3% YOY driven by balance sheet growth and margin management, partially offset 5 65 17 by lower margins on deposits 1,017 24 19 973 • 3% expense growth from salary increases and investment in projects, partially offset by a reduction in FTE and productivity initiatives • Neutral JAWS. Cost to Income ratio flat YOY at 34.2% Up 5% • Provisions down 6% with a reduced provision charge (release of $54m in FY12 of surplus flood provisions FY11 Net Other Expenses Provisons Tax and FY12 raised in March 2011) offset by lending growth and Interest Income OEI impact of current economic environment. Underlying NPAT movement – 2H12 v 1H12 $m • Net interest income flat with asset repricing and 1 3 1 531 volume growth (lending growth of 5%, deposit growth of 6%) offset by deposit margin declines 486 15 • Expenses flat reflecting benefits of restructuring activities and a continued focus on driving productivity 63 savings Down 8% • Provisions up 57% HOH driven by an increase in individual provisions reflecting softer economic conditions across a number of sectors, partially offset 1H12 Net Other Expenses Provisons Tax and 2H12 by the release of surplus flood provisions Interest Income OEI 90
Commercial – Balance Sheet For personal use only Customer Lending Customer Deposits $b $b 0.0 52.0 0.3 43.2 0.8 1.0 0.6 1.0 0.9 0.4 40.8 49.3 39.7 0.0 47.8 Sep 11 Mar 12 Esanda Commercial Business Business Other Sep 12 Sep 11 Mar 12 Esanda Commercial Business Business Sep 12 Banking Banking Banking Banking Regional Small Regional Small Banking Banking Lending composition (Sep 12) Deposit composition (Sep 12) Regional Commercial Regional Commercial 27% 27% Banking Banking Business Banking Business Banking 30% Small Business Banking 41% 32% 32% Small Business Banking 10% Esanda 91
Commercial – Provisions For personal use only • Increased provision charge reflects increased Provision charge lending volume in addition to softening of economic conditions across a number of $m $m $m $m Total provision charge ($m) sectors 250 1.00% 192 107 110 173 0.90% • The provision charge for 2H12 was primarily 200 driven by an increase in individual provisions 0.80% Circa 35% or $62m of the 2H12 individual 150 0.70% provision related to Regional Commercial Banking reflecting pressure in Agri- 0.60% 100 business sector mainly QLD and NT 0.50% 50 • Collective provision overlay relating to flood 0.40% provision taken up in 1H11 has now been 0.30% fully released 0 0.20% -50 • While the portfolio remains well secured, the 0.10% economic recovery following the floods has been slower than expected -100 0.00% 1H11 2H11 1H12 2H12 Flood provision Collective Provision ex-flood provision Individual provision (LHS) Total provision charge (ex-flood release) as % of NLA's (RHS) 92
Commercial – Total lending exposures by sector For personal use only Exposure at default (EAD) Category EAD % in Non Performing by industry sector (%) Sep 12 Mar 12 Sep 11 Sep 12 Mar 12 Sep 11 Property services 15.9% 15.0% 14.7% 1.1% 1.0% 1.0% Agriculture, forestry & 13.5% 16.5% 17.0% 17.0% 6.6% 5.8% 5.0% fishing 5.8% Retail Trade 13.5% 14.5% 13.8% 1.3% 1.0% 1.2% 8.4% Construction 8.4% 8.5% 8.4% 1.6% 1.6% 1.4% 16.5% Business services 5.8% 6.0% 6.0% 1.1% 1.3% 1.3% 5.7% Manufacturing 5.7% 5.7% 5.8% 1.8% 2.0% 2.4% 4.9% Wholesale trade 4.9% 4.9% 4.9% 0.8% 0.8% 1.7% 4.1% 15.9% Accommodation, cafes 4.1% 4.1% 3.8% 1.5% 1.6% 1.6% 2.0% & restaurants 3.3% Heath & community 2.0% 2.0% 1.9% 1.4% 1.6% 1.5% 1.3% services 17.9% Transport & storage 3.3% 3.4% 3.6% 1.6% 1.6% 1.7% Finance & insurance 1.3% 1.3% 1.4% 2.2% 1.6% 1.2% 0.6% Mining 0.6% 0.5% 0.7% 0.8% 0.9% 0.7% Other 17.9% 17.1% 18.0% 1.4% 1.3% 1.2% 93
Commercial – Risk grade profiles For personal use only • The Commercial book is well secured with Commercial Australia Security Cover 72% of Commercial lending book being more than 80% secured • Security Indicator (SI) profiles have decreased slightly from Sep-11, reflecting underlying changes in property values 46% 49% 49% 49% 49% • Average Customer Credit Rating (CCR) is stable YOY and has improved slightly from 1H12 27% Weighted Average Customer Credit Rating 24% 25% 26% 26% Impaired 10 9 10% 12% 10% 12% 10% Weak 8 4% 4% 4% 4% 4% 13% 11% 11% 11% 11% 5.84 Fair 5 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Strong 0 <40% 40%-59% 60%-79% 80%-99% >100% Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 94
Australia Division – Balance sheet For personal use only Net Loans and Advances Deposits $b $b 244.7 228.5 250.0 215.0 250.0 200.0 200.0 140.8 127.0 150.0 150.0 111.0 100.0 100.0 50.0 50.0 0.0 0.0 Sep 10 Sep 11 Sep 12 Sep 10 Sep 11 Sep 12 Commercial Retail Commercial Retail Funding $b 11.4 12.0 18.2 2.1 4.1 2.7 104.1 103.9 101.6 10.0 3.5 1.6 10.3 6.2 6.0 90.9 Lending Lending Lending Lending Lending Lending Sep 09 Deposits Deposits Sep 10 Deposits Deposits Sep 11 Deposits Deposits Sep 12 Comm Comm Comm Retail Comm Retail Comm Retail Comm Retail Retail Retail 95
Australia Division – Deposits For personal use only Customer deposit composition FY12 deposit growth $b 100% Retail Commercial 9% 9% 9% Up 12% Up 9% 140.8 0.3 11% 11% 11% 2.3 80% 0.1 0.7 1.9 13% 12% 12% 0.3 4.6 60% 22% 23% 25% Progress 1.6 Saver up 2.0 86% YOY 127.0 40% Up 11% 45% 44% Decreased 43% 20% reliance on term Mortgage Other Savings Transaction Other Savings Transaction Sep 11 Term Deposits Online Saver Term Deposits Online Saver Sep 12 deposits Offset 0% Sep 11 Mar 12 Sep 12 Term Deposits Other Savings Online Saver Transaction Offset 96
Australia Division – Outlook For personal use only Revenue Revenue growth • Above system growth in mortgages in FY12 provides good balance sheet momentum 6% leading into FY13 3% • Targeting to grow lending at or above system 1% in FY13 0% • Disciplined management of margins in FY12 to continue in FY13 to minimise downside 1H11 2H11 1H12 2H12 from funding impacts • Continuing to transform business to address Expense growth revenue headwinds, including competition for 4% deposits 3% 1% Expenses • Full year effect of productivity initiatives implemented in FY12 will be reflected in FY13 -1% • However, seasonal impact of wage increases 1H11 2H11 1H12 2H12 expected in 1H13 Provision charge Provisions $m Second Half First Half • FY12 provision release associated with flood provisions not expected to recur in FY13 302 278 357 • Modest increase in 2H12 provisions likely to continue into FY13 416 355 309 • Continue to be cautious and disciplined in our approach to lending and risk management FY10 FY11 FY12 97
For personal use only 12 FULL YEAR RESULTS AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 25 October 2012 Investor Discussion Pack International & Institutional Banking (IIB)
International & Institutional Banking (IIB) For personal use only A new division that combines Global Institutional and Asia Pacific, Europe & America Divisions (APEA) International & Institutional Banking Division (IIB) Global Institutional Banking Asia Pacific, Europe & America (APEA) Transaction Global Global Banking Loans Markets Institutional Australia Retail Banking Asia Pacific Institutional New Zealand Asia Partnerships Institutional APEA (including Commercial Banking Asia Pacific) 99
International & Institutional Banking – growing in line with strategy For personal use only • Super Regional strategy continues to build Income Growth FY12 v FY11 momentum IIB Division Geographies Growing in our priority markets 16% 14% Delivering greater cross-border connectivity 6% 2% With total cross-border income up 16% YOY -2% IIB Cross-Border Institutional Institutional APEA • Client growth focussed on key strategic Division Income 1 New Zealand Australia segments Customer Segments Delivering growth in key investment segments 46% 2y 2y 25% Lower cost business model allows continued CAGR CAGR 15% 7% investment in priority segments +3% +13% -8% -8% Agriculture Infra- Affluent & Financial Natural Commercial • Shifting business model and becoming a structure Emerging Institutions Resources Asia modern Institutional bank Affluent Continuing to diversify income by product Products 25% 25% Well funded, low risk balance sheet, loan to 17% deposit ratio at Sep 2012 - 75% 11% 7% 42% of APEA Institutional lending book represents short-dated trade finance which -4% grew 30% YOY Global Investments Cash Foreign Fixed Trade Loans & Insurance Management Exchange Income & Supply Chain 1. Represents referred income booked in a jurisdiction different to where a client relationship is managed. 100
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