Transcript No Slide Title

International
- Move to Growth Phase
Elmer Funke Kupper
Head of International Division
18 July 2000
International - Move to growth phase
•
Last year, we presented a three year agenda to “Simplify and
Focus” International. The first phase is nearing completion:



•
With the focus shifting to growth, new positions will be built in the
Pacific and Asia:


•
Implemented risk reduction program
Simplified positions and extracted value in one move
Freed up capital and management for growth agenda
In the Pacific, we will extend our leadership position to new
geographies and continue to drive operational improvement
In Asia, following the crisis, we have small and lower risk positions.
We will re-energise these positions and direct new investment
towards eCommerce
Implementation of the growth agenda will take two years, and a deal
pipeline has been established
Risk reduction program largely completed
Impact Grindlays Sale on Risk Profile
Specific Provisions International
One Name
Assets in countries rated below ‘Single A’
82%
$299m
$247m
48%
$75m
Grindlays
* H2000
ANZ Post
Completion
1998
1999
1H2000
ELP (%) 1.58
1.38
1.13
Simplification completed in one move
M
M M
P
M
Grindlays transaction:
• $10.2b assets, $79m 1H earnings
• Simplifies network in one move
• Extracts immediate value at 2.3
times NAV and 14.6 times
earnings
• Completion on track for 3rd
quarter 2000
N
N
N
D
D R
D
D
N
D
D
D
D
M
R
D
N
Asia - Selective Investment
Japan, Korea
• Trade, money centre
Three Chinas
• 4 branches
South East Asia
• Singapore, Indonesia,
Philippines, Vietnam,
Malaysia, Thailand
N
R
M
D
N
D
D
D
Pacific – Extend leading position
• South Pacific well covered
• 41 branches
• 20-60%share
D
D
D
D
D
International - Move to growth phase
•
Last year, we presented a three year agenda to “Simplify and
Focus” International. The first phase is nearing completion:



•
With the focus shifting to growth, new positions will be built in the
Pacific and Asia:


•
Implemented risk reduction program
Simplified positions and extracted value in one move
Freed up capital and management for growth agenda
In the Pacific, we will extend our leadership position to new
geographies and continue to drive operational improvement
In Asia, following the crisis, we have small and lower risk positions.
We will re-energise these positions and direct new investment
towards eCommerce
Implementation of the growth agenda will take two years, and a deal
pipeline has been established
Two growth agendas
Starting Position
Pacific
Asia
Markets
 Large in number, individually small
 Modest growth
 Highly concentrated – few players
 Similar market/management models
ANZ
 Leading position in eight markets
 Strong track record
 NPAT 1H2000: $22m
Markets
 Individually large, more fragmented
 Recovery under way
 Emerging “mass affluent”
 Rapid growth in online economy
ANZ
 Network positions in 11 countries
 Early investment in Panin Bank
 NPAT 1H2000: $15m
Strategic Response




Replicate leading market positions
- Organic growth or acquisition
in new geographies
- Rapid deployment of successful
management model
Continue to drive operational
improvement
Build existing positions
- Re-energise network points
- Build Panin into top 5 retail bank
Invest in new growth
- Target mass affluent as they get
online
- Partner to complement ANZ’s
strengths in e-commerce and
monoline businesses (eg cards)
Pacific: Consolidate existing leadership
Leadership Positions
Continuous Improvement
Customer segmentation Prime Banking in Fiji, PNG
Products - funds mgmt,
insurance, asset finance
Electronic channels: ATMs,
EFTPOS
Fee income automation
Fiji
1

Vanuatu
1

Samoa
1

Solomon Islands
2

American Samoa
2
Tonga
2
Cook Islands
1
Going forward
 Continue to invest in new
channels and products
 Review opportunities to
regionalise operations
PNG
3
* First half annualised
Results (NPAT)
$44m
$37m
1999
% Consumer
• Assets
• Liabilities
• NPAT
2000*
81%
80%
85%
Impact of recent events in pacific
Real GDP Growth
NPAT contribution
10
100% = $766m
Solomons
5
46
$22m
68
Other
Islands
32
Fiji/
Solomon
0
54
-5
Fiji
-10
'90
'92
'94
'96
'98
f00
Lending
Assets
2000
Profit After
Tax H2000
Extending leadership to new markets
Size of the pacific opportunity
Pacific Population and Wealth, Bubble Size proportional to GDP
US Territories, 24% GDP
25
French Territories, 36% GDP
Guam
South Pacific, 40% GDP
GDP/Capita (USD 000's)
20
French
Polynesia
New
Caledonia
15
10
Northern Marianas
Palau
5
American Samoa
Cooks
Marshalls
10k
Fiji
PNG
Micronesia
Vanuatu
Solomons
Samoa
100k
1m
Population
10m
Asia: Dealt with the credit crisis as predicted
New Non Accrual Loans
$277m
Net Specific Provisions
One name
$270m
$228m
$118m
$101m
$51m
1998
1999
H2000
Coverage (%)
1998
1999
H2000
86.0
67.2
70.0
Re-energise Asia
Economic Recovery in Region
Grow the Business in Selected Areas
Build Strategic Assets
 Trade finance



ANZ represented in:
 Japan
 South Korea
 China
 Hong Kong
 Taiwan
 Singapore





Indonesia
Philippines
Thailand
Malaysia
Vietnam
Network customers
Relationship banks
Key project sectors
Maintain Policy on Non-Strategic Assets
 USD wholesale banking
 Interbank lending
 Participations
Indonesia: Patience in building position
annual % change
140
120
100
80
60
40
20
0
-20
Panin Bank
Profile
 Assets $2.6bn (Dec 1999 full year)
 Pre provisions NPAT $107m
Food
Consumer Prices
All Items
29% shareholding by ANZ
Currently number 8 Non-State Bank
- 106 branches mainly in Jakarta/Java


Jan-97
Rupiah
Inflation Improved
Jan-98
Jan-99
Jan-00
Currency/Stock Market Remains Weak
200
2200
4200
6200
8200
10200
12200
14200
16200
800
700
600
500
400
300
200
100
0
Jakarta SE Composite
Price Increase (RHS)
Rupiah per USD
Inserted Scale (LHS)
1996
1997
1998
1999
Index
2000
Going forward AUD20m investment in retail
banking

New ATMs

Phone banking/National Call Centre
Refurbish branches
New branches in Jakarta


Key to new Asia growth are mass affluent
•
•
•
•
•
There is a largely untapped opportunity to provide financial services to
the emerging mass affluent consumers
eCommerce provides a more cost efficient and low risk way of targeting
this potential – ANZ is a leader in eCommerce
The need for speed, access to markets and risk sharing means that we
need to combine the strengths of ANZ with those of others in the region
We have joined forces with OCBC from Singapore to develop the
regional business, which we expect to launch early 2001
The business model recognises the weaknesses of existing pure online
propositions and includes specific responses to these
Japan
Mass affluent market is emerging
14
Korea 3.23
China 3
0.39
1.5
Hong Kong
0.12
Wired Emerging Affluent
Adults in urban areas:
• Annual income over approx.
US$10,000
• Connected to the Internet
2000
24.24
2005
2000
2005
3.5
1.3
Taiwan 2.98
1.24
Thailand
1.11
Philippines
0.45
Malaysia
2000
Singapore
2.61
Indonesia
2005
0.89
1.34
0.5
0.23
2000
2005
0.26
0.1
2000
0.1
2005
2000
2005
2000
2005
Online use is taking off
Internet
Penetration of
Households (%)
25
Internet Take-up
Zone
Australia
Singapore
20
15
Hong Kong
Korea Taiwan
Malaysia
Based on US experience,
B2C financial services
takes off when internet
penetration hits 10-20%
Japan
Broking and Net Banking
are the early ‘Killer Apps‘
10
Indonesia
Thailand
5
Philippines
China
Vietnam
0
0
10
20
30
Implication: e-Commerce opportunities are
starting to emerge in each country
40
GDP / Capita
(USD '000)
Online customers are attractive
Online customer more attractive
Offline (= 100)
Online
259
500
169
100
Online customers cheaper to acquire (index)
185
116
100
Average
Deposit
Balance
Average
Loan
Balance
Source: ANZ customer base
Number of
products
Average
Profitability
Offline
Online
Pipeline under development
Leading Financial
Portal
Online
Stockbroking
Internet Service
Provider
Regional e-based financial
institution
+
B2B and B2C
Enabling
Retail Alliances
Banking front
end
OCBC/ANZ partnership makes sense
Country
OCBC
ANZ
China
5
2
Hong Kong
3
1
Indonesia
JV
Panin
Market Capitalisation
Japan
1
2
Market Share (Spore)
Korea
1
1
25
1 Rep.
Office
1
Malaysia
Philippines
Singapore
Taiwan
Thailand
Vietnam
1
44
1
1
1 Rep.
Office
1
1
1 Rep.
Office
2
OCBC Profile
June 2000 USDm
Total Assets
33,562
NPAT, Dec 1999 full year
Partnership Benefits
Complementary licences, strategic fit
Both banks embrace the e-space at home
Shared vision of opportunity across Asia
7,751
415
17.9%
Leveraging ANZ’s strengths
Credit Cards
• No. 1 in Australia
• Domestic partnership through Qantas Telstra Visa Card
• International partnership with Star TV
Consumer
eCommerce
• Highest penetration of customers banking with anz.com
• Continuously expanding product suite, eg. eauto, pay anyone, my
ANZ
• Key alliances - E*Trade, Freenet, MultiEmedia, Medweb
Corporate
eCommerce
• Leader in electronic banking to corporates, ANZ Online, FX Online
• B2B solutions - eGate, eProcurement with MRO.com, corProcure
• Development of FX Online web based platform
International - Move to growth phase
•
Last year, we presented a three year agenda to “Simplify and
Focus” International. The first phase is nearing completion:
–
–
–
•
Implemented risk reduction program
Simplified positions and extracted value in one move
Freed up capital and management for growth agenda
With the focus shifting to growth, new positions will be built in the
Pacific and Asia:
–
–
•
In the Pacific, we will extend our leadership position to new
geographies and continue to drive operational improvement
In Asia, following the crisis, we have small and lower risk positions.
We will re-energise these positions and direct new investment
towards eCommerce
Implementation of the growth agenda will take two years, and a deal
pipeline has been established
International program phasing
Complete
“Simplify
and Focus”
Strategic
Review
Completed/
Elmer Funke
Appointed
new
markets
Grindlays
Transaction
Announced
Indian Mgmt
Strengthened
Profit Decline
Halted – Growth
Visible
Completion
Grindlays
Transaction
9/99
3/00
9/00
6/99
Drive Growth
Agenda:
Target
Profit
Improvement
Program
Launched
Panin Bank
Rights Issue
eAsia Team
Established
 Pacific
 Asia
eGrowth
Acquisition
Amerika Samoa
Bank
Announced
BOOM.COM
Investment
1/01
Launch
Internet
Banking
Indonesia
eCommerce
Joint Venture
with OCBC
Announced
Customer
Launch OCBC
Joint Venture
• JV Alliances
• Pacific new
markets
strategy
Summary
Complete ‘Simplify and Focus’
•
•
•
Implemented risk
reduction program
Simplified International
positions in one move
with Grindlays sale –
completion on track
Freed up capital and
management
Extend Pacific Leadership
•
•
•
Replicate leading market
positions

Organic or acquisition

Deploy successful
management model
Continue to drive
operational improvement
Agenda defined and under
way
Invest in Asian eGrowth
•
•
•
Re-energise existing
positions

Network points

Panin Bank
Invest in eGrowth

Target mass affluent

Partner to complement
strengths
Joint Venture announced